SWOT Analysis Of Netflix analyzes, having a basic introduction to the company is essential. As one of the top-rated streaming service providers, Netflix exceeds the count of 193 million paid customers. It is currently available in more than 190 countries and is deemed one of the most successful streaming platforms globally. It offers the customers a streaming service to enjoy films, documentaries, and original series without commercials. Netflix SWOT Analysis can teach us a lot about Netflix Business Model and other factors.
Did you know? Did you have the knowledge that Netflix was initially called Kibble?
With 167 million users around the globe, Netflix has grown tremendously throughout the years. It is among the most popular internet-based entertainment providers in the world with paid memberships available in more than 180 countries.
This can only be achieved through a firm with extensive knowledge, experience and innovative strategies. To determine the strengths of the company potential, weaknesses, opportunities and threats, it is necessary to conduct an SWOT analysis For Netflix.
Netflix At A Glance – Netflix SWOT Analysis
Company: Netflix Inc
Founders: Marc Randolph | Reed Hastings
Year of establishment: 29 August 1997, Scotts Valley, California
CEO: Marc Randolph | Reed Hastings
Headquarters: Los Gatos, California, United States
Employees (Dec 2020): 12,135
Ticker Symbol: NFLX
Type: Public
Annual Revenue (Dec 2020): USD$7.5 billion
Profit net income (Dec 2020): USD$2.76 billion
Products & Services: Streaming of e-games | Educational content | Live streams | News | Possibly even podcasts
Company Website: www.netflix.com
Netflix Competitors
Competitors: Disney+ | HBO Max | Paramount+ | Apple TV+ | Amazon Prime Video | Hulu
Netflix SWOT Analysis
SWOT Analysis Of Netflix analyzes the brand based on its strengths weak points, weaknesses, opportunities, and threats. With Netflix SWOT Analysis it is clear that the advantages and disadvantages are internal factors, while threats and opportunities are external elements. Here we are going to talk about Netflix SWOT Analysis. Below Is The Detailed SWOT Analysis Of Netflix.
Netflix Strengths – Netflix SWOT Analysis
1. Expansive Growth: Over the past 10 decades, Netflix has become an prominent brand for streaming content, not just across the US but around the globe.
2. Brand Reputation: Netflix has grown to the status of a global brand in just a few years. In the year 2019, Netflix was ranked at the #4 spot of top-rated firms in Forbes.
3. Global Customer Base: Global Customer Base Netflix serves more than 190 countries around the globe with a global user base. There are more than one hundred million users of Netflix and this provides the company with an enormous bargaining position with studios to secure exclusive content.
4. Originality: Another of its strengths is the fact that Netflix has been creating original content for years , with the best quality. Certain shows like Tiger King, Stranger things, Money Heist, Narcos, Mindhunter as well as Orange Is the New Black have become so popular that the subscribers kept growing during the course of the quarters.
5. Flexibility: The ability to adapt Netflix has adapted to different technologies quickly by offering streaming on all devices that are connected to the internet such as personal devices, tablets, computers mobile devices, televisions. This is why the company’s business has grown tremendously over time.
6. Customer-centric Service: Since a long time, customers have been looking for an alternative to stream Netflix content in the event of traveling (plane or subway) or a poor internet connection. This is why Netflix launched an option to downloading now (offline) function for users to stream their most-loved shows when they are on the go.
7. Affordable Pricing: The pricing strategy of Netflix has helped it gain a foothold over its rivals. The plans Netflix has created are reasonable and provide excellent value. Customers can enjoy unlimited movies on DVD or via streaming, for a reasonable price of $8.99 per month. It’s cheaper than watching cable as well as going to the movies and offers a wider variety of films. If you want a superior high-quality Ultra HD (4K+HDR) streaming subscribers can get the premium plan for $15.99 monthly.
8. Awards-Winning Shows: It’s not surprising that the appeal of Netflix’s original programming has increased.
Additionally, Netflix has been beating traditional TV network (HBO, NBC) in nominations. For 2020, Netflix is receiving more than 160 nominations at the Emmys in comparison to traditional television channels have received nominations like:
- HBO – Nominations for 107
- NBC 47 nominations
- ABC Nominations: 36
- FOX 33 nominations
- CBS 23 nominations
Netflix Weaknesses – Netflix SWOT Analysis
1. Limited Copyrights: Netflix does not hold the majority of its content which affects the company in a negative way. The rights acquired by other companies expire in a a few years, and the content is then made available on other websites.
2. Increased Debt: Netflix serves its diverse content to a variety of countries around the world , which demands massive amounts of cash. Netflix is constantly adding to its debt over time to fund new content. In April 2020, Netflix reported $14.17 billion in debt, and is planning to raise an additional $1 billion via a debt offering. The increasing amount of debt each year is a significant problem.
3. The absence of Green Initiatives: Netflix has so far not made use of renewable energy sources and hasn’t yet created an enterprise model that promotes sustainable development. However, technology companies such as Amazon, Google, Apple as well as Facebook has already started to use renewable energy in order to sustain the ecological balance. Four tech companies have pledged to using only renewable energy to run their businesses. The absence of green energy use is a negative influence on the image of brand Netflix.
4. Flexible Pricing: Customers expect personalized pricing that includes more options. The pricing model of Netflix is rigid, with just three tiers: basic, Standard as well as the Premium. The lack of alternatives has led to a slowdown in the growth of subscriptions that are new.
5. Dependence too heavily on North America Market: Even although Netflix operates worldwide however, it heavily depends in its North American market. The fiscal year of 2019, Netflix reported $10.05 Billion revenues coming from North America, which represents roughly 50 percent from its overall revenues ($20.15 Billion). This is a huge weakness as it is believed that the North American Market is nearing saturation.
6. Support shortfalls: The number of Netflix users as well as accounts with hacks was up in the beginning of the year of 2020 due to people being at home because of Pandemic. Then, Netflix reduced support hours. People were annoyed over the lack of customer service and were forced to wait longer in order to retrieve their accounts that were hacked.
7. Price Increases: Price Increases Netflix has increased its prices for subscriptions in addition to other streaming services for video, such as Disney+ ($6.99 per month) and Apple TV+($4.99 per month) have also launched their services with cheaper prices.
8. The rising operational costs: Adding more content provides Netflix an advantage in competition however the cost to support the content is always increasing. The cost of steaming of steaming was $14.61 Billion and the amount is higher than the previous year’s expenditure which was $12.04 Billion.
Netflix’s Opportunities – Netflix SWOT Analysis
1. Low-cost Mobile Streaming Option: Netflix may offer a less expensive option to draw and retain customers in the international market. Netflix has tested a lower-cost mobile-only service in India which costs just $3 per month. It is able to expand this less expensive option to other countries to compete effectively with less expensive alternatives such as Disney+, Apple+, Peacock and more.
2. Utilize the Ad-Based Model: To its fullest extent Utilize Ad-Based Model Google, Amazon, Facebook and a host of other service providers earn billions of dollars from advertising. Netflix could increase its revenues with the help of adopting an advertising-based model of business.
3. Expand Global Customer Base: With such a large existing subscriber base, Netflix can tap into several other countries and increase its offerings and customers. It is now able to begin targeting the countries where it’s currently not accessible. In the past, Netflix expanded its operations and added several more countries to its list of operations. But, it’s not available for China, Crimea, North Korea and Syria.
4. Refresh the library of content: It could expand its licensing of content through a broader range of contracts with different movie distributors. Furthermore, Netflix should refresh its library of content as it’s currently creating its own original content.
5. Alliances: It is also able to collaborate with a variety of telecom providers to offer bundles across different countries. Partnerships and alliances can prove beneficial to Netflix. It has been the case that Netflix was a partner in the past with Channel 4. It is able to form stronger alliances that include local radio stations.
6. Niche Marketing: Producing regional-specific content that is local to the region is another huge chance for Netflix. niche marketing has proven to be beneficial for Netflix. It has, for instance, launched an original television series called ‘ Sacred Games in India and Spanish show ‘ La Casa de Papel’ (Money Heist) that are huge success stories.
7. Offer a lower annual subscription: When Netflix launches new or updated content, customers will usually be able to pay for just one month and watch all their favorite shows in a brief time. Netflix has to cut off a large portion of revenue due to the fact that users are able to end their subscription after having completed all of the new content without penalties. Netflix can boost its profits by introducing annual subscriptions. year-long membership with discounts that attract monthly subscribers to switch to annual plans.
8. Help Black Educational Institutions: Netflix has pledged to donate 2 percent of its stock for the next few years to support Black communities, amounting to about $100 million. This is a great example of corporate social responsibility.
Netflix’s Threats – Netflix SWOT Analysis
1. Competitive Pressure: Competition Pressure Netflix isn’t the only company that offers streaming services online around the globe. Its competitors are growing each year. Disney+, Apple TV+, HBO, Amazon, Hulu, and YouTube compete continuously with Netflix by providing access to fresh and original content to their subscribers.
2. Government Regulations: Stringent government rules and regulations pertaining to companies like Netflix in a variety of countries could pose a serious threat to Netflix. For instance, Netflix expansion to China is unlikely because of its limitations on content from outside the country.
3. Piracy: Digital piracy remains at its highest with thousands of people across the globe find ways to download media content because of the cost of monthly subscriptions that they are unable to pay for. It’s a different risk that Netflix is facing.
4. Market Saturation: Netflix has added 420,000 U.S. subscribers in Q4 of 2019, which was lower than the 600,000 it had hoped for. In Canada the target was 218,000, however it added just 125,000 subscribers. In the third quarter of consecutive quarters, the North American subscribers’ growth been slowing due to the market getting to saturation. Netflix will have a difficult time to acquire new subscribers in the near future because of the market’s saturation.
5. The Account Hacking: Account Hacking – The amount of compromised Netflix accounts has increased dramatically between Q1 and Q2 of 2020 due to an increase in the number of users per day due to the lockdown. If the hacking continues in the near future, dissatisfied Netflix users may move in large numbers to other businesses.
6. Carbon Emission: According the study of Shift Project, digital technologies are more carbon-intensive that the aviation industry. The streaming of online video accounts for almost one percent of all global emissions. The emission of carbon dioxide is an important threat in this day and age when all countries are impacted by climate changes. Netflix can be able to limit Netflix’s use.
7. Government pressure due to capacity issues: Netflix users are increasing quickly and straining infrastructure resources and. In March of 2020 The European Union commissioner complained about the way that Netflix’s huge HD content had strained infrastructure and disrupted vital services like hospitals and defense. Netflix was requested to lower the amount of data available in video streams for European viewers for 30 days. They also urged viewers to stream the content in normal resolution in lieu of HD.
This is our SWOT report that Netflix has done. Please let us know if you have additional suggestions to add.
Netflix SWOT Analysis Template
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