Netflix’s core mission, strategy, and vision are that of “improving its members’ experience by expanding the streaming content with a focus on a programming mix of content that delights members and attracts new members.”
Aspect
How Netflix Achieves It
Analysis & Implications
Advantages
Mission & Strategy
– Focuses on expanding streaming content to enhance user experience.
– Prioritizes user satisfaction and attracting new members.
– Rapid growth and a large subscriber base.
– Invests in original content creation and binge-worthy releases.
Our core strategy is to grow our streaming membership business globally within the parameters of our operating margin target. We are continuously improving our members’ experience by expanding our streaming content with a focus on a programming mix of content that delights our members and attracts new members. In addition, we are continuously enhancing our user interface and extending our streaming service to more internet-connected screens. Our members can download a selection of titles for offline viewing.
The volatility of content licensing and production used to be weaknesses, yet Netflix invested substantial resources in developing its own content:
The Netflix content, and the way it delivered it became so addicting to members that a new term would be made popular by how Netflix distributed the content all in batches, without pacing it: binge-watching.
Indeed, that is the practice of watching TV series all at once. In a speech at the Edinburgh Television Festival in 2013, Kevin Spacey said: “If they want to binge then we should let them binge.” This new content format would be popularized by Netflix, launching its TV series all at once.
Netflix is a subscription-based business model making money with three simple plans: basic, standard, and premium, giving access to stream series, movies, and shows. Leveraging on a streaming platform, Netflix generated over $33.7 billion in 2023, with an operating income of over $6.95 billion and a net income of over $5.4 billion. Starting in 2013, Netflix started to develop its content under the Netflix Originals brand, which today represents the most important strategic asset for the company that, in 2023, counted over 260 million paying members worldwide.
Netflix makes money with three simple plans:
Basic,
Standard,
And premium,
Those subscriptions give access to stream series, movies, and shows. The company is profitable, yet it runs on negative cash flows due to upfront cash paid for content licensing and original content production.
Netflix is a profitable company, with over $5.4 billion in net profits in 2023, an increase compared to nearly $4.5 billion in 2022.
Netflix is a profitable company. It generated over $1.2 billion in 2018, a 116% increase compared to 2017, primarily driven by substantial growth in paid memberships.
However, Netflix has negative cash flows as it invests massively on content license agreements and original content.
Netflix Values
As highlighted, on the Netflix career site its core values are:
Judgment
Communication
Curiosity
Courage
Passion
Selflessness
Innovation
Inclusion
Integrity
Impact
This translates in five core actions:
Encourage independent decision-making by employees
Share information openly, broadly, and deliberately
Are extraordinarily candid with each other
Keep only our highly effective people
Avoid rules
Highly Aligned, Loosely Coupled
We spend lots of time debating strategy together, and then trust each other to execute on tactics without prior approvals. Often, two groups working on the same goals won’t know of, or have approval over, their peer activities. If, later, the activities don’t seem right, we have a candid discussion. We may find that the strategy was too vague or the tactics were not aligned with the agreed strategy. And we discuss generally how we can do better in the future.
The motto “highly aligned, loosely coupled” is in line with Netflix’s way of keeping a startup mindset even though the company has scaled to the size of a tech giant.
Extensive Content Library: Netflix provides access to a vast and diverse library of movies, TV series, documentaries, and original content. Subscribers can choose from a wide range of genres and languages, ensuring there is something for everyone.
Binge-Worthy Experience: Netflix pioneered the binge-watching culture by releasing entire seasons of TV series at once. This allows subscribers to enjoy uninterrupted viewing and immerse themselves in their favorite shows.
Personalized Recommendations: Netflix uses sophisticated algorithms to analyze user preferences and viewing history, delivering personalized content recommendations. This tailored experience enhances user satisfaction and engagement.
Offline Viewing: Subscribers can download selected titles for offline viewing, making it convenient to enjoy content on the go, without an internet connection.
Ad-Free Experience: Netflix offers an ad-free streaming experience, allowing viewers to enjoy content without interruptions from advertisements.
Flexibility in Subscription Plans: Netflix offers multiple subscription tiers, including basic, standard, and premium plans, catering to different budget and viewing preferences.
Global Access: Netflix is available in over 190 countries, providing global access to its content library. It transcends language and cultural barriers, offering a universally appealing entertainment experience.
Distribution Channels of Netflix’s Business Model:
Netflix employs several distribution channels to deliver its content and engage with subscribers:
Streaming Platform: The primary distribution channel is Netflix’s streaming platform, accessible through the official website and mobile applications. Subscribers can stream content on various internet-connected devices, including smartphones, tablets, smart TVs, and gaming consoles.
Partner Ecosystem: Netflix collaborates with device manufacturers and smart TV providers to pre-install the Netflix app on their products. This strategic partnership expands the reach of the platform to a broader audience.
Global Availability: Netflix’s international expansion allows it to distribute content to subscribers in over 190 countries. The platform adapts to local preferences by offering content in multiple languages and providing subtitles and dubbing options.
Content Delivery Network (CDN): To ensure seamless streaming and minimal buffering, Netflix utilizes a content delivery network (CDN). This network of servers strategically caches and delivers content to users based on their geographical locations, optimizing the streaming experience.
Offline Viewing: Netflix enables subscribers to download selected titles for offline viewing. This distribution channel caters to users who want to watch content without an internet connection, such as during travel or in areas with limited connectivity.
Marketing and Promotion: Netflix employs marketing and promotional channels, including social media, email campaigns, trailers, and partnerships with influencers and celebrities, to attract and retain subscribers. These efforts create awareness and drive user engagement.
Customer Support: Netflix offers customer support through various channels, including online help centers, FAQs, and customer service representatives. This ensures subscribers can resolve issues and receive assistance when needed.
Billing and Payments: Netflix manages subscription billing and payments through secure online platforms. Subscribers can select their preferred payment methods and update their billing information easily.
Key Highlights
Mission and Strategy: Netflix’s core mission and strategy are focused on “improving its members’ experience by expanding the streaming content with a focus on a programming mix of content that delights members and attracts new members.” This involves continuously enhancing the streaming content library, user interface, and extending the service to more internet-connected screens.
Content Creation: Netflix has invested significantly in creating its own content, popularizing the concept of binge-watching by releasing entire seasons of TV series at once. This approach has led to the success of Netflix Originals, which represents a strategic asset for the company.
Subscription-Based Model: Netflix operates on a subscription-based business model, offering three plans: Basic, Standard, and Premium, giving subscribers access to a wide range of series, movies, and shows.
Financial Performance: Netflix generated over $29.6 billion in revenue in 2021, with an operating income of over $6 billion and a net income of over $5 billion. The company is profitable but has negative cash flows due to investments in content licensing and original content production.
Core Values: Netflix’s core values include judgment, communication, curiosity, courage, passion, selflessness, innovation, inclusion, integrity, and impact. These values emphasize independent decision-making, open communication, and trust among employees.
Highly Aligned, Loosely Coupled: Netflix follows a philosophy of being “highly aligned, loosely coupled.” This means that while the company spends time debating strategy collaboratively, it trusts its employees to execute tactics without prior approvals. This approach allows for agility and innovation while maintaining alignment with overarching goals.
Netflix is a subscription-based business model making money with three simple plans: basic, standard, and premium, giving access to stream series, movies, and shows. Leveraging on a streaming platform, Netflix generated over $33.7 billion in 2023, with an operating income of over $6.95 billion and a net income of over $5.4 billion. Starting in 2013, Netflix started to develop its content under the Netflix Originals brand, which today represents the most important strategic asset for the company that, in 2023, counted over 260 million paying members worldwide.
Binge-watching is the practice of watching TV series all at once. In a speech at the Edinburgh Television Festival in 2013, Kevin Spacey said: “If they want to binge then we should let them binge.” This new content format would be popularized by Netflix, launching its TV series all at once.
Coopetition describes a recently modern phenomenon where organizations both compete and cooperate, which is also known as cooperative competition. A recent example is how the Netflix streaming platform has been among the major customers of Amazon AWS cloud infrastructure, while Amazon Prime has been among the competitors of the Netflix Prime content platform.
Netflix is among the most popular streaming platforms, with a subscription-based business model. The brand, platform, and content are strengths. The volatility of content licensing and production are weaknesses. The streaming market is a potential blue ocean. The inability to attract and retain premium members and its fixed long-term costs threaten its business model.
Netflix’s largest individual shareholder is Reed Hastings, co-founder, and former CEO of the company, now Chairperson of Netflix, with a 1.76% stake, valued at over $4.5 billion as of January 2024. Other significant individual shareholders comprise Jay C. Hoag, the company’s directors since 1999, and Ted Sarandos, former chief content officer and now Chief Executive Officer of Netflix. Major institutional shareholders comprise The Vanguard Group (7.99% ownership), BlackRock (6.24% ownership), and FMR (5.35% ownership).
In 2023 Netflix had over 260 million paid subscribers. In 2022, Netflix had 230 million paid subscribers and almost 222 million paid subscribers in 2021.
Netflix reported an average yearly revenue per subscriber of $139.68 in 2023, compared to $141.12 in 2022. Thus, Netflix had an average revenue per subscriber of $120 in 2019 (pre-COVID) and $139.68 by 2023.
In 2023, Netflix reported an average monthly revenue per subscriber of $16.28 in the US & Canada, $10.87 in EMEA, $7.64 in APAC, and $8.66 in the LATAM region. Thus, the US & Canada reported the highest average monthly revenue per subscriber of $16.28.
Netflix had over 260 million subscribers in 2023, with over $33.7 billion in revenue, of which $14.87 billion came from the USA & Canada; $10.55 billion from EMEA, $4.44 billion from LATAM, and $3.76 billion from APAC.
In 2022, The Walt Disney Company’s total paid subscriber base was larger than Netlfix, with over 235 million paid members, compared with Netflix’s over 230 million members. However, Disney’s offering is fragmented among Disney+, ESPN+, and Hulu, compared with Netflix, which has a single offering.
Adidas’ mission is “To be the best sports brand in the world.” Adidas AG is a German multinational initially founded in 1924 by Adolf Dassler who developed spiked running shoes out of his mother’s house. Today, the company is the largest sportswear producer in Europe and the second largest globally behind rival Nike.
Tesla’s vision is to “create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles,” while its mission is “to accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.” Tesla used a transitional business model as its ecosystem grows.
Amazon’s mission statement is to “serve consumers through online and physical stores and focus on selection, price, and convenience.” Amazon’s vision statement is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.”
Apple’s mission is “to bring the best user experience to its customers through its innovative hardware, software, and services.” And in a manifesto dated 2019 Tim Cook set the vision specified as “We believe that we are on the face of the earth to make great products and that’s not changing.”
Netflix’s core mission, strategy, and vision are that of “improving its members’ experience by expanding the streaming content with a focus on a programming mix of content that delights members and attracts new members.”
Coca-Cola’s Purpose is to “refresh the world. make a difference.” Its vision and mission are to “craft the brands and choice of drinks that people love, to refresh them in body & spirit. And done in ways that create a more sustainable business and better-shared future that makes a difference in people’s lives, communities, and our planet.”
Starbucks highlights its mission as “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” And its vision is to “treat people like family, and they will be loyal and give their all.”
Microsoft’s mission is to empower every person and every organization on the planet to achieve more. With over $110 billion in revenues in 2018, Office Products and Windows are still the main products. Yet the company also operates in Gaming (Xbox), Search Advertising (Bing), Hardware, LinkedIn, Cloud, and more.
Walmart’smission can be summarized as “helping people around the world save money and live better – anytime and anywhere – in retail stores and through eCommerce.” While its vision is to “make every day easier for busy families.” Walmart defines “busy families” as the bull’s eye of its business strategy.
Nike vision is “to bring inspiration and innovation to every athlete in the world.” While its mission statement is to “do everything possible to expand human potential. We do that by creating groundbreaking sport innovations, by making our products more sustainably, by building a creative and diverse global team and by making a positive impact in communities where we live and work.”
Google mission statement is to “organize the world’s information and make it universally accessible and useful.” Its vision statement is to “provide an important service to the world-instantly delivering relevant information on virtually any topic.” In 2019, Sundar Pichai emphasized a renewed mission to allow people “to get things done!”
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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