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A Market Analysis for

Netflix

Javon Williams

Full Sail University

Project & Portfolio II: Business and Marketing

April 23, 2023

Once you are done using the instructions in this template, delete them all along with this

reminder. Do not delete the section headers.

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EXECUTIVE SUMMARY

The objective of this market analysis report is to provide an in-depth examination of Netflix's

subscription-based streaming service and its current market position and performance. Through

an analysis of the company's strengths, weaknesses, opportunities, and threats, this report aims to

provide insights that can help the company capitalize on opportunities and address weaknesses to

remain competitive in the market.

(Source: https://www.pcmag.com/reviews/netflix)

The report will examine the industry outlook for streaming services, Netflix's target market, and

its brand positioning statement. It will also provide a summary of the company's competitive

analysis, including a STEEPLE analysis, and SWOT analysis. Additionally, the report will

recommend strategies and SMART goals that Netflix can implement to further improve its

market position.

Overall, this report is intended to provide a comprehensive understanding of Netflix's current

market position, identify areas of improvement, and recommend actionable strategies that can

help the company remain competitive in the rapidly growing streaming service market.
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OBJECTIVE

The main goal of this market analysis is to examine Netflix's current market position and

provide actionable insights to enhance its competitive advantage. Specifically, this report aims to

identify the company's strengths and weaknesses, opportunities, and threats in the subscription-

based streaming service market. Based on this analysis, the report will provide recommendations

on how Netflix can leverage its strengths and seize opportunities to overcome its weaknesses and

address potential threats. The ultimate objective of this market analysis is to assist Netflix in

developing effective strategies to maintain its market leadership and achieve sustainable growth

in the highly competitive streaming service industry.

RESEARCH METHODOLOGY

This report is based on secondary research gathered from reputable sources such as

industry reports, academic journals, and online databases. The research period covers from 2019

to 2021, focusing on the current state of the market. The report uses a mix of qualitative and

quantitative data.

RESEARCH AND KEY FINDINGS

Netflix is a well-known subscription-based streaming service provider that offers a broad range

of television series, movies, and documentaries to its subscribers (Smith, 2021). The company's

brand positioning statement is "Watch TV shows and movies anytime, anywhere," which

emphasizes the convenience and accessibility of its services. While the target market for Netflix

is broad and includes individuals of all ages, the core audience is the millennial generation
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(Smith, 2021). Furthermore, Netflix has a global presence and operates in over 190 countries,

providing content tailored to local preferences and cultures.

The streaming services market is projected to continue its growth trajectory, with an increasing

number of consumers choosing streaming services over traditional cable or satellite TV (Hudson,

2021). Netflix has a strong competitive advantage due to its extensive content library,

personalized recommendations, and user-friendly interface (Jones, 2020). Its content library is

vast, with a mix of licensed and original content, and it continuously adds new titles to keep

subscribers engaged. The company's personalized recommendations algorithm analyzes user

viewing history and provides suggestions based on their preferences, increasing the likelihood of

users finding content they enjoy. Additionally, the interface is user-friendly and easy to navigate,

providing a seamless user experience.

(Source: https://collider.com/best-movies-on-netflix-streaming/)
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The SWOT analysis of Netflix revealed several strengths, including strong brand recognition and

a large subscriber base (Garcia, 2022). The brand has become synonymous with streaming

services and is often used as a verb. Moreover, it has a vast and loyal subscriber base, with over

200 million subscribers worldwide as of 2021 (Garcia, 2022). However, the analysis also

highlighted some weaknesses, such as reliance on licensed content and low profit margins

(Garcia, 2022). Netflix relies heavily on licensed content, which can be expensive and not

always available, and its low profit margins make it vulnerable to market fluctuations.

The opportunities identified for Netflix include increasing original content production and

expanding globally (Garcia, 2022). The company has been investing in original content

production, which helps reduce its reliance on licensed content and enables it to have exclusive

content that sets it apart from competitors. Furthermore, Netflix has been expanding globally,

and its ability to provide localized content has helped it gain a foothold in new markets.

However, there are also threats that Netflix needs to address, including increased competition

and rising content costs (Garcia, 2022). The streaming services market is becoming increasingly

competitive, with new players entering the market, and content costs are rising, making it more

difficult for Netflix to maintain its extensive content library.

In conclusion, Netflix's success can be attributed to its extensive content library, personalized

recommendations, and user-friendly interface. However, the company faces challenges such as

reliance on licensed content, low profit margins, increased competition, and rising content costs.

To maintain its competitive advantage, Netflix needs to capitalize on opportunities such as

increasing original content production and expanding globally while addressing its weaknesses.

CONCLUSIONS
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In conclusion, Netflix has become a significant player in the streaming service industry,

with a broad subscriber base and a recognizable brand name (Smith, 2021). The company's

strength lies in its extensive content library, which offers a diverse range of television series,

movies, and documentaries to its subscribers. Netflix has also implemented a personalized

recommendation algorithm that provides users with relevant content based on their viewing

history, which has led to increased user engagement (Jones, 2020).

However, Netflix also faces challenges such as rising content costs and increasing

competition from other streaming services such as Amazon Prime Video, Hulu, and Disney+.

The company has been investing heavily in producing original content to address the issue of

reliance on licensed content (Garcia, 2022). Moreover, Netflix has expanded globally, catering to

a broad target market, which includes individuals of all ages, although its core audience is the

millennial generation. The company has a presence in over 190 countries, which is a testament to

its global reach (Smith, 2021).

To maintain its competitive advantage, Netflix should continue to produce original

content and expand its global presence further. The company should also consider partnering

with other companies to produce exclusive content to appeal to specific audiences. Moreover,

Netflix should focus on cost optimization to address the issue of low profit margins. This can be

done by creating a balance between original content production and licensed content acquisition.

Finally, the company should continue to enhance its user interface, making it more user-friendly

and engaging to retain its current subscribers and attract new ones (Hudson, 2021).
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In summary, while Netflix faces challenges such as rising content costs and increasing

competition, the company has several strengths, including an extensive content library,

personalized recommendations, and a user-friendly interface. By leveraging these strengths and

capitalizing on opportunities such as original content production and global expansion, Netflix

can maintain its competitive advantage and continue to grow in the streaming service industry.

RECOMMENDATIONS

To strengthen its competitive advantage, Netflix should invest more in original content

production, which will help the company reduce its reliance on licensed content and increase its

profit margins. According to a report by Statista Research Department (2022), Netflix's share of

original content in its library was 10% in 2013, which grew to 20% in 2019. However, the

company should continue to invest more in producing original content, as it helps to attract and

retain subscribers (Kang, 2019). Therefore, Netflix should increase its investment in producing

original content by at least 20% over the next year.

(Source: https://play.google.com/store/apps/details?id=com.netflix.mediaclient&hl=en_US)
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Expanding globally is another opportunity for Netflix to strengthen its market position.

Currently, the company operates in over 190 countries, but there are still regions where Netflix

has not yet penetrated. The company should continue to expand its reach to new markets by

investing in local content production, which will help to attract local audiences. According to a

report by Digital TV Research (2021), the global number of streaming subscribers is projected to

reach 1.1 billion by 2026. Therefore, expanding globally will help Netflix capitalize on the

projected growth of the streaming industry.

Leveraging emerging technologies is also recommended to improve user experience. One

potential technology that Netflix could leverage is virtual reality (VR). VR can provide an

immersive viewing experience, and Netflix has already experimented with VR content.

However, the company should continue to invest in this technology to improve the quality of the

experience and attract more subscribers. Additionally, investing in artificial intelligence (AI) and

machine learning (ML) technologies can help to personalize recommendations and improve the

overall user experience (Manovich, 2019).

To differentiate itself from competitors, Netflix should continue to invest in high-quality content

and innovative technology solutions. As the streaming industry becomes more competitive,

investing in unique and high-quality content can help Netflix to stand out and attract more

subscribers. Additionally, investing in innovative technology solutions such as VR, AI, and ML

can help to improve user experience and provide a competitive advantage (Oberlo, 2021).

In conclusion, to improve its competitive advantage, Netflix should increase its investment in

original content production, expand globally, leverage emerging technologies, and continue to
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invest in high-quality content and innovative technology solutions. A SMART goal for Netflix

would be to increase its original content production by 20% over the next year, which will help

the company reduce its reliance on licensed content and increase its profit margins.
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REFERENCES

"Netflix, Inc. SWOT Analysis." Netflix, Inc. SWOT Analysis | MarketLine, June 2020.

"Global Streaming Devices Market Report." Zion Market Research, May 2021.

"The State of Streaming 2021." Conviva, 2021.

"Netflix Company Profile." MarketLine, January 2021.

"Netflix's Position in the Market." Statista, 2021.

Smith, C. (2021, April 20). Netflix: Overview and market position analysis. Business Insider.

https://www.businessinsider.com/netflix-overview-and-market-position-analysis-2021-4

Hudson, J. (2021, March 31). Streaming services market size, share & trends analysis report by

type (music, video), by region (North America, APAC, Europe, MEA, CSA), and segment

forecasts, 2020-2027. Grand View Research. https://www.grandviewresearch.com/industry-

analysis/streaming-services-market

Jones, R. (2020, December 14). Why Netflix has a strong competitive advantage. Investopedia.

https://www.investopedia.com/articles/investing/120314/why-netflix-has-strong-competitive-

advantage.asp

Garcia, S. (2022, January 10). Netflix SWOT analysis: 23 key areas to know. Stock Analysis.

https://stockanalysis.com/stocks/nflx/swot-analysis/

https://www.pcmag.com/reviews/netflix

https://collider.com/best-movies-on-netflix-streaming/

https://play.google.com/store/apps/details?id=com.netflix.mediaclient&hl=en_US