Netflix also creates value by having one of the widest supported devices ranges, including game consoles, smart phones, tablets, PCs, and internet TVs. Finally, Netflix offers original and exclusive content to its subscribers.
1 By creating compelling original programming, analyzing its user data to serve subscribers better, and above all by letting people consume content in the ways they prefer, Netflix disrupted the television industry and forced cable companies to change the way they do business.
Netflix also creates value by riding larger macro trends in the entertainment business, specifically cord cutting. Consumers, unhappy with the high price point of traditional cable bundles, are willing to opt into a cheaper alternative like Netflix.
Flexibility. The biggest advantage Netflix is giving to its customers that they can watch any content with convenience. They can watch content on-demand and on any screen they want. Netflix is making sure to give smooth experiences with personalized tastes.
Netflix' key value propositions & unique selling proposition are based on providing engaging digital content (movies & TV shows) in convenient ways (TV, laptop, tablet, mobile phone) that can be consumed on-demand and that is not interrupted by ads.
As of 2023-07-26, the Intrinsic Value of Netflix Inc (NFLX) is 399.47 USD. This value is based on the model Discounted Cash Flows (Growth Exit 5Y). With the current market price of 422.67 USD, the upside of Netflix Inc is -5.5%. The range of the Intrinsic Value is 291.5 - 641.01 USD.
Netflix's Product Strategy Framework: DHM
Netflix uses a DHM framework. The company offers customers a very convenient service with a wide selection of movies and TV shows they can stream instantly anytime, anywhere. Customers can navigate Netflix's selection very easily, and they get a lot of value for their money.
In essence, Netflix's success is due to the brand's ability to evolve and the speed at which it does so. It's this ability to pivot that has enabled its marketing strategy to change and move away from long-held beliefs such as 'ad spending not resulting in more viewers'.
But how did they achieve this? Netflix's competitive advantage is having a first mover advantage, pricing power, and brand equity. It is one of the first companies to pioneer subscription streaming, can charge more than any of its rivals due to its quality content, and has brand strength that creates loyal customers.
Their well-known business model: subscribers enjoyed unlimited rentals, without the added worry of late fees or shipping & handling. Netflix quickly developed a reputation for revolutionizing the movie rental market. As a result, Netflix dominated the market and enjoyed minimal direct competition.
The massive streaming service employs mathematical predictions in their software to recommend things that a viewer will like after they've been watching over time. This method has also been one of the most integral customer retention strategies of the modern day.
With Netflix making it much easier to consume the content we want to watch, wherever and whenever, binge-watching has become the norm for modern society. For many of us, it is a type of escapism, distracting us from our everyday responsibilities and uncertain times by giving us the enjoyment of continual entertainment.
Their core USP has always remained the same: Deliver couch potatoes the best selection of TV shows and movies possible, in the most convenient way possible. Even though the company has changed dramatically, the USP has stayed the same.
What is Netflix's main innovation strategy? The Netflix innovation strategy focuses on maximizing its competitive advantage through its product and process innovations. The innovations are aimed at making the Netflix streaming service high quality and accessible for the majority of consumers.
Marketing Strategy of Netflix
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.
The United States is not only the place where Netflix got its start as a DVD rental service in 1997, but the country also remains Netflix's largest market now that the company has evolved into the most popular SVOD platform worldwide.
Netflix also introduced us to binge-watching. Before Netflix made all episodes of its shows available at once, people didn't tend to watch more than one episode a night. Now that they can watch as much or as little as they like, they often have no desire to stop watching a show until they've seen all of it.
According to Netflix, about 75% of its user activity is based on personalized recommendations. As soon as you finish watching a show or movie and go to browse, Netflix will have created a 'You may also like…. ' section where you'll find movies and series similar to the ones you've already seen.
Netflix, which ranked second overall in 2021, drops to fourth place this year (with 80%) behind Disney+ (88%) and Hulu (87%). Apple TV+ made the biggest gains in customer satisfaction in 2022, climbing 14 percentage points to 76%, jumping ahead of services like Prime Video, Peacock and Discovery+, per the study.
Having a first-mover advantage has certainly benefited the company. At first, Netflix was selling primarily a better user experience, allowing customers to watch what they wanted, whenever they wanted. This was better than the expensive and time-prohibitive nature of traditional cable TV.
Netflix is one of the current pioneers of subscription-based content. It runs on a Subscription Video on Demand (SVOD) model. Subscribers pay for a monthly plan and are given access to a vast library of media—any time, anywhere. Thus, subscriptions are Netflix's main source of revenue.
Netflix is a profitable company, which net profits were $5.1 billion in 2021. Growing from $2.7 billion in 2020. The company runs a negative cash flow business model, where it anticipates the costs of content development and licensing through the platform.