Netflix Case Study

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Netflix Case Study Introduction

Netflix in the past few years has become one of the largest companies to provide online streaming on demand all over the world. Although it is the most well known and successful company, it faces a lot of stiff competition from various other companies like Hulu, Amazon, Prime etc. To maintain its position worldwide, analysis of the internal and external business environment is necessary. SWOT and PESTLE help companies like Netflix to scan and understand its internal and external threats and find areas of improvement. The following study focuses on SWOT and PESTLE analysis of Netflix, a US based company. The study sheds light on the internal and external factors of Netflix in relation to SWOT and PESTLE.

Fill in the table

Company name

Netflix

Type of industry

Entertainment

Headquarters

Los Gatos, California, US

Sales/revenue

Approx 15.79 billion dollars

Areas served

World wide

Number of stores

Online

Competition

Hulu, Amazon Prime, the Walt Disney company

USP

Online streaming on demand.

Target groups

Teenagers, young and the elderly

Products

Online series, movies and videos

Website

https://www.netflix.com/in/

Netflix SWOT Analysis (Table)

Strengths

Weakness

  • Subscribers strength of 1.39 million (2018).
  • Large no. of series and movies (it has a 56 page long index of its contents)
  • On demand online streaming
  • Accessible on different devices.
  • Available in different languages
  • Increasing debt
  • Increase cost of production for original content.
  • Fast net service required
  • No download facility for some series and movies.

Opportunities

Threats

  • Expansion to different countries.
  • Collaborations with small and big media houses.
  • Maintaining the reputation of producing original content.
  • Stiff competition.

Netflix Analysis

Strengths

Netflix has huge number of subscribers, adding up to 1.39 million, worldwide in 2018 (edition.cnn.com, 2019). It serves all the subscribers sufficiently through a large no. of series and movies available. As per the case study of Netflix, it has a 56 page long index of its contents (Media.netflix.com, 2019). One of the main reasons of Netflix success is its ability to provide shows and movies on demand on different devices. Hence, a person does not have to wait for a TV release of a movie or necessarily carry his/her laptop.

Weakness

As per the case study of Netflix, it has been increasingly falling into debt due to its high production cost. In 2018 Netflix reported about 8.4 billion dollars in long term debt (Variety.com, 2018). Also as watching various contents in Netflix require a fast internet speed which is not available to many, Netflix has been unable to reach everyone. As per the case study of Netflix, not all of its contents have the facility of downloading. This forces the users to use the internet each time they something.

Opportunities

As per the case study of Netflix, it is available for online screening in over 190 countries. Providing service in so many countries, Netflix is not available in the country with the largest population in the world, China (Help.netflix.com, 2019). Being available in this country will greatly help it financial problems. Other countries Netflix is not available in are Crimea, North Korea and Syria. Collaboration with various media houses will help Netflix to have more regional content catering to a huge sum of people.

Threats

One of the biggest threats that Netflix is facing is a huge loss of finances on making original content. This has pulled the company into millions of dollars of debt. The company also faces stiff competition from other entertainment companies like Hulu and Amazon Prime. To keep up with the competition the company continuously is trying to make new or buying content.

Netflix PESTLE Analysis

Political

  • US government restrictions on American companies.

Economic

  • Weak currency of some countries
  • High subscription cost

Social

  • Well accepted (117.5 million and 139 million subscribers in 2017 and 2018 respectively)
  • Needs are catered at a local level

Technological

  • Technologically developed.
  • Available on all types of devices.

Legal

  • US policies
  • Copyright policies

Environmental

  • Lack of using renewable energy
  • Carbon footprints.

Analysis

Political

As per the case study of Netflix, due to political restrictions over American business companies, streaming of Netflix is restricted in countries like Crimea, North Korea and Syria (Nevin et al. 2017). Such restrictions have affected its revenue by not allowing sales in these countries.

Economic

Economy of a country plays a huge role in the economic development of Netflix. Countries with weak currency have affected the company negatively. The company has to provide services in such countries at low rates. High subscription price is a serious issue in the company’s economic loss. As per the case study of Netflix, the company’s main challenge is to provide services at costs lower than cable TV (Ma and Ahn, 2019).

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Social

Netflix has been widely accepted in various countries. Hence, it is available in more than 190 countries. Also the company caters at a regional level by collaborating with different media houses. Having 117.5 million subscribers in 2017, its revenue that year was approx 11.69 billion dollars. The significant rise in the number of subscribers in 2018, about 139 million, also helped in increasing its revenue, about 15.79 billion in 2018 (Edition.cnn.com, 2019).

Technological

As per the case study of Netflix, its trend of making original content requires technologically advanced equipment. Also its availability on all devices has made it one of the most recognized brand names all over the world.

Legal

Legal restrictions of carrying out business in certain countries have greatly affected the company’s income. As per the case study of Netflix, the company has also filed and faced many lawsuits. One such lawsuit is regarding to its series Wild Wild Country. Netflix faced a lawsuit for stealing the contents and the copyrights.

Environmental

The amount of resources used by the company has emitted a lot of carbon footprints which Netflix has been trying to reduce. The company also lacks behind in renewing its resources. This might cause legal issues for the company due to environmental policies of the government.

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