Netflix Strategic Analysis

Netflix Strategic Analysis Part 2
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Netflix Strategic Analysis Part 2
Recommended Strategies
One strategy that Netflix needs to consider and implement is building memories for its customer base. Over the years, Disney has maintained its position and fan base mainly because it focused on giving its fans memories or experiences that are not time-bound. Memories elevate the customers into fans, meaning they get to be a part of the organization. Netflix can consider the same approach and focus on building long-lasting memories for its customers. The implication of the above would be an increase in investment, especially in creativity and the products being released. The goal here should be to release films and shows that are not time-bound.
A major disadvantage for Netflix in the past few years has been rigidity, and this has negatively impacted the adoption of newer and better ideas like lowly-priced Netflix options with ad-support. However, there have been rumors of Netflix looking to change its approach and consider an ad-supported plan. Shaw (2022) indicates that Netflix is considering a monthly plan that is half its current $15.49 monthly plan. In the new plan, Netflix intends to offer customers content that has 4-minute ads every hour. Further, with the streaming platform losing more than a million subscribers in the first two quarters of 2022, it is crucial that this plan be considered (McCluskey, 2022).
Thirdly, unlike other platforms that release their shows on a weekly basis, Netflix has been in the habit of releasing all the episodes of its popular shows. The advantage of this approach is that it keeps people glued to their screens for the entirety of the episodes. However, the disadvantage of this approach is that some customers subscribe to these shows and then cancel immediately after. Therefore, Netflix needs to consider releasing their shows on a weekly basis to help ensure that they keep this crop of customers. While there could be a few who may consider canceling their subscriptions after finishing a show, a percentage might start following other shows or watching other films within the platform.
The fourth strategy entails releasing blockbuster movies in theaters first before making them available for subscribers. However, it is crucial to mention that Netflix should limit this option to select movies that fit within the category of blockbusters. Blockbusters take the world by storm and happen to attract millions of viewers around the world. These are movies that have managed to generate a following by themselves, and Netflix has been releasing several movies every year that fit this category. Also, as Shaw (2022) indicates, theaters are in need of more movies to help return ticket sales to pre-pandemic numbers. Therefore, Netflix can take advantage of this and negotiate a favorable contract.
The fifth suggestion entails the idea of bringing back free trials. Free trials have their advantages and disadvantages. First, there is a real chance that some of the people who use the trial version will not subscribe. Secondly, it opens the door to people who are unwilling to subscribe but will open as many trial accounts as possible. However, trial versions are also quite advantageous. First, they are an avenue for Netflix to collect customer data to help enhance user experience. Secondly, trial versions help potential customers experience a product before committing. However, this ought to be done strategically and with keen consideration of the distribution of seasons.
Implementation of Strategies
Regarding gifting fans memories instead of products, the first step entails hiring the right people. Here, Netflix needs to invest in scouting for the best creative talents, especially writers and directors. These are individuals with a keen eye for the right content. Having the right and skillful talent is the first and most important step towards actualizing this idea. Building memories means creating experiences instead of films and television shows, which can only be achieved through acquiring the right talent. Regarding timelines, acquiring the best talent can take about five years because of the scouting process that should be done globally. The next step or phase would entail the release of films and shows. With regard to timelines, this should be a process that takes decades, depending on
Implementing the ad-supported plan is an idea that is long overdue. However, Netflix ought to tread with caution to avoid lowering the standards it already set in the streaming industry. The first step to implementing this strategy is mapping out the target market, and this should take between a month and two months because it mainly entails the analysis of available data. The available data here means data on its viewership, especially data on its target viewers. After collecting this data, Netflix should then move forward and release its ad-supported version.
Releasing shows on a weekly basis instead of all episodes at once. This strategy continues to work for streaming platforms like HBO and others and proves successful, especially with regard to retaining subscribers. For popular shows like ‘Stranger Things’ and ‘Money Heist,’ Netflix should introduce the one-episode-per-week strategy. However, this should happen with a new and critically acclaimed show. The strategy here should be to release some of the popular shows slated for 2023 in this manner and gauge the subscribers’ response. Slowly, this strategy should shift to all other shows.
Releasing blockbuster movies in the theaters first before making them available on the streaming platform should be implemented strategically. This strategy calls for assessing the organization’s physical resources and capacity to implement the strategy. However, as Shaw (2022) indicates, the American entertainment industry is not short of distribution networks to actualize this strategy. The steps involved here would entail signing contracts with distribution networks for both to find common ground. The biggest hurdle between Netflix and distribution networks has been how long the theaters could showcase the films before Netflix makes them available for its subscribers. So, as a way to speed things up, this should be the step to be resolved, and Netflix should push the networks to accept its 45 days proposal.
Bringing back free trials for the streaming platform is a crucial strategy that can help Netflix revive its subscriber membership, which is currently dwindling. Implementing this strategy needs to be done strategically and should coincide with particular seasons, events, or situations. For example, during winter or the festive season, Netflix could consider bringing its trial version back. Aside from this step, the trial version should also coincide with films and shows that are particularly meant for a certain season but that drag long enough for people to consider buying a subscription. A good example would be the family-friendly shows and films that are released over the festive season could extend just enough to encourage newer subscribers who have been enjoying the same on free trial versions.
The results of implementing strategies
Market Expansion
The implementation of the strategies is critical for market expansion. Netflix suffered a loss of subscribers in the first quarter of 2022, where it lost about a million of them. At the same time, Netflix suffered a market loss of 55.7% in 2020 to 45.2% in 2022. Such a loss of market has adverse effects on the business. Because of the declining market share, Netflix needs to implement measures to ensure that it prevents further loss of the market while making an effort to expand the existing market. With an increased market share, the company will improve its production of movies. Currently, most movies and programs belong to third parties, with Netflix contributing a tiny fraction. A larger market share will allow Netflix to produce more movies and programs and have more control over its content. More markets will widen the company’s overall customer base. The potential new clients will follow the lead of the existing ones. This means that Netflix can increase sales from existing and new customers.
Financial income
The achievement of the outlined strategies will be instrumental in enabling Netflix to increase revenue. According to Statista (2022), Netflix generated about $7.97 billion in the second quarter of 2022. This improved from the first quarter of 2022 when the revenue was $7.34 billion. The current revenue has been achieved despite the plummeting number of subscribers and increased competition. For instance, implementing lowly-priced Netflix options with ad-support will be vital in increasing profits. ...