Netflix

Netflix

1. Competitor Analysis

   • Disney, Comcast and Warner Bros have entered the same market on streaming space, increasing competition For Netflix
   • This year, Netflix will spend up to $13 billion on original content, more than triple Amazon’s outlays. It has 82 films on tap this year, compared to 23 for Warner Brothers, and plans to increase spending to $16 billion by 2022.
   • Netflix’s biggest competitors are amazon prime and YouTube.
   • Disney+ is set to launch in late 2019 and will pull movies like “Original Marvel and Star Wars” which could take customers from Netflix.
   • Due to the new participants in the competition, “Netflix could lose 20% of the content shown on Netflix currently”.
   • Netflix is gaining more publicity, due to their successful Netflix original shows such as Stranger Things, You and The Umbrella Academy, Amazon Prime has yet to start creating their own content which helps remain the market leader.

2. Growth, Market share & Reputation

   • Intro: Netflix’s revenue has grown $10.4bn in 10 years + 107 million new subscribers.
   • Netflix ended 2017 with over 110 million paid subscribers, Amazon Prime Video ended with an estimated 44 million.
   • The growth rates are similar, with Netflix adding 1.6 million new subscribers, compared to Amazon’s 1.3 million in the third quarter of 2018.
   • Netflix is still in the growth stage as their reputation continues to precede itself.
     • 27% of Americans prefer Netflix to any other platform, including cable.
     • Americans in the 18 – 34 age group with 39.7% naming Netflix as their favourite TV platform leading to growth superseding the expectations of Wall Street analysts as share price increased by 206.9% from this time last year.
   • The number of Amazon Prime users outnumbers the number of Netflix users in India, Germany and Japan.

3. Segmentation & Targeting

   • Consumer segmentation
     • Psychographic: Many users are classified as binge watchers which is something Netflix encourages by uploading all episodes of a series at once and implementing autoplay, incentivizing users to watch more.
       • This could be part of the reason that TV streaming services have overtaken pay TV for the first time
     • Geographically: Content varies geographically, due to two factors; firstly, it allows them to adhere to cultural differences and secondly, licensing agreements vary by region.
       • Netflix's global presence currently extends to over 190 countries
   • Targeting
     • Teens: Netflix targets teens by providing access to many popular shows for this age range and by advertising on social media platforms such a YouTube and Twitter.
       • Examples: Riverdale, Shadowhunters, Dynasty, Pretty Little Liars, Gossip Girl, Teen Wolf
     • Adults: They penetrate the adult market using their Netflix originals, one of their Movies (Roma) won a BAFTA for best film, showing they create high quality content.
       • Examples: Roma, The Boy in Striped Pyjamas, About Time, Good Will Hunting, Gone Girl, Bird Box
     • Families: In order to attract families, different profiles can be created within one account so that every family member can watch separately. Age restrictions are also an important feature for young children..
       • Examples of kids shows available: Alexa & Katie, Victorious, Peppa Pig, Spongebob Squarepants

4. Marketing Mix

   • Product: Netflix is a subscription based streaming service that provides entertainment for a wide market of people. They carefully monitor user preferences such as: the device you use to watch particular movies/shows, when you pause, rewind and resume content and the ratings you give each movie/show
   • Price- Netflix has 3 price plans; watching on one screen without HD is £6.99 per month, 2 screens are £8.99 per month and 4 are £10.99 per month.
   • Place: Netflix can be streamed on devices such as your smartphone, laptop, smart TV etc.
   • Promotion - young viewers engage with viral promotion through sharing, liking and retweeting. They retain 90% of their users. Social media exposure created backlash as they people claiming it invaded the privacy of users and mocked their preferences.
   • Process: Their algorithm also customises thumbnail pictures to attract each demographic to a show, such as displaying a black actor as if they are a lead role, when in reality their role in the film is limited.

5. Positioning

   • Perceptual Map

6. SWOT Analysis

   • Opportunities
     • Difficulties with licensing has left Netflix unable to enter China through traditional means. The company must find a 'joint-venture' to capitalise on the 500m Chinese users who currently stream media content
   • Threats
     • For more than 30 content providers, including Netflix, piracy has led to 5.4bn downloads of media content in 2016 alone, threatening the whole of Netflix's business model and ability to fund content in the future.
   • Strengths
     • Netflix have a large customer base through serving 190 countries, enabling access to over 100 million subscribers. This strength gives the company bargaining power when in talks with studios to secure exclusive content
   • Weaknesses
     • Original content is sought after as it creates a competitive advantage for the company, however this comes at a price. In 2017 Netflix budgeted $2.5bn solely on securing original content rights.