Netflix Case Study

STRTMAN 050

Group 1 Members:
Karl Antoni Badilla
Lyca Coñejos
Ma. Catherine Joven
Joan Locille Milca
John Rick Miranda
Czyra Niña L. Salutan

Macroenvironmental Trends Contributing to Netflix's Success

External:

• Demand for Over-the-Top (OTT) Services: Traditional cable/satellite television

offered a bundled package of channels, many of which viewers didn't watch. The
rise of OTT services like Netflix allowed consumers to ditch these bloated
packages and subscribe only to the services they actually used. This cord-cutting
trend fueled Netflix's growth as it offered a more consumer-centric and cost-
effective way to access entertainment.

• Shift in Watching Patterns (Binge-Watching): Closely aligned with the rise of

OTT services is the change in watching patterns, particularly the phenomenon of
binge-watching. Consumers, especially younger demographics, have embraced
the flexibility and convenience offered by streaming platforms, allowing them to
consume content on-demand and at their own pace.

Gone are the days of waiting a week for the next episode of your favorite show.
Netflix's on-demand model perfectly aligns with the rise of binge-watching, where
viewers consume multiple episodes in a single sitting. This behavior is further
encouraged by Netflix's auto-play feature and the lack of commercials, leading to
longer viewing sessions and increased subscriber engagement.

• Increased Internet Access: The growth of high-speed broadband internet access

has been critical for Netflix's success. Smooth and reliable streaming requires
significant bandwidth, and Netflix's service wouldn't be possible without the vast
improvements in internet infrastructure over the past two decades.

• Convenience and Affordability: Compared to traditional cable, Netflix offers a

more convenient and often more affordable way to access entertainment.
 Subscribers have the flexibility to watch content on-demand, on any device, and
without the hassle of annual contracts or hidden fees. Netflix's tiered subscription
plans also allow users to choose a price point that fits their budget and viewing
habits.

• Global Expansion: The rise of a global middle class with disposable income
creates a vast potential market for Netflix's services. By offering localized content
and subtitles in multiple languages, Netflix caters to a diverse international
audience. This expansion strategy not only increases their subscriber base but
also exposes viewers to different cultures and perspectives.

• Content Delivery Networks (CDNs): Delivering high-quality video content across

the globe requires a robust infrastructure. Netflix utilizes Content Delivery
Networks (CDNs) to store cached copies of their content in geographically
distributed servers. This ensures that viewers experience smooth and reliable
streaming regardless of their location.

Internal:
• Focus on Original Content (Netflix Originals): Netflix's initial success relied
heavily on licensed content from traditional studios. However, they recognized the
power of owning their own content. By investing in high-quality, original content
(Netflix Originals), Netflix creates a unique selling proposition and fosters
subscriber loyalty. Shows like "Stranger Things" and "The Crown" have become
cultural phenomena, drawing in new subscribers and keeping existing ones
engaged.

• Data-Driven Content Creation: Unlike traditional studios that rely on gut feeling
and guesswork, Netflix leverages user data to understand viewing preferences and
trends. This data allows them to tailor content to specific demographics and
regions, ensuring a high level of audience engagement. For example, analyzing
viewing data might reveal a high demand for Korean dramas in a particular region,
prompting Netflix to invest in producing Korean-language content.

• Strategic Partnerships: While Netflix invests heavily in original content, they also
leverage strategic partnerships with local production companies. This allows them
to create content that resonates with local audiences in international markets. For
example, a partnership with a French production company might yield a series that
reflects French culture and sensibilities, attracting a wider audience in France and
other French-speaking countries.
 • Rise of Mobile Entertainment: The increasing use of smartphones and tablets
for entertainment consumption has made mobile apps a crucial asset for streaming
services. Netflix's user-friendly mobile app allows users to watch content on the
go, further enhancing convenience and accessibility.

• Social Media Engagement: Social media has become a powerful tool for building
brand awareness and fostering communities. Netflix uses social media platforms
to create buzz around its shows, share trailers and clips, and interact with viewers.
This engagement helps to solidify brand identity and attract new audiences.

Trends Behind Netflix Current Growth

One of the key trends that have greatly contributed to Netflix's current growth following
recent economic woes is the company's ability to adapt to changing times. In the face of
economic challenges such as recessions and downturns, Netflix has been able to pivot
its business model and offerings to meet the needs of consumers. For example, during
the recent economic downturn caused by the COVID-19 pandemic, Netflix quickly
capitalized on the increased demand for streaming services as people were forced to stay
home and seek entertainment options.

Additionally, Netflix has been successful in catering to the varying needs of its target
market. The company has invested heavily in creating a diverse range of content that
appeals to a wide audience. By offering a mix of original series, movies, documentaries,
and licensed content, Netflix has been able to attract and retain subscribers from different
demographics and interests.

Furthermore, Netflix's focus on innovation and technology has also played a significant
role in its growth. The company continuously invests in enhancing its streaming platform,
improving the user experience, and leveraging data analytics to personalize
recommendations for its subscribers. This commitment to innovation has helped Netflix
stay ahead of the competition and maintain its position as a market leader in the streaming
industry.

The combination of adaptability, customer-centric approach, and technological innovation

has been instrumental in driving Netflix's growth. By staying agile and responsive to
market trends, being proactive rather than reactive, Netflix has been able to not only
survive but thrive in challenging economic environments.