Environmental Analysis

SM I| Netflix | Group (No.)

 Online subscription based media and entertainment streaming platform
 Mainly PAAS, recently started producing its own original/ exclusive content
 Business Model: Driven by renewal rate of subscriptions and cash burn approach
 Takes cloud services from AWS, doesn’t have its own.
Analysis Factors
 Demographic & Global Factors
 Sociocultural Factors
 Political/ legal Factors
 Technological Factors
 Economic Factors
 Growth Factors
Demographic and Global Factors
 Started with the US, Netflix is now available in 190 countries.
 40% of the Netflix subscribers are from the domestic market, out of this, 23% of the US
Adults and 37% of Teens Watch Netflix Daily.
 Acc to the 2018 statistics, 77% of VoD users subscribed to the streaming service in the
first quarter.
 The other 60% of the users come from the global market. The exact amount of Netflix’s
total viewership is estimated at over 300 million globally.
 50% users who are over the age of 35, meaning that majorly Netflix enjoys the support
of the younger generation like teenagers and millennials.
 Netflix is Predicted to be in 114 Million Households by the end of 2020.
Demographic and Global Factors
 Started with the US, Netflix is now available in 190
countries.
 40% of the Netflix subscribers are from the domestic
market, out of this, 23% of the US Adults and 37% of
Teens Watch Netflix Daily.
 Acc to the 2018 statistics, 77% of VoD users
subscribed to the streaming service in the first
quarter.
 The other 60% of the users come from the global
market. The exact amount of Netflix’s total viewership
is estimated at over 300 million globally.
 50% users who are over the age of 35, meaning that
majorly Netflix enjoys the support of the younger
generation like teenagers and millennials.
 Netflix is Predicted to be in 114 Million Households by
the end of 2020.
Sociocultural Factors
 Amidst lockdown, online streaming platforms are the preferred way to
consume media and entertainment
 With keeping in mind the class structure, hierarchy, and power structure in
society, Netflix has an overall approach to the content selection
 The content is shown according to the consumer’s behavior, skill levels,
environmental consciousness, social stigmas of the population in that region
 Social trends suggest that millennials like to consume media from a much
smaller screen than huge TV’s creating a dip in the Cable operation business
Political/ Legal Factors
 Strict laws imposed by the US government regarding data collection
and other practices.
 European Union took a strict stance against technology brands
indulging in targeting users through their marketing campaigns.
 The protection of intellectual property cannot be compromised.
 EU government charging heavy taxes around 26% on Netflix.
Technological Factors
 The maintenance of web applications is vital.
 Technological awareness has pushed its boundaries in recent times.
 Within 'Netflix Labs', the company has patented a new technology
allowing for better compression of 4K signal.
 New software codenamed 'Hermes' developed in Netflix's R&D Labs is
capable of automatically grading a translation for the content.
Economic Factors
 The international economic growth rate has fallen but the development
of the online media & entertainment industry is certain amidst the
digitalization era.
 The inflation rate and interest rates have increased
 The production rates have increased and are also turned into
competitors
 With over 182 million subscribers accessing their service globally,
Netflix had 15.1 Million subscribers in Q1, 2020 due to the imposed
lockdown earning 5.77 USD billion
Growth Factors
 Gradually It should plan to have its own data centers
 Low-cost, mobile plans in Southeast Asia
 With the emergence of multiple new streaming platforms, Netflix may
need to add a lower-cost tier better compete with the likes of Disney
and Apple, which are $7 and $5 per month respectively