Breaking Down the Business Strategy of Netflix: How the Company Became a Streaming Giant
Netflix is a company that has revolutionized the way people consume digital media. What started as a DVD rental-by-mail service has now become one of the most popular streaming platforms in the world. The company has been able to gain a large market share in a relatively short amount of time, largely due to its unique business strategy. In this article, we will break down the business strategy of Netflix and how it became a streaming giant.
Background
Netflix was founded in 1997 by Reed Hastings and Marc Randolph. The company’s initial business model was to offer DVD rentals by mail, which allowed subscribers to rent DVDs online and have them delivered to their homes. Netflix’s success in the DVD rental business allowed them to expand their offerings to streaming.
Low Cost, High Value
One of the key components of Netflix’s business strategy is offering a low-cost, high-value product. The company’s low subscription fee gives it a distinct advantage over traditional cable companies, which often charge significantly more for their services. Netflix’s low cost has made it accessible to a wide range of consumers, from college students to families on a budget.
Binge-Watch Culture
Another key component of Netflix’s business strategy is the creation of a binge-watch culture. The company offers entire seasons of TV shows and allows viewers to watch them at their own pace. Traditional TV networks release episodes on a weekly basis, which can make it difficult for viewers to keep up with their favorite shows. Netflix’s binge-watch culture has allowed the company to create a loyal fan base, who eagerly anticipate the release of new content.
Original Content
Netflix has also invested heavily in creating original content. This strategy has paid off, as the company’s original shows, such as “Stranger Things” and “Orange is the New Black,” have become some of the most popular shows on the platform. By producing its own content, Netflix can offer a wider variety of shows and movies, which helps to attract more subscribers.
Data-Driven Approach
Finally, Netflix uses a data-driven approach to decide which shows and movies to produce and distribute. The company collects data on user behavior, such as what shows they watch and how long they watch them, to determine which types of content are most popular. This allows Netflix to create and distribute content that it knows will be well-received by its audience.
Conclusion
In conclusion, Netflix’s business strategy has been pivotal to its success as a streaming giant. The company’s low-cost, high-value product, creation of a binge-watch culture, investment in original content, and data-driven approach have all contributed to its popularity. As the streaming industry continues to grow and evolve, it will be interesting to see how Netflix adapts its strategy to maintain its position as a leader in the market.
