Case Study on Netflix (Business Analysis)

Netflix is an Online Streaming Platform for Movies and TV Shows founded in 1997 by Reed
Hastings and Marc Randolph in California, USA. With access in more than 190 countries
worldwide, a net worth of greater than $100 Billion, and over 117 Million Subscribers, it has
truly become a massive task to compete against it. Netflix Inc falls under the bracket of
Oligopoly companies which is where there are very few companies in the industry and it is
very difficult to enter it. However, Netflix does have 2 competitors in the market, namely,
Hulu and Amazon Prime, which have slightly differed goals.
With the wide variety of TV Shows and Movies Netflix offer, they use analytics to provide
every user with a unique experience. For example, Netflix has identified more than 75,000
micro-genres to help their user search more accurately, improving the satisfaction of
customers. However, with such intensive analytics, a price must be paid. As it is the largest
company of an Oligopolistic market, Netflix has the liberty to command the price within the
market. Considering Netflix’s pricing strategy, since 2011, they have very carefully analyzed
the market and introduced 3 tiers benefiting both, the customers as well as the company
itself. These are the Basic Plan (€7.99/Month), Standard Plan (€10.99/Month) and the
Premium Plan (€13.99/Month). Each has its own benefits considering one’s financial situation,
video clarity, number of screens, downloadable option etc.
Netflix does not only apply analytics to what the customers want, in fact, they focus on the
employees as well. For example, they analyze how effective they work, how they can make
decision independently for the company and how well they exchange information with their
peers.
Furthermore, Netflix adheres to a very unique marketing strategy which massively involves
analytics. This intelligent technique is monitoring illegal Torrent downloading sites. Based on
the most popular downloaded content, they conclude what customers really want. This
content along with the ‘Netflix Originals’, word of mouth has also accelerated the growth of
Netflix. Apart from this, Netflix also relies on the emotions of their customers. With the
analytical algorithms of recommendations of what one can watch after they finish watching
a Movie or a TV Show, it is very easy for customers to attract customers by playing with their
subconscious.
Ultimately, Netflix’s successful implementation of analytics is shown by its share prices,
market capitalization and market share. With an unforeseen growth of its share price in the
stock market from around $8.00 in 2010 to around $560.00 currently (2021), market
capitalization of approx. $2.8 Billion to approx. $250 Billion and a market share of approx.
30% worldwide, it signifies the importance of Analytics for businesses.
Reference: UKEssays. (November 2018). Netflix Business Strategy Analysis. Retrieved from
https://www.ukessays.com/essays/international-business/netflix-share-price-analysis.php?vref=1