Netflix

Survival Strategy

Before coming to a solution, we have to identify the problem that Netflix is facing. In my view, a rapid
expansion in terms of geographical territories rather than in terms of customers is one of the major
cause of loss. Now Netflix strategy is based on two things

 Content that other produced

 Content that they produced

Recently Netflix set budget of 17 billion dollars for original content due to rise in demand from different
areas where English is not the primary language. This puts Netflix from direct to consumer platform with
other entertainments giants such as Disney that spend 19.6 billion dollars in 2019, Comcast (15.9 billion
dollars) and AT&T (12.2 billion dollars).

The market-leading streaming service, which is already facing long-term debt of roughly $14.6 billion, is
expected to invest more than $17 billion into content this year, per forecasts from Wall Street firm BMO
Capital Markets provided to Variety. That number could spike to $26 billion by 2028, according to the
report. For comparison, the annual GDP of Vermont is roughly $34 billion.
As per statista, the quarterly revenue growth of Netflix is around 300-400 million dollars and with the
rising competition from Disney, HBO, amazon prime and other streaming services. The best survival
strategy for Netflix is to invest in their original content, which later on creates a large streaming library
for future customer and helps them in retaining them. The reason for the increase in revenue is because
of their high spending in different regions for content like india where they produced sacred games,
bard of blood or delhi crimes or in japan where they have created a lot of anime content for users in
that region. Currently, We are seeing a lot of original content in different languages that includes
German, French and spanish for their respective market with facility to hear it in English version as well.

According to statista, in the third quarter of 2019, Netflix had over 158 million paying streaming
subscribers worldwide as well as over 5.5 million free trial customers. Of these subscribers, 60.62 million
were from the United States.

Now the problem is that half of the customers are from USA whereas the remaining half is from rest of
the world. The solution to the problem is that Netflix has to focus more on the penetration in other
regions by creating awareness through advertisement channels like online channels such as social
platforms, entertainment websites etc or traditional approach like Out of Home or experiential activity
to promote their content and register their brand among the customer.

Netflix has to create regions where different language are spoken and the potential in it and what
language is spoken in there and use it in their original content in multi lingual like Hindi and English or
Spanish and English or French and English that will merge 2 communities to watch the show.

Netflix in 2019 has come up with a special episode “ Black Mirror - Bandersnatch” in which audience is
the writer where user were able to control the journey of the movie and with each decision you make in
a movie leads to a different ending. Such an innovation that engages and interact users is what audience
needs more.

Netflix can use this interactive film inspiration in the film industry and create an educational learning
cartoons or programs for kids. This is an untapped market for tv industry which Netflix can utilize for
their advantage as parents wants to give the best education to their kids. Through these programs and
courses, they will be able to tap a huge market and increase the sales and revenue. Through the kids
they will eventually tap into the parents and want becomes a need.

Obviously, in order to survive Netflix has to go through an extensive research. The research in each
markets for user preference in shows, their interest and their likes. We would suggest Netflix to engage
with local writers to create original content in their region. In addition, they should lookout for some
partnerships in each region with different producers to cover the cost and create a value deal for them
in return. Also they need to partner with other local film studios or production houses for exclusive
display rights. In addition to that, they can also look for an option that is comprised of pay per view
(based on time). This way they will be able to keep certain amount of the user subscription for the time
that he has paid for. For the production house, they will be able to reach around 170 million users in no
time.

In short, Netflix needs to continue spending more on their original content, add more multilingual series,
partnership with local film studios and production houses, include local writers for their original content
series in their respective region and start their own educational learning cartoons or programs for kids.