Various strategies (innovation, growth) adopted by Netflix to become the largest streaming service provider in the world.
About Netflix
Netflix, the world’s largest online streaming services provider, serves a diverse subscriber base globally. Its popularity over the years has been driven through original content and sound use of technology.
Netflix maintains that member satisfaction is critical to its growth and that is why the company invests in producing original content, even though the cost of producing original content is high. This strategy has helped Netflix earn a stronger word of mouth, and has helped the company grow its subscriber base.
Netflix’s target audience
Netflix has a vast amount of original and licensed content targeted at various age groups of customers. Netflix serves its content to a diverse group of customers from diverse cultural backgrounds.
The company has also priced its services competitively and released a few lower priced plans to target the middle class customer segments. In the emerging economies where the consumers are more price sensitive than the developed economies, the company introduced a smaller plan allowing users to access content only on smartphone devices.
The customers of Netflix are mainly in the 18-45 age group, mostly Gen Z and millennials. The United States and Canada are together the largest market region of Netflix.
Business Growth Strategies of Netflix
Original content
Netflix invests heavily in original content and it is one of its core business growth strategy. The company has continued to expand its collection of original movies and shows. Original content is the main differentiating factor for online streaming sites, and not just Netflix, but its competitors such as Amazon Prime are also investing in original content.
However, Netflix’s collection is much larger compared to the others, and nothing attracts customers from across the globe like original movies and shows.
Even though producing original content costs the company a lot of money, it is a proven way to draw audiences and has been a source of competitive advantage for Netflix.
Netflix maintains a strong focus on quality and also creates a lot of localized content for local users in various regions (such as India, China, France). However, the localized content does not just appeal to the local subscribers but also the international audience. Customers have substantial choices across various genres and languages resulting in higher user satisfaction.
Technological Innovation
Netflix also invests in technological innovation in order to offer better quality of streaming and a superior customer experience. Netflix continues to invest in improving its search algorithms and recommendation system to grow its attractiveness.
Their website adapts to individual users’ preferences which differentiates the Netflix experience. This is done through the use of machine learning and artificial intelligence and its team’s creativity. The company also made significant investments in data and analytics.
Netflix relies on cloud computing for its computing and storage related needs and relies on a network of data centres around the world.
Focus on User Satisfaction
Subscriber satisfaction matters the most for Netflix and there are several factors shaping user satisfaction. Continuous improvements, higher personalization, producing quality content, all helps to improve user experience and user loyalty.
Phased expansion
US company Netflix first entered the markets that were geographically close to its domestic market. It first expanded to Canada since the Canadian audience is very similar to the US audience. The firm needed to develop strong internationalization capabilities before it could move to foreign markets at a larger scale.
In the next phase of expansion, Netflix expanded into fifty markets. Apart from the attractiveness of the local market, there were other factors like the presence of affluent customers and broadband internet, that the firm considered before entering these markets.
After that, the company grew much more aggressively and today it is operational in almost every market worldwide.
The company now understands preferred content of audience, it has added more languages, it has optimized its personalization algorithms, and also expanded its support for various devices, and offers more payment options.
While it expanded geographically, Netflix continued to improve its content and service quality.
Focus on Mobile User
Netflix was also among the first to shift its focus on the mobile user, and worked on improving its user interface as well as streaming efficiency for mobile devices. The company also focused on growing its relationship with smartphone brands, mobile and TV operators as well as internet service providers.
Regional Partnerships
Netflix’s growth also involved regional partners. The company formed mutually beneficial partnerships with regional players such as cell phone companies, cable operators to sell its content. In most market, telecom and cable operators offer free Netflix subscriptions to its subscribers.
Marketing
Netflix earns a strong word of mouth by producing quality content. From paid promotions to digital advertising, and social media, the company uses all channels to reach and engage users. It has also developed market-specific strategies.
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