It was back in 1997 when a brilliant computer engineer and marketing expert in Scotts Valley, California decided to launch a new online video rental system. In the early days of e-commerce, Reed Hastings and Mark Randolph had the intuition that it would forever change their lives and the concept of entertainment: Netflix.
The goal of the project was simple: to satisfy a market niche that the great giants of DVD and VHS distribution such as Blockbuster were unable to satisfy or, instead, to reach. The operation of the forerunner of what is today the most famous streaming platform in the world was very simple: it was enough to subscribe to the monthly subscription by connecting to the website, choose three titles, receive them by post, return them, and receive others even within the same period. month. Success was assured.
In 2005, in fact, Netflix was shipping one million DVDs a day; in 2007 the video streaming platform was added to the rental; starting in 2013 the first of the original productions, the series House of Cards. The Netflix Original brand has thus become viral in a short time and the practice of binge-watching (or, simplifying a lot, seeing all the episodes of a season of a series, continuously, without stopping) has become an expression of use daily.
What led to such resounding success? Surely the disruptive nature of a new business model, accompanied by a wise marketing strategy can be analyzed using the famous 4P model of the marketing mix as a guide.
Product: The Catalog And The Original Shows
The main strength of Netflix is its catalog which, although limited in some respects, offers the viewer a wide choice of films, TV series, and shows for all tastes and all ages. The watchword is quality, not only of the service – high resolution, adaptability to all devices, stability – but also and above all of the original productions. Who hasn’t heard of TV series like Stranger Things, Narcos, or Breaking Bad at least once?
Between renewals (many) and cancellations (few) today the Netflix originals make up the majority of the catalog, with excellent cast and productions active in different states. However, the success of this content is not only the result of large investments and lucky creative choices. Indeed, Netflix knows exactly what its audience wants: thanks to the complex algorithm that governs the platform, the company collects thousands of data every day which, once analyzed, return the exact mirror of the audience’s preferences, thus orienting production choices.
“ Think global, act local “: another strong point of the rich catalog is multiculturalism. Not only films and TV series made in the USA, but also many local productions such as La Casa de Papel (Spain), Suburra (Italy) or Black Mirror (Great Britain), just to name a few. These productions are not destined only for local markets: some, in fact, are today real global successes. Suffice it to say that half of the audience that saw the Brazilian series 3% lives outside Brazil, while the German series Dark was among the ten most viewed in over 136 countries. I encourage you to read more about this blog here: Ten Career Tips For Aspiring Accountants
Price: Subscriptions
Among the many variables that have conditioned Netflix’s success, there is certainly the price factor. The platform currently offers the user the possibility to choose between three subscription plans (“basic”, “standard” and “premium”), the cost of which varies according to the number of screens on which to watch content at the same time and the quality of the image. While remaining in a decidedly “low cost” range, the prices of Netflix subscriptions have undergone small variations over time.
The latest is that of last June 2019, which saw the standard and premium subscriptions be increased by 1 €. The slight increase in tariffs was justified by an increase in investment in the production of original shows. The push to create new content is in fact fundamental in order to counter the rise of competitors such as Amazon Prime Video and Disney +.
However, despite the increases, the price of the service remains extremely competitive, especially when you consider that the entire Netflix business model does not provide advertising revenues, but is based exclusively on revenue from subscriptions.
Place: Netflix Distribution Policies
Another choice, not at all casual or lucky, which has strongly marked the platform’s success concerns the distribution policies of Netflix. In a historical moment when the distribution of home entertainment was in the hands of the giant Blockbuster, Reed Hastings and Mark Randolph understood that the web could play a fundamental role in creating a new innovative distribution model based on the concepts of decentralization and simplification. In fact, it was enough to subscribe online the monthly subscription, which did not depend on the number of titles rented in the past or on the date of return of the same, to be able to receive an almost unlimited number of titles at home without necessarily having to go to a physical point of sale. Subsequently, with the introduction of on-demand content and the definitive elimination of physical support, international expansion was an almost obligatory choice.
Today, according to official data on the company’s website, Netflix is present in all countries of the globe (over 190), with the exception of Crimea, North Korea, and Syria – due to the limitations imposed by the US government on American companies. – and China, where, however, it does not exclude the possibility of being present in the not-too-distant future.
However, despite the single market, the contents available for streaming are not always the same: they can change according to the reference context and the duration of the titles in the catalog may be subject to variations from one country to another. The availability of content in the various states, in fact, varies according to the agreements made with the different copyright holders.
Netflix’s Online Communication Strategy
In addition to being a leader in the creation, production, and distribution of content, the platform is a reference point in the field of communication, which contributes to making the Netflix case studies one of the most interesting and most successful in recent years.
Just like its complex algorithm, the brand’s communication strategy has evolved following a precise line and adapts itself every time to the different channels and contexts of reference. Each social network is managed differently, with different contents not only from platform to platform but also from country to country, adapting contents and languages thanks to the geotargeting technique. For example, if the main promotional content is published on Facebook, Twitter leaves room for content designed to stimulate users’ retweets, while on Instagram the Stories format prevails, and so on.
On social networks, Netflix communication is strongly based on engagement thanks to the use of a direct, informal, and ironic tone of voice with which the brand fits naturally into conversations between users, identifying itself with everyday life and emphasizing the impact that Netflix has on their daily lives.
The content strategy focuses mainly on the new releases of the platform, creating hype before the release and maintaining a high level of engagement during and after the same. In this way, a strong bond is created between the brand and its fans, to the point of enjoying such trust as to trigger authentic and genuine word of mouth among users.
Another strength of the content strategy is the use of real-time marketing. Many of the brand’s social contents, in fact, refer to events, demonstrations, and news particularly followed by the public, thus riding their visibility. Through often self-deprecating content, creating contaminations between the real world and that of the “Originals” and winking at pop culture phenomena, Netflix manages to fit perfectly into the dialogue between users, making its point of view shine through also on issues of social interest.
Netflix’s Online Communication Strategy: Between Guerrilla, Ambient, And Event Marketing
In addition to investments in online marketing activities, the streaming giant combines a more innovative approach that aims to extend the experience of using content in the real world. For Netflix, in fact, engaging the viewer does not only mean creating engagement on social media through viral content but overcoming the boundaries of tablet and smartphone screens to make your audience live new offline experiences. No idea is too ambitious and no experiment is too risky for the communication team of the streaming platform. So guerrilla marketing campaigns, ambient marketing, pop-up stores, thematic events, etc. are welcome.
For example, for the launch of the fourth season of the British series Black Mirror, Netflix transformed a well-known club in Milan into the Black Future Social Club, an exclusive restaurant whose access was reserved only for those with at least a thousand followers on Instagram, an initiative perfectly in line with the dystopian and alienating spirit of the series produced by Charlie Brooker.
The Value Of The Netflix Brand According To Interbrand
As evidence of Netflix’s success in the entertainment sector, in 2017 the New York consulting firm Interbrand listed the streaming platform among the 100 global brands with the greatest economic value.
With an economic value of almost 9 billion dollars and a growth rate of + 10%, the brand is in 65th place in the prestigious ranking, followed by the historic US multinational 3M and preceded by Colgate. Among the drivers through which this value is created – and which consequently determine its competitive strength – the consulting firm identifies ” responsiveness ” as an internal factor, that is the ability of the brand to respond or anticipate changes, opportunities, and market challenges. On the other hand, external factors include “ relevance ” and “ engagement“, Understood as the brand’s ability to respond to the needs of consumers and to involve them in the entire process of purchasing and using the service.
To conclude, it is possible to say that the Netflix case study is that of a brand that has managed to revolutionize the entertainment sector in a very short time thanks to an innovative business model, an engaging customer experience, and the ability to create that emotional connection. with its own audience only of the famous love marks. The streaming platform has in fact established itself forcefully in the lives of many people, influencing their preferences, changing consumption, and giving rise to new habits and social phenomena (such as the practice of binge-watching or the phenomenon of cheating, a sort of “streaming betrayal “). In addition to all this, the constantly growing numbers confirm a positive trend that sees the platform as an exemplary model for many brands and a successful case study.
FAQs
How Did Netflix Use Innovation In Its Business Strategy?
How Netflix transformed itself from a DVD rental company to an online video streaming platform that became the world’s largest online retailer.
When Netflix first began renting DVDs by mail in 1997, it was a fledgling service with only one state in its home territory, California. In 2000, when it launched a web-based subscription service, it had just four employees. Today, it has more than 4.5 million streaming subscribers and nearly 125 million DVD and Blu-Ray rentals. How did Netflix go from a DVD-rental company with limited reach to an international video-streaming giant?
Is Netflix An Example Of Business Model Innovation?
The goal of the Netflix business is to provide a great experience for members. We believe this requires a focus on customer service and an unending quest to improve our product and the member experience.
What Is Netflix’s Communication Strategy?
What is Netflix’s communication strategy? It all began in 1997 with a little company called Netflix. They started out selling DVDs by mail and then added streaming video content to their service. They were so successful that they went public in 2002.
How Does Netflix Decide What To Share With The Public?
Introduction: Netflix’s story isn’t just one of the most innovative companies in America, but one of the most successful ones as well. Since its founding in 1997, Netflix has transformed from a DVD rental service into an international content delivery powerhouse. The company now produces original content, licenses DVDs, sells physical and digital media and provides streaming services. The company’s success lies in its ability to identify a problem and solve it. While other companies focus on creating new products, Netflix focuses on solving the problem of how to enjoy television. The company’s communication strategy is centered around sharing information about how it is solving this problem, in addition to its innovations and new products.
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