Evolution of Netflix
Netflix was originally founded in 1997 by Reed Hastings and Marc Randoplph. The original
service Netflix provided was a DVD rental-by-mail service. The model that grasped the
consumers across North America was the subscription model, which was introduced by Netflix
in 1999. This allowed the consumer to enjoy the unlimited DVD service Netflix had while
simultaneously being able to avoid late fees by paying a monthly subscription. Netflix also used
an innovative recommendation algorithm which personalized suggested content. This added
feature kept the consumer coming for more DVDs. An interesting note here is that Netflix
approached Blockbuster in 2000 with a partnership deal which they refused. This decision with
time proved to be costly.
In 2007, Netflix introduced a streaming service. This allowed subscribers to watch movies and
TV shows instantly over the internet. When the service was originally introduced, streaming was
just an add-on to the primary and superior DVD service. By 2010 Netflix began expanding
internationally starting in Canada and then moving to Latin America and eventually Europe.
Netflix did run into a fallback when they introduced Qwikster. This was a service that was solely
going to focus on the DVD service and Netflix would then focus on the streaming. This
disappointed the consumer base and ended up in a stick drop of almost 80% and a loss of over
800,000 subscribers.
Netflix found success when they shifted their focus to original programming. Programs like
“House of Cards”, “Orange is the New Black”, and “Stranger Things” provided the consumer a
product that can only be found with a Netflix subscription. This focus away from third party
content allowed them to reduce their reliance on studios like Disney and Warner Bros. They have
also introduced ad-supported plans to attract budget-conscious consumers. They continue to
expand their portfolio by introducing gaming, interactive content, and live events.
Globalization and the Response from Netflix
By 2016, Netflix had expanded from originally being a U.S. only service to operating in 190
countries worldwide. They now have more international subscribers then they do U.S.
subscribers. Their expansion has allowed Netflix to leave the U.S. saturated market and expand
into Latin America, Europe, and Asia. Netflix's ability to offer subtitles and dubbing (a method
of replacing original spoken dialogue with a new recorded version in a different language) allows
them to make a product tailored to the local consumer. Their heavy investment on regional
original content such as Money Heist (Spain) and Squid Game (South Korea) allow them to truly
satisfy these new global markets.
Netflix has also had to adjust on the technological side of the business. Internet speeds across the
globe differ. This forced Netflix to innovate an optimized streaming quality for their service,
specifically tailored for regions with slow internet speeds. Another example of Netflix
responding to this challenge is their option to download content. This feature gives the consumer
the ability to play their favorite show or movie offline. Another adjustment Netflix had to make
is the reaction other regions have to the content Netflix offers. Some countries like Saudi Arabia,
China, and the Middle East in general censor and even ban some content. This forced Netflix to
comply with local laws and they even work with local rating systems to align with cultural
sensitivities.
Overall, Netflix’s success in global market expansion stems from its ability to adapt to diverse
cultural landscapes. A strategy that prioritizes regional markets and cultural influences plays a
crucial role in determining whether Netflix will sustain its success in the future. Netflix's future
may hinge on its ability to capitalize on consumer demand, an irony given that once a company
deciphers the algorithm behind a complex problem, it can apply that formula to other markets. A
prime example is the success of “Squid Game”, a Korean show created for a Korean audience
that became a global phenomenon. By mastering the Korean market, Netflix not only tapped
into local success but also demonstrated how content tailored for one audience can resonate
across international markets.