Netflix Company’s Strategic Analysis

Netflix Company’s Strategic Analysis
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Netflix Company’s Strategic Analysis
Company Profile
Netlix Inc. is an entertainment company that allows users to watch movies and television shows through the internet via streaming. The company offers a wide range of movies and television shows that users can enjoy unlimited access through a regular membership subscription fee. Netflix began in 1998 as a movie renting service that mailed out physical copies of movies, shows, and video games through the normal mailing system (Gupta, 2020). However, the company reinvented its business model to a subscription service due to rapid changes in internet technology in the late 1990s. In 2000, it launched its first sales site, Netflix.com, and introduced a subscription service. For a limited monthly fee, subscribers could access unlimited DVD rentals.
The company also introduced a personalized movie recommendation system that could accurately predict users’ movie preferences based on their ratings. Consequently, it used this system to recommend the right movies and programs for users. By 2005, it had more than 4 million regular subscribers (Uta, 2019). In 2007, Netflix introduced its streaming service which allowed users to watch movies and shows through the internet using their personal computers. In 2013, it redefined its business model again by venturing into original programming. It has so far produced critically acclaimed television shows and movies, such as House of Cards, Orange is the New Black, and Stranger Things (Uta, 2019). The company won its first Oscar Award for Best Documentary Short Subject with the production of The White Helmets in 2017. The next year, it had 112 nominations at the 2018 Emmy Awards becoming the most nominated internet TV network and went on to win 23 awards.
As a result of its industry disrupting business model, it has achieved massive success at a global scale. Netflix is one of the leading entertainment companies with 221 million paid memberships in over 190 countries (Netflix, 2022). Canada and the United States account for the largest market share with 75.2 million Netflix customers (Iqbal, 2022). Europe, Africa, and the Middle East form the second largest customer bloc collectively with 74 million customers. Latin America comes third with approximately 40 million and Asia Pacific comes last with 32.6 million Netflix customers (Iqbal, 2022). Currently, it is the largest streaming platform with a larger market share than its main rivals, including Hulu, Amazon Prime Video, Disney +, AppleTV+, Paramount+, and HBO Max. As of 2021, Netflix’s market share was around 50% of the industry (Lee, 2021). Netflix also generates the highest revenues in the digital streaming industry. According to Gupta (2020), Netflix has a market cap of around $240 billion with annual revenues of $20.16 billion and net profit of $1.86 billion.
Key strategic Issues Facing Netflix
Despite being the market leader in the digital streaming industry, Netflix is facing several key issues that are threatening its dominant position. In the second quarter of the 2022 fiscal year, the company lost approximately one million subscribers, which is the...