NETFLIX INTERNATIONAL EXPANSION CASE ANALYSIS
NETFLIX’S JOURNEY - TIMELINE
Launched in Australia,
New Zealand, Japan. 3rd
European exp: Italy,
Portugal and Spain
Launched in
Netherland
Further European
expansion (company's
first non-English
language shows)
Launched in
Latin & central
America and
Carribean
Launched in
Canada
Launched in UK
and Ireland
1 Million
subscribers
A partnership with
Best Buy gives
exposure in the
chain’s 1,800 stores
On January 6, 2016 Netflix announced a major
international expansion into 130 new territories; its service
would now be available nearly "worldwide"
Introduction to
Video streaming
devices
Founded by Marc
Randolph and
Reed Hasting in
California
Revenue
sharing deals
signed with WB
Beggins offering
DVD rental and
sales
Q.01: SWOT ANALYSIS
STRENGTH
•
Award winning original content, high-value licensed content like
Orange is the new Black, House of Cards, Narcos, etc
WEAKNESS
•
Need to strike strong deals with content owners
•
High subscription prices
•
Adapts with the change in industry, from mail order DVD to
internet streaming & VOD
•
Low profit margins due to the cost of international expansion and
currency fluctuation
•
Netflix has developed an ecosystem for use on various Internetconnected devices, including televisions, computers, and mobile
devices.
•
Dependence on content licensing costs and relationships with
distributors.
•
Potential dependences on regulations and laws in different
countries.
OPPORTUNITY
•
Entry into Regional language content
THREAT
•
Local & International competition like Amazon Prime, YouTube
•
Netflix is still not available in China- more international expansion
•
Black market around the world i.e. Piracy
•
Finding local partners to further international expansion
•
Rising content costs, limited access to content due to stiff
competition with cable tv's and conflicts with content owners.
•
Capitalizing on its exiting user base
•
Competition and price wars between streaming services.
•
legal issues with local authorities and content providers because
of licensing and violation off regulations.
•
Scale and popularity will help potentially lower their content
licensing fees and can potentially increase their average revenue
per user per month
Q 02: Challenges and Strategies
CURRENT STRATEGIES
Huge Content Catalogue
availability to
consumers
Adapting according to
the expansion
Stretching hands on acquiring new
content by collaborating with
entertainment providers
Aggressive spending on
marketing to raise
brand awareness
Proprietary software technology
Netflix developed was a large
part of the strategy
CHALLENGES
THE CONTENT CONUNDRUM
a.Regional markets content
b.Content in limited languages
c.People are reluctant to pay and find
local competitor more affordable
This is especially relevant because
many regional competitors in
developed markets, like Germany and
France, have looked to Netflix's
success in the US as inspiration to get
their own offerings into the market
ahead of Netflix's entry. These
competitors generally have more
localized content.
PRICE ARBITRAGE
GOVERNMENT CENSORSHIP
Expensive price point in certain
markets. Netflix has made the
choice to not chop down its price
point significantly in developing
markets. This makes it relatively
more expensive compared to
competitors, many of which have
lower price points.
Regulatory restrictions, global
licensing deals and cultural
factors are an issue which
requires a lot of time and money
to move way forward. E.g
Chinese market.
CHALLENGES
INTERNET SPEED AND
INFRASTRUCTURE
In India we have speed at which video
doesn’t buffer properly. This means
that people with an Internet
connection speed of 1Mbps or 2Mbps
and with a data cap of 40 to 50 GB —
which is roughly the average in India
— will find it difficult to use Netflix
heavily. Watching a handful of movies
and TV shows could eat up a little over
half of a user’s data cap, make them
quickly hit their FUP limit, and have
their Internet speeds reduced to a
piddly 512 Kbps.
COMPETITION IN THE GLOBAL
MARKETS
a. Television operators
b. VOD service providers
c. Indian competitors like Hotstar,
Spuul, Eros Now, Ditto
d. Underdeveloped Infrastructure:
Poor Network quality
COMPETITION DTH
DTH is giving tough competition
to Vod platforms.
TataSky for example has its own
VoD platform which gives 5000
titles where one can watch
several movies and TV shows, on
demand. Similarly, TataSky has
its own mobile app whereby
paying a fixed fee one can access
all the content library.
Partner with
Multichannel
Television Provider
Continue
International
Expansion
Netflix will be able to
provide its members with
access to additional TV
series, offering exclusive
content, it is a necessity for
Netflix to continue to
expand its content library
and make it accessible
across multiple channels.
There are many territories
that Netflix need to target
like China. This will provide
advantage to Netflix,
related economies of scale,
and early mover benefits in
many international
markets.
Leverage offline
streaming
Technology
Allowing customers to offline
buffer content to view when
internet is unavailable
will attract more customers.
Customers in India often
don’t get to view online
streaming content in many
areas as it consumes
maximum bandwidth.
Digital India
Campaign
With the advancement of
Digital India campaign and
introduction of 4G
services, Internet
bandwidth and services
will grow and Netflix
should tie with them for
the advancement.
STRATEGIES TO OVERCOME CHALLENGES
Q 03: Competitor Analysis
THE SHOW IS OVER!