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A Market Analysis for

Netflix

Santa M. Maldonado

Full Sail University

Project & Portfolio II: Business and Marketing

May 29, 2022

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EXECUTIVE SUMMARY

This report provides an analysis and evaluation report to Netflix. It looks to analysts at

Netflix's current struggle with its financial profits, subscription loss, and cash burn content. The

results are not favorable because Netflix lost 200,000 subscriptions at the beginning of the first

quarter, and its stock fell 35%. The primary threat areas are inflation, consumers tightening

budgets, and increasing competition. The report includes recommendations on how Netflix saves

content spending, a different strategy in subscription prices, increases subscriptions, and moves

the brand forward in today's second act of stream wars.

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OBJECTIVE

The main reason for this report is to suggest a different strategy to Netflix's subscription

base that offers to customers that’s within their budgets. Another opportunity is to start slowing

down production and form a plan to start having a daily content schedule to save content

spending on Netflix financially.

RESEARCH METHODOLOGY

All the information gathered for this report is mostly external, secondary research from

the internet. Essential information has been found in March, April, and May of 2022.

RESEARCH AND KEY FINDINGS

This Photo by Unknown Author is licensed under CC BY

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Netflix is a successful stream service that has changed the technology over time and,

with its success, has created original content. Netflix has managed to produce and distribute

high-profile original shows, such as House of Cards and Orange Is the New Black, which has

brought Emmy awards to Netflix and

successfully paved the way for more

original content. Netflix's success with its

original content has challenged traditional

TV networks like HBO and CBS. In

2021, Netflix received over 129

nominations for its original content, triple

the nominations from the past previous

years.

Netflix became a dominant stream

service for 15 years with its continued

increase in membership to 222 million

subscribers in 2022.

Netflix's annual revenue in 2021

This Photo by Unknown Author is licensed under CC BY-NC
is 26.7 billion U.S. dollars. (Statista 2022)

According to Refinitiv Survey, Netflix's Net income fell 6.4%, down from $1.7 billion.

(CNBC 2022)
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The typical target market for Netflix is millennials between the ages of 18-34, with its

users mixed with men and women with an income of less than $50,000 with some or no college

degree. The target lives in the American suburbs.

One of the significant issues Netflix is facing

is global inflation, and it has affected the customer

budgets that have to start cutting subscriptions that no

longer need their budgets.

In the article, Study: Netflix Is Losing

Subscribers But Gaining Users. What Gives?

“In a separate piece of research conducted by

Attest, we found that 51.1% of Americans say they're

feeling the effect of inflation on their life to a high or

very high degree, while 36.6% are feeling it to a

moderate degree. People are having to cut back:

nearly half of Americans say they're pulling back on

non-essentials like clothes and meals out, while 34%

are cutting back on basics like food and fuel. This is

bound to translate into canceled subscriptions, so all platforms are at risk,” King says. (Para. 11)

With Netflix rising its price, customers are looking for low-cost stream service that offers

more content at a low cost within their budget. More competition that offers bundle deals,
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discounts, and live stream service at a low price is what attracts customers to the competition

stream services.

CONCLUSIONS

Even though Netflix has gained subscriptions during Paramedic lockdown, Netflix did

not have promised results at the beginning of 2022, with the loss of over 200,000 subscriptions

and stock falling 35%. From the conclusions, Netflix has increased its content spending,

particularly on originals, increasing its service prices. Cash-burning content is responsible for a

loss of 600,000 subscribers in the U.S. and Canada.

To combat this new challenge, Netflix needs to look at new opportunities for the

consumer.

RECOMMENDATIONS

Based on the research findings and conclusion, Netflix will need to create a daily

schedule for new original content. Netflix will need to move away from the binge model, which

causes early cancellation. Data from Antenna show that cancellations hit 3.6 million people in

the last quarter. (The Verge 2022)

The strategy is to help keep subscribers coming back each week to see new episodes and

not cancel their Subscription. It also helps slow down production cost spending and allows

productions to find scripts that will successfully reach audiences. This strategy gives original

content time to provide the audience to see new episodes and analyzes results for each successful

original content.
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In the Forbes article, Netflix Is Losing Subscribers Because Its Competition Is Cheaper

With Better Shows, Paul Tassi stated,

"Not that Netflix has no good shows, but you are paying for a whole lot of poor-quality

offerings in the general pool, whereas practically every single thing Apple is putting out these

days is solid, and it costs 25% as much as Netflix. So what are you paying for, really? "(Para. 11)

Instead of using the money for every new show, Netflix can focus on using the money to

produce more seasons to popularize the show. It would help gain more fans and subscribers for

content that’s put into growing seasons. Netflix could use the fanbase opportunity to create

merch for original content; it'll help bring revenue to Netflix with the merchandise sales.

Netflix plans to create a lower-cost ad base price for customers that’s looking for a lower

budget. Another recommendation to Netflix is to create a student discount for students. Netflix's

target market is millennials in college, Netflix's competition, Hulu, offers a student discount, and

Netflix is losing an opportunity to reach out to Netflix's target customers. Include an annual year

plan for customers. This allows customers to save money if given an option to pay either

monthly or yearly.

Netflix should look into live stream tv to help lower production cost and interact with

audiences by creating an unscripted live stream for game shows, reality tv, and comedy skits.
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This could create a new subscription plan for customers. The Netflix stream services plan

has only three plans that aren't interesting to customers. “People are not going to pay for

something they don’t see the value in.”(Bloomberg 2022)

Netflix could add a subscription in a bundle deal for Netflix games and Netflix Live.

Netflix will need to keep track of subscription switching plans or getting the bundle deal while

keeping track of merchandise bought.

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REFERENCES

Stoll, J. (2022 February 21). Netflix's annual revenue from 2002 to 2021.Statista.
https://www.statista.com/statistics/272545/annual-revenue-of-netflix/

Whitten, S. (2022 April 19). Netflix shares crater 25% after company reports it lost subscribers
for the first time in more than 10 years. CNBC.
https://www.cnbc.com/2022/04/19/netflix-nflx-earnings-q1-2022.html

Sherman, A. (2022 May 29). The first act of the streaming wars saga is over — Netflix’s fall
from grace has ushered in the pivotal second act. CNBC.
https://www.cnbc.com/2022/05/29/netflix-and-rivals-enter-pivotal-second-act-of-
streaming-wars-saga.html

Canales, K. (2021 September 18). Meet the average Netflix user, a Millennial woman without a
college degree living in the American suburbs earning less than $50,000 a
year. Businessinsider. https://www.businessinsider.com/typical-netflix-user-subscriber-
demographic-millennial-age-political-views-income-2021-9

Smith, M. (2022 April 20). Netflix Subscriber Woes Hint at U.S. Consumer Pushback on
Prices. Bloomberg. https://www.bloomberg.com/news/articles/2022-04-20/netflix-
subscriber-woes-hint-at-u-s-consumer-pushback-on-prices

Roth, E. (2022 May 18). Survey shows Netflix is losing more long-term subscribers. The
Verge.https://www.theverge.com/2022/5/18/23125424/netflix-losing-long-term-
subscribers-streaming

Fitzgerald, T. (2022 May 21). Study: Netflix Is Losing Subscribers But Gaining Users. What
Gives?. Forbes. https://www.forbes.com/sites/tonifitzgerald/2022/05/21/study-netflix-is-
losing-subscribers-but-gaining-users-what-gives/?sh=45c2ef6a240a

Tassi, P. (2022 April 20).Netflix Is Losing Subscribers Because Its Competition Is Cheaper With
Better Shows. Forbes. https://www.forbes.com/sites/paultassi/2022/04/20/netflix-is-
losing-subscribers-because-its-competition-is-cheaper-with-better-
shows/?sh=ab9336646197

Weiss, N. (2022, April 22). Old-fashioned stubbornness may have doomed Netflix, from sticking
with the binge model to early cancelations. Primetimer.
https://www.primetimer.com/item/Old-fashioned-stubbornness-may-have-doomed-
Netflix-from-sticking-with-the-binge-model-to-early-cancelations-RBSGxB
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