Netflix has become one of the world’s largest streaming services. The company isn’t only an over-the-top content platform. It also has an in-house production house that produces various films, documentaries, TV series, and much more. The company has its headquarters in Los Gatos, California. Founded in 1997 by Reed Hastings, the company has captured a majority portion of the US market. It also dominates some other markets.
Netflix Overview and History
Netflix started with its business model that included DVD sales and rental through the mail. However, the company abandoned that model to focus on the initial DVD rental business. Netflix expanded its business later in 2007. With this expansion, it introduced streaming media while still maintaining its initial business model. The company soon started offering its services around the globe.
Netflix operates a subscription-based streaming service or subscription business model that offers online streaming from a catalog of movies and TV series. The company has movies from in-house production or other production houses. The company reported a global paid user count of 195 million in the third quarter of 2020. Of these, 73 million come from the US.
The platform is available in almost all countries around the world, with a few exceptions. In January 2016, the company reported its operations in more than 190 countries. The company primarily operates from the US. However, it also has offices around the world, including England, Japan, France, India, South Korea, etc.
The company has been experiencing exponential growth in its revenues. In 2020, the company became the largest streaming capital in terms of market capitalization. Netflix generated revenues of $29.698 billion in 2021, which was a 19% increase from the $24.996 billion it made in 2020. The company has been experiencing growing revenues for over a decade.
The company also generated a net income of $5.116 billion in 2021. It increased by 85% from the $2.761 billion in net income that the company made in 2020. Overall, Netflix has been profitable for more than a decade. While the company has some down years in terms of profitability, it was still an overall net profit.
Netflix – At a Glance
Given below is Netflix’s company profile.
|Founder||Reed Hastings, Marc Randolph.|
|Chief Executive Officer (CEO)||Reed Hastings|
|Co-Chief Executive Officer||Ted Sarandos|
|Headquarters||Los Gatos, California, US|
|Type of corporation||Public|
|Revenues (2021)||$29.698 billion|
|Company valuation (approximate)||$250 billion|
|Key products/ services||Streaming media, video on demand, film production, film distribution, television production|
|Key competitors||Amazon Prime Video, Disney+, YouTube TV, HBO On Demand, Sony Crackle, and Apple TV+, etc.|
|Key subsidiaries||DVD Netflix (DVD.com), Netflix Animation, Netflix Pictures, Netflix Pte. Ltd., Netflix Services Germany GmbH, NetflixCS, Inc., Netflix Services UK Limited, Netflix Streaming Services International B.V., Netflix Streaming Services, Inc., Netflix Global, LLC, Netflix Studios, Netflix Entretenimento Brasil LTDA., Netflix Pty. Ltd., Egyptian Theatre, etc.|
Netflix SWOT Analysis
The Netflix SWOT analysis presents its strengths, weaknesses, opportunities, and threats. These are internal and external factors that play a significant role in the company’s success. An explanation of each of these and what they are for Netflix is as below.
In Netflix SWOT analysis, strengths are internal factors that allow a company to gain a competitive advantage over others.
Netflix is a household name in the USA and many other countries around the world. The company is one of the oldest and most popular brands in the online streaming market. Likewise, its brand name is what attracts a majority of customers to the platform. Netflix’s brand name has always contributed to its competitive advantage.
Compared to other online streaming platforms, Netflix has the largest collection of original and outside content. The company invests heavily in original content worldwide in different local languages. It is what allows the company to attract many users from around the globe. The company has also widened its range of content, allowing customers to get more for the price they pay.
Netflix’s customer base has always been one of its differentiating factors. The company racked up 195 million users worldwide in 2020, which is the highest for any online streaming platform. Its global presence and quality products have made the company a standard for all companies within the industry. The numbers are expected to grow even further.
Netflix was one of the original inventors of online streaming platforms. The company transitioned from a DVD rental model to an online streaming platform model, which has generated significant popularity. Similarly, the company also has a well-designed and easy-to-use online platform. Netflix also invests heavily in technology and development, which makes it difficult for its competitors to top.
In Netflix SWOT analysis, weaknesses are internal factors that hold back companies. These are also things that competitors do right, and a company doesn’t. For Netflix, these are as follows.
Netflix’s business model, while innovative, isn’t unique. The business model is imitable, which makes it difficult for Netflix to attract more customers. Various competitors follow the same business model, such as Amazon Prime Video or Disney+. Therefore, the company has lost its competitive advantage due to its easy-to-replicate business model.
While Netflix has produced a large amount of original content, it hasn’t always performed well. Netflix produces original content, but most customers don’t like that. There is some content that has done exceptionally well for the company. However, most of the other content has not been as successful. Most customers don’t like these contents, which makes it a weakness for the company.
For the content that Netflix doesn’t own, the company has limited copyrights. It means that when these expire, the content will go off the platform. While Netflix may renew some licenses, it may also decide not to for some others. The content may end up on competitor platforms, which will take the company’s customers with it.
Dependency on the North America market
Netflix heavily relies on the North American market for its revenues. Almost half of the company’s revenues come from the market. If the company does not generate money from the market, it will end up making a loss. The overdependence on this market makes the company lose some competitive edge to local competitors.
In Netflix SWOT analysis, opportunities represent external factors that can result in strengths for a company in the future. For Netflix, these are as follows.
Many online customers come from mobile devices. While Netflix already has a mobile platform in the form of the Netflix app for Apple and Android, the company can still improve it. The company has also been testing some cheaper variants of its streaming services on mobile devices. It is what can bring in more customers from developing countries.
Netflix is already available in almost every country around the world. However, it does not have original content for every language or country. The company can expand its content to cover every locality and language to attract even more customers. Netflix already has the resources to consolidate all the content under its platform. Therefore, it can benefit from expanding.
Netflix has a single plan for customers that want to view content. However, the company can offer more plans to benefit its customers. These customers are likely to view only specific content. Therefore, Netflix can break up its plans into several chunks to which buyers can subscribe. The price of each package can be relatively low. It can allow the company to increase its profits significantly.
The company has already adopted technological developments into its business model. However, it can improve on that to provide customers with even better services. The company can increase the technological features on its platforms to benefit customers. It is something the company can turn into a strength.
In Netflix SWOT analysis, threats are external factors that can harm a company’s prospects. These can adversely impact a company’s operations or result in weaknesses. For Netflix, these include the following.
Due to the high market profitability and easily imitable business model, the online streaming industry has a lot of competition. The competition can significantly impact Netflix’s profitability and steer customers away from the company’s platform. Various platforms such as HBO, Disney, or Amazon Prime Video, have already deterred Netflix’s popularity.
Piracy always has been and will continue to be, a significant threat to Netflix’s business model. The company has faced several piracy problems in the past and continues to do so. The content available on the platform is also available for free on illegal websites, making it difficult for the company to generate income.
Any company or platform that operates in the online marketspace has to face cybercrime threats. Netflix user accounts have faced hacking threats in the past, and the rate continually increases. If these problems persist in the future, customers may leave the platform for competitors. The company has to face these problems constantly.
Netflix is the world’s largest online streaming service. The company started as a DVD rental business model but moved to the online streaming market. Netflix has been innovative through its platform. The company has been highly profitable in the past and continues to experience increasing profitability. Netflix’s SWOT analysis provides more details about the company’s activities and operations, as given above.