From a DVD rental site to a streaming giant, in just two decades, Netflix has become a multi-billion-dollar company. It has ballooned to $245 billionin market value, eclipsing media conglomerate Disney which has been in the business for 96 years.
The exponential growth of Netflix can be attributed to one thing, and that’s the company’s penchant for innovation. Because of its radical ideas, ever-changing business model, and groundbreaking techniques, Netflix is now one of the most successful companies in the world. This article explores the ingenious business strategies employed by this powerful streaming platform:
It Keeps an Ear to the Ground
Netflix was born out of the need to offer solutions to a market that was tired of driving to video rental stores to catch a good movie. In April 1998, software engineers Reed Hastings and Marc Rudolph launched Netflix for the sole purpose of making DVD rental more convenient to people. The company spearheaded the concept of renting DVDs through snail mail. This easy customer onboarding process made it easy for Netflix to gain customers. People didn’t have to swing by local rental stores to browse video content. They only had to choose from Netflix’s online catalog and have it delivered at their doorstep. The company simplified home entertainment to a market that didn’t know needed it. And that made all the difference.
It’s Always One Step Ahead
Netflix is always evolving. The company is known for constantly changing its business model. From being a DVD rental site, Netflix transitioned to a subscription model. It pioneered the concept of subscription service, where customers could have unlimited access to DVDs for a fixed monthly price. Nobody else was doing it back in the ‘90s, but despite being a foreign concept, the market sank their teeth into it. The company amassed 240,000 subscribers in 1999 and swelled to 1 million in 2003. It didn’t take long for Netflix’s competitors to follow in their footsteps.
However, by that time, Netflix was already poised to become an online streaming service. In 2007, the company shocked the world when it finally rebranded itself into an online streaming site. Netflix was one of the first companies to offer access to television series and movies through users’ personal computers. Netflix was never really afraid to make leaps into the unknown. As early as the 2000s, the company sensed the rise of technology and adjusted their business model to fit perfectly into that mold. If they hadn’t foreseen that trend, perhaps they wouldn’t be where they are now.
It Adjusts to the Times
When Netflix refashioned itself into an online streaming service, it cashed in on the growing popularity of smart television screens in the United States. Because of integrating itself on LCD TVs, Netflix became accessible to watch on the small screens, not only on personal computers. It was slowly invading households, becoming one of the most convenient sources of entertainment. By riding on the fame of new technology, Netflix became an essential service to American families.
Aside from that, the company had a knack for timing. The company chose the right time to shift into a streaming site because, in 2008, the world was on the brink of recession. But that dip in the economy didn’t affect Netflix one bit; it even made it stronger. Netflix became the go-to source of home entertainment as it was way cheaper than cinema or cable. Because of its modest pricing, more people subscribed to Netflix as their primary platform for amazing content. That demonstrates that a business has to know how to adjust your services and policies according to the economic climate.
It Makes Data-Driven Decisions
Netflix’s power lies in its ability to reinvent itself constantly. In 2013, the company wowed the world when it launched its first original programming lineup. It released House of Cards, a television show with a star-studded ensemble. But Netflix didn’t just come up with an idea and decided to invest millions to create this critically acclaimed political drama series. Before they even made a gamble, the company already knew what the people exactly wanted.
Netflix made use of algorithms to understand the preferences of its market. Initially, they measured customer feedback through a basic rating system. Later on, they improved their algorithm to gauge customer satisfaction accurately and understand customer preference. So, before they even launched the original lineup of their content, they already knew it was going to be a huge hit. The success of House of Cards paved the way for other series such as Orange Is the New Black, Narcos, Stranger Things, The Crown, and so on. Netflix showed that if your decisions are purely data-driven, you can turn anything into a goldmine.
It’s a Trendsetter
Netflix started the concept of “binge-watching.” When people were so accustomed to TV networks dropping episodes on a weekly interval, Netflix swooped in and changed the game. It spearheaded the concept of dropping complete seasons of TV series on its site, so people can finish it in just one sitting. Users were given the liberty to choose the kind of program they wanted and how long they wanted to watch it. They had full reign on their viewing experience, unlike when watching via the cable networks.
Aside from that, Netflix provided more options for users, from full-length movies to TV series to special documentaries. The platform also offered access to content as old as two decades ago, so people were able to watch television classics without scouring the internet for copies. Netflix boasted old catalogs as well as recent content that users took pleasure in. The variety of video content was one of the catalysts of Netflix’s success. There’s no need to get up from the couch because everything’s just on one screen.
Netflix’s ability to understand its market, maximize technology, and launch groundbreaking ideas is what made it a multi-billion-dollar company. Netflix is one of the few global brands that know that part of success is innovation.