Lisa Guernec Netflix Case study

7.1. What are the challenges faced by Netflix in every region? Which modes of entry is
Netflix
using? Advantages/ disadvantages

In each region Netflix faces challenges called in the case study “liability of foreignness’ it
refers to their capacity to adapt to the language of the region, the consumer preferences:
adapting content to suit the local preferences, the competition of local streaming services,
technological barriers as streaming requires high speed internet and regulations of every
region, like censorship laws mentioned for Saudi Arabia or Singapore.

Netflix is using partnerships to enter different market: it collaborates with local telecom
companies such Telefonica in Spain or BBC in the UK to enter distribution channels. It
collaborates in both the distribution of its service but also in the creation of the content. In
order to adapt to the local market Netflix uses the mode of entry of Foreign Direct Invest to
fund foreign production to produce original content locally adapted for Netflix Originals.

The advantages of those entering modes are the technological expertise and the trust from
the partnership of brand with a global recognition. As it is mentioned in the case, at the
beginning people could feel a bit mistrustful putting their credit card information online and
being charged online each month for a service of a digital provider. Partnering with internet
providers, media houses like BBC allowed Netflix to earn the trust of the consumers.
Creating its own original content but with a local touch can be both and advantage and a
disadvantage for Netflix. Having a diversified catalog is great but the company has to make
sure it does not make mistake in terms of cultural sensitivity. By entering the market on its
own and not by buying local competition Netflix can be in some countries facing a risk of
intense competition which can also be perceived as a disadvantage.

7.2. Would you say that the internationalization process of Netflix is sequential or
exponential?
Even though there seems to have been some steps in Netflix internationalization process,
starting with Canada’s similar market behaviors and then going to Latin America and
Caribbean’s islands, this process, in my opinion, is an exponential one. In less than 15 years
Netflix has gone from a US based company to a company which is present in 190 countries.
The company has focused on simultaneous entries into various regions like Europe, Asia,
Australia.

7.3. What do you think is the role of digital technology in the internationalization of Netflix?

Digitalization was the key of Netflix internationalization. More than digital technology I
would say that the rise of globalization was the key of their success. Due to the
connectiveness of our current world, digital platforms like Netflix enjoys the interactions of
viewer all other the world watching the same content in different languages and being able
to discuss that content through their digital devices on social media platforms.
As it is mentioned in the case study, Netflix algorithms and more generally business analytics
being able to be deployed worldwide allowed Netflix to have deep insights on how to
internationalize into which country.
7.4. What do you think are the challenges of Netflix in the years to come?

In my opinion Netflix main challenges in the years to come, and that we’re already started
seeing is the fierce competition. Nowadays there is a multiplication of streaming platforms
being offered by media channels (HBO), movie production company (WarnerTV), technology
companies (Apple TV+), we have reached market saturation. This is creating a multitude of
offers which is spreading consumers and making it harder for Netflix to acquire new
subscribers and to retain the one they have.
Lastly as there has been different type of regulations put in place in different country we
could mention 2 that are challenging for Netflix. France is pushing for people to return to the
cinemas after Covid-19, preventing streaming platforms to display the movies on their
platforms later than they used to be able to. In the USA, there has been strikes going in
Hollywood for the actors, the writers, producers to ask for a participation in the streaming
benefits. Those strikes delayed some movies for at least a year and lasted more than a
hundred days making it a challenge for Netflix in the years to come.