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The Best Way for Netflix to Keep Growing

• Andrei Hagiu

Allowing third-party content could lead to new forms of revenue and new subscribers.

Netflix’s model has been undeniably successful to date. However, fighting the blockbuster content-acquisition and creation battle is becoming ever more expensive, and it involves an increasing number of combatants. Furthermore, the growth of Netflix’s subscriber base is slowing down. Netflix can and should become a platform. Why? Its big subscriber base (130 million worldwide) and content-delivery infrastructure are potentially very attractive to many third parties, including video content providers, developers of cloud gaming, and marketers. How would it become a platform? Simply by allowing these third parties to sell their products or services within Netflix’s service but outside Netflix’s subscription, on terms controlled by the third parties.

Netflix has a lot to gain by becoming a multisided platform.

• Andrei Hagiu is an associate professor of information systems at Boston University’s Questrom School of Business. theplatformguy

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Netflix SWOT Analysis & Recommendations

This SWOT analysis of Netflix examines the internal and external factors that influence the competitive advantages of the entertainment and content streaming business. The company’s operations depend on information technology for its streaming infrastructure, as well as consumer electronics and Internet services available to target customers. These factors in the internal and external environments of the business are considered in this SWOT analysis of Netflix, relating to the company’s comparative performance and competitive advantages relative to other firms in the international market. Netflix’s growth and expansion and current potential for further business growth and profitability are positive indicators considered in this SWOT analysis.

This SWOT analysis includes an internal analysis of Netflix’s strengths and weaknesses, which determine core competencies and business capabilities for competitive advantages. This SWOT analysis also shows an external analysis of Netflix’s opportunities and the threats to its business. These strengths, weaknesses, opportunities, and threats (SWOT) represent the company’s status and position as a competitor in the entertainment content production and streaming market.

Netflix’s Strengths

Internal factors that make the video streaming business competitive are evaluated in this part of the SWOT analysis. The following competitive advantages are Netflix’s strengths:

• International market reach
• Economies of scale
• Content production capabilities

Netflix’s international market reach equates to a large user base, a large market share, and commensurate revenues from streaming services. This multinational user base also supports the company’s economies of scale, which ensures adequate funds for business operations, such as the production of original movies and series. Considering the internal business environment evaluated in this SWOT analysis of Netflix, these internal factors are competitive advantages that allow for large-scale operations and profitability in streaming services. The company also maintains competitive pricing for streaming services with support from these business strengths. Moreover, Netflix’s content production capabilities are relevant to this SWOT analysis. This strength is a competitive advantage that empowers the business to retain subscribers despite competitors and alternatives for Netflix’s streaming services. This part of the SWOT analysis shows the competitive advantages for achieving the entertainment goals and strategic objectives established through Netflix’s mission and vision , which aim to provide entertainment for the global market.

Netflix’s Weaknesses

Internal factors that prevent maximum business performance are considered in this part of the SWOT analysis. The following business conditions are Netflix’s weaknesses:

• Lack of own data center
• Low control over mobile app availability and accessibility
• Low control over internet connection speeds
• Limited content production

Netflix streams movies and series from cloud computing infrastructure using Amazon Web Services (AWS). Also, Netflix’s app availability and accessibility are subject to the requirements and limits of app stores, such as Apple ’s App Store and Google Play Store. Moreover, internet service providers (ISPs) determine connection speeds and throttling policies for streaming videos. In this SWOT analysis of Netflix, these weaknesses are internal factors that indicate limited or low control over some critical factors that affect the company’s online services and competitive advantages. Furthermore, the limited extent of the company’s content production is a weakness in this SWOT analysis, considering some competitors’ large-scale entertainment production and distribution capabilities. The strategies and tactics involved in Netflix’s marketing mix (4P) depend on how these weaknesses affect business operations. For example, this SWOT analysis shows limited content production, which affects the product mix, as well as lack of control on app availability and accessibility, which influences Netflix’s distribution strategy.

Opportunities for Netflix

External factors that can improve business performance are evaluated in this part of the SWOT analysis. The following are Netflix’s opportunities:

• Development of novel digital products/services for subscribers
• Diversification for business growth outside content streaming
• Development of the company’s own data center

The opportunity to provide new products capitalizes on Netflix’s strength of its international market reach. For example, the company can develop and offer additional or new mobile games on top of its core movies and series. Another of Netflix’s opportunities is diversification, which can include consumer electronics that create a service ecosystem involving movies, series, and video games. In this SWOT analysis, developing new products and diversifying the online business can create new revenue-generation channels. Netflix can also consider building a data center as its operations grow, considering dependence on AWS, which is a weakness considered in this SWOT analysis. However, the company continues to indicate that the benefits of using AWS outweigh its disadvantages. For the opportunities in this part of the SWOT analysis, Netflix’s competitive strategy and growth strategies include competitive advantages for product development and diversification.

Threats to Netflix

External factors that limit or decrease business performance are considered in this part of the SWOT analysis. The following industry and market factors are the threats to Netflix:

• Competition
• Content piracy
• Changes in Amazon’s rules and policies for AWS

The aggressive and high-pressure competition described in the Five Forces analysis of Netflix is a major threat relevant to this SWOT analysis of the business. The company competes with the movie and series production and distribution businesses of Disney , Sony , and NBCUniversal, as well as the content production and streaming services of Apple TV Plus, Google’s (Alphabet’s) YouTube, Facebook (Meta) , Amazon Prime Video, and Microsoft Movies & TV (Films & TV). Netflix also states that content piracy in some countries or regional markets is an external factor that threatens the business. In this SWOT analysis, piracy can reduce or limit membership and corresponding subscription revenues. Nonetheless, Netflix’s competitive and affordable pricing can encourage customers to pay for the company’s service instead of consuming pirated entertainment content. Considering this competitive landscape, changes in AWS policies and strategies can threaten the stability of Netflix’s cloud computing infrastructure and online services. The threats in this SWOT analysis are beyond the company’s control, although strengthening competitive advantages can protect the integrity and profitability of the online business.

Netflix SWOT Analysis – Recommendations

The internal and external factors in this SWOT analysis of Netflix indicate a business situation where the company can grow with cautious strategic implementation. While the company’s competitive advantages can promote further growth, strategic prioritization for content production, product development, and business diversification can address the weaknesses, opportunities, and threats considered in this SWOT analysis. Netflix’s strengths and competitive advantages can support this strategic prioritization and corresponding adjustments in its operations.

• Jang, M., Kim, D., & Baek, H. (2023). How do global audiences of TV shows take shape? Evidence from Netflix. Applied Economics Letters, 30 (3), 285-291.
• Netflix, Inc. – Form 10-K .
• Netflix, Inc. – Long-Term View .
• Netflix, Inc. – Top Investor Questions .
• Taherdoost, H., & Madanchian, M. (2021). Determination of business strategies using SWOT analysis; Planning and managing the organizational resources to enhance growth and profitability. Macro Management & Public Policies, 3 (1), 19-22.
• U.S. Department of Commerce – International Trade Administration – Media and Entertainment Industry .
• van Es, K. (2023). Netflix & big data: The strategic ambivalence of an entertainment company. Television & New Media, 24 (6), 656-672.
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Table of Contents

Netflix target audience , what are the key principles of netflix marketing, marketing strategy of netflix, digital marketing strategy of netflix, 5 key takeaways from netflix marketing approach, conclusion , a case study on netflix marketing strategy.

Netflix was founded in 1997, offering online movie rentals with less than 1000 titles. Soon, it switched to the subscriber-based model, and in 2000 Netflix introduced a personalized movie recommendation system. By 2005 Netflix had over 4.2 million subscribers and started work on a video recommendation algorithm. And finally, in 2007, Netflix began its streaming services and original content creation. By 2016 Netflix had over 50 million subscribers; the story continues today as it is a worldwide presence in the video-on-demand industry. 

Become a Certified Marketing Expert in 8 Months

Netflix marketing strategy is undoubtedly a guide for digital marketers worldwide. It is a learning experience to know how this digital media streaming company outperformed all others in the market. 

Netflix's target market is young, tech-savvy users and anyone with digital connectivity. The audience of Netflix is from diverse age groups and demographics. 

However, most of the audience are teenagers, college-goers, entrepreneurs, working professionals, etc. Netflix aggressively works on content expansion and personalization to expand the user base. They separate the kids' and adults' audiences based on their maturity levels. 

Netflix is a fantastic example of an integrating marketing strategy . It is integrated, agile, and customer-driven to make the maximum impact. Netflix follows a customer-centric model to deliver a seamless experience. The platform follows integrated marketing for effective targeting and makes the best use of content marketing for data analytics. 

• Customer-centricity: Netflix focuses on creating a solid connection with its customers by engaging them personally and personalizing their viewing experience. They also use clever marketing tactics to get people to watch their shows.
• Integrated viewing experience: Multi-device and up-to-date no matter where you view it from, makes the experience combined.
• Innovation: Modern marketers must use data analytics to create experiences that delight consumers. Netflix uses customer data analytics to get content recommendations because it knows which movies its customers like to watch. For example, if a Netflix user likes Rocky, it will also offer them sports documentaries. As you manage your business, you, too, need to use data analytics for effective marketing and website optimization.  

Netflix uses data-driven and customer-centric marketing strategies that work in the digital age. Netflix's success relies on constant analysis and optimization, so you can use these tools for marketing your business online.

Netflix's marketing strategy is a surefire example of innovation and modern-day technology growth. The platform has been eager to bring the changes per market need or user demand. The evolution of the marketing tactics from time to time is one of the core reasons behind its success. 

Netflix proves that a brand can connect with customers easily through regular analysis and optimization. Simply put, Netflix's advertising strategy is full of agility, data-collection, user-centricity, personalization, and dedication. Major and minor brands can follow such a strategy and boost brand exposure and market value. 

Let's walk through 5 effective strategies of Netflix's advertising strategy that led them to the most disruptive business model. 

1. Use Personalized Content

Netflix is an excellent example of how personalized content can improve user satisfaction. Netflix knows what TV shows and movies its users like to watch. It uses this information to create customized recommendations for them. This allows them to find the content they enjoy without searching through many lists. It also ensures that users are always getting the latest and greatest content. This level of personalization is critical for online users because it enhances their experience and makes them more likely to return to a site in the future. 

2. Ensure Multi-mode Experience

Starting with a DVD service, Netflix's journey has been successful because of its multi-device strategy. You can open Netflix on TV, computer, smartphone, and tablet with seamless content continuity being watched. The company shows zero restriction in meeting the customers wherever required. Netflix follows both online and offline promotion strategies to boost user engagement. Be it any medium; their marketing strategy remains aligned wherever it can work. 

3. Blend Technology With Marketing Tactic

You wouldn't find two Netflix accounts with the same interface or suggestions. The recommendation shows order is as per user activity and ever-changing. They change the artwork frequently to add a sense of newness. Netflix puts modern-day technology to good use. The platform keeps on having new features to gain maximum engagement. Machine learning is a proven technology trend to transform marketing research to the next level. The blend of ML into advertising is what helps Netflix Marketing Strategy. 

4. Target Emails Like Any Other Marketing Channel

It is wrong to say or consider that email marketing is dead. Netflix is one solid example of a company making the most out of email marketing. They are one step ahead and pairing the email campaigns with machine learning systems. It helps gather more user data and preferences—further, the data segments into multiple user groups for precise and effective customer targeting. So, email marketing can introduce Netflix to new users and show relevant recommendations to the old users. One essential tip from Netflix email marketing is to be creative and take risks. Those old boring emails wouldn't help get such an impact as Netflix today. 

5. Create a Buzz With Better Interactions

Netflix has used the best content marketing strategy in the last decade. The company thinks of an out-of-the-box way to grab quick attention from users. They are bringing standalone products and unmatched experiences. On top of everything, the platform has a seamless communication channel to boost momentary awareness and recognition. The platform allows the audience to be involved in the story and make decisions. This unpredictable move is a proven game-changer for revolutionizing future television. The incomparable buzz in the platform keeps the user stuck to binge-watching. The users feel high engagement in the hopes of finding a happy ending. 

Hence, Netflix happens to be a unique example and inspiration for many fellow companies. They have done a commendable job in content, branding, business model, and product. Netflix marketing strategy has a lot to offer to market enthusiasts and students.

Learn about such integrated marketing strategies with Simplilearn's PGP Digital Marketing Certification Program . You will be taught by Facebook and Purdue University experts, providing a holistic learning experience. Sign-up now and make yourself - job ready! 

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The Power of Digitalization: The Netflix Story

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• First Online: 18 May 2020
• Cite this conference paper

• Manuel Au-Yong-Oliveira 20 , 21 ,
• Miguel Marinheiro 20 &
• João A. Costa Tavares 20  

Part of the book series: Advances in Intelligent Systems and Computing ((AISC,volume 1161))

Included in the following conference series:

• World Conference on Information Systems and Technologies

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The evolution of technology, and mainly the evolution of the Internet, has improved the way business is done. Nowadays, most services are offered through a website or through an app, as it is much more convenient and suitable for the customer. This business transformation made it possible to get a faster and cheaper service, and companies had to adapt to the change, in order to fulfill customers’ requirements. In this context, this paper relates to this digital transformation, focusing on a case study about Netflix, a former DVD rental company and currently an online streaming leader. We aimed to understand Netflix’s behavior alongside this digital wave. Thus, we performed a survey, which had 74 answers, mainly from Portugal, but also from Spain, Belgium, Italy, Turkey, Georgia and Malaysia. Of the people who answered the survey, 90.1% were stream consumers, but only 59.1% had premium TV channels. From those 90.1%, 58.3% also said that they watched streams between two and four times per week, but the majority of premium TV channel subscribers (63.8%) replied that they watch TV less than twice in a week. We see a trend in which the traditional TV industry is in decline and streaming as a service has increased in popularity. Consumer habits are changing, and people are getting used to the digitalization era. Netflix is also confirmed in our survey as the market leader of the entertainment distribution business, as stated in the literature, and the biggest strength of this platform is its content.

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Manuel Au-Yong-Oliveira, Miguel Marinheiro & João A. Costa Tavares

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Au-Yong-Oliveira, M., Marinheiro, M., Costa Tavares, J.A. (2020). The Power of Digitalization: The Netflix Story. In: Rocha, Á., Adeli, H., Reis, L., Costanzo, S., Orovic, I., Moreira, F. (eds) Trends and Innovations in Information Systems and Technologies. WorldCIST 2020. Advances in Intelligent Systems and Computing, vol 1161. Springer, Cham. https://doi.org/10.1007/978-3-030-45697-9_57

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Published : 18 May 2020

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