From its humble beginnings as a DVD rental and sales business back in 1997 to one of the world's best online streaming service providers, Netflix has come a long way in just three decades.
Netflix has over 220 million active subscribers located in more than 190 countries worldwide. Netflix allows subscribers to stream new and popular TV programs and movies online. Netflix offers content for about 16 categories including Action, Anime, Children & Family, Comedies, Crime, Documentaries, Dramas, Fantasy, and thrillers.
Paid subscribers can access content in multiple languages for their convenience. Netflix offers its subscribers the option to opt out of a plan without requiring any financial commitment by way of cancellation fees, for example. This is just one of the many strengths of this paid subscription internet streaming service provider.
The in-depth Netflix SWOT analysis in this post further highlights the strengths of Netflix while also providing insight into its weaknesses, possible business opportunities, and likely threats.
Apart from allowing customers to use their services for a full month without paying subscription fees for preferred plans, Netflix also has the following strengths:
- A solid customer base: Netflix currently has over 220 million active subscribers. And this number is growing on an almost daily basis.
- A reputable brand: In 2019, Netflix was ranked fourth on the Forbes list of the most reputable brands in the world. Netflix has grown exponentially as a renowned global brand for the past three decades. As of 2020, Netflix had received 160 Emmy nominations which far outweighs the number of nominations received by conventional cable TV networks like HBO (107 nominations), NBC (47 nominations), and ABC (36 nominations), FOX (33 nominations), and CBS (23 nominations).
- Worldwide availability: Netflix can be accessed in more than 190 independent nations around the world. The accessibility of this brand to a worldwide audience is what makes Netflix one of the fastest-growing paid subscription internet streaming companies around.
- Original content: Netflix Originals is a service offered by the company where they produce TV and film content which is then made available on their streaming platform for subscribers to watch. Some notable Netflix Originals content include Narcos, Orange Is the New Black, Tiger King, Money Heist, Stranger Things, and Mindhunter.
- Multiple features: Netflix offers multiple functions and features that make streaming content a pleasure for all subscribers. Multiple language options are available, and subscribers can download content to watch offline.
- Availability on multiple devices: Subscribers can watch TV shows and films on multiple devices. These include macOS or Windows OS desktop computers and mobile devices like Android, Windows, or iOS smartphones and tablets.
- Affordable subscription plans: At present, Netflix offers three monthly subscription plans, namely; Basic, Standard, and Premium plans. All plans are affordable, with monthly rates ranging from USD$8.99 to USD$15.99.
- Unlimited access to content: Subscribers have unlimited access to as many TV series, shows, and films as they like during their subscription period. Subscribers can watch audio-visual content all day long provided they have a good internet connection.
- High-quality content: Netflix offers about 13 categories of film and TV programming. Subscribers can watch documentaries, comedies, action films and series, drama, thrillers, horror, and many other genres that appeal to them. Subscribers can watch award-winning shows and movies, including Netflix Originals.
- High-quality viewing: Netflix also offers streaming in Ultra HD, although this viewing option is available to premium subscribers only.
There are also weaknesses in the SWOT Netflix analysis, with the most notable ones highlighted below;
- Copyright limitations: It is important to note that most of the audio-visual content available on Netflix is not owned by them. Typically, studios grant limited rights to content expiring after some time. Once the rights expire, the content may be available on rival streaming platforms. Paying for the rights to content can be expensive over time.
- A growing debt profile: It costs a lot of money for Netflix to provide content to the over 190 countries that they serve. In order to provide funds for new content, Netflix raises money from creditors. The debt profile of Netflix keeps rising as a result, and as of the second quarter of 2020, its debt was approximately USD$14.17 billion.
- Limited subscription and pricing options: Netflix only offers three monthly subscription plans: Basic, Standard, and Premium. This rigidity in subscription plans and pricing is partly responsible for constraints in the number of new global subscriptions.
- Increased costs of operation: As Netflix continues to add more audio-visual content to its platform, it incurs even more costs. The cost of streaming in 2019 was more than USD$14 billion. This cost has steadily grown over the years with 2018 streaming cost figures at just over USD$12 billion. Increasing operational costs is a definite weakness of Netflix and other similar companies in the industry.
- Increasing subscription prices: The prices of Netflix's monthly subscription plans have increased over time. While this may not seem much on its own, compared to other similar TV and film online streaming companies, the rise in pricing is significant.
For example, the monthly subscription of Apple TV+ is about USD$4.99 while the monthly subscription fee for Disney+ is about USD$6.99. These competing internet streaming service providers offering lower monthly subscription rates can further reduce the number of new subscribers that Netflix can attract.
- Delayed customer support response: As the number of subscribers to Netflix has increased, many inquiries and complaints have also increased. This has put an immense amount of pressure on the customer support team of Netflix leading to delays in their response time. This could lead to frustrated subscribers opting out of Netflix altogether.
- Over-reliance on the North American market: Netflix may have a global presence in more than 190 countries worldwide, but they still have an overreliance on subscriptions from North America, consisting of the US and Canada.
Their revenue in 2019 from this market was over USD$10 billion, representing 50% of their overall revenue for that year which was over USD$20 billion. With the North American market having many competing internet streaming service providers, the fear is that this market is fast being saturated.
No Netflix SWOT analysis is complete without highlighting possible opportunities available to the brand. Here are a few opportunities that are open to Netflix;
- Netflix can provide cheaper pricing: Many prospective subscribers take advantage of the free one-month access to Netflix to view new and existing content only to opt out of paying the subscription at the expiration of the 30 day period. To have more people subscribing to their services, Netflix can introduce cheaper subscription plans which may involve monthly, semi-annual or annual payments.
- Flexible subscription plans: In addition to cheaper plans, Netflix can also introduce mobile device-only subscription options that offer discounted rates for subscribers streaming from their Android or iOS mobile devices. To be fair, Netflix has already introduced a mobile-only monthly payment plan option in India where subscribers pay only USD$3 per month instead of the regular Basic plan monthly rate of about USD$8.99.
- Ads could help: This is actually controversial considering that one of Netflix’s unique selling points is the fact that their customers can stream content without worrying about advertisements interrupting their viewing. This is a model that other brands like Amazon, Google, and Facebook (Meta) have adopted to make even more revenue.
- Improved global presence: Netflix is already active in 190 countries, but it can still do more to expand its operations in a few other countries and boost its revenue in the process.
- Content refreshing: Netflix can refresh the content in its library by expanding the contract agreements with certain film and TV programming distributors.
- Improved partnerships: Netflix can also engage in much more partnership agreements, particularly with other telecom companies. This way, they would be able to provide a variety of viewing bundles to subscribers depending on the country they are located in. Partnerships with local broadcasting firms can also help in the short and long term.
- Creating and taking advantage of niche markets: Netflix can take advantage of niche markets by helping to produce content that would thrive in particular regions due to the language and cultural influences instilled in the content. For example, the Netflix original TV series of La Casa de Papel or Money Heist and Sacred Games are in Spanish and Hindi, respectively.
The possible threats in Netflix SWOT analysis include the following;
- Increasing competition: Netflix faces a lot of competition in the world of digital streaming. The likes of HBO, Disney+, Amazon, and Apple TV have already taken a sizable share of the market. And with each passing year, new online streaming service providers keep emerging and grabbing their own share of the market.
- Stringent regulations: With a rising number of digital streaming companies springing up in North America, Netflix has to look for new markets overseas. However, government regulations on foreign audio-visual content in countries like China have hindered their entry into potentially lucrative new markets.
- The threat of piracy: Netflix like other online streaming platforms are at risk of piracy. This is where hackers can illegally download new, popular and original content to avoid having to pay monthly subscription fees.
- Saturation of North American market: There is an urgent need for Netflix to expand its services to meet the needs of potential subscribers in other countries other than North America because of a saturated market due to the emergence of many digital streaming companies in the region. Online streaming providers like HBO, Apple TV, Disney+, and Amazon all have their own subscribers and hence a substantial share of the North American market.
- Hacking of Netflix user accounts: Another threat faced by Netflix has to do with the hacking of user accounts by cybercriminals and hackers. This can lead to a loss of active subscribers and a resulting drop in revenue.
Netflix remains one of the most renowned online streaming platforms around. One crucial way that they are able to maintain their status in the industry is by engaging their strength, limiting weaknesses, capitalizing on opportunities, and providing measures to tackle possible threats.
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Netflix SWOT Analysis 2022 | SWOT Analysis of Netflix
SWOT Analysis of Netflix
Published by: Hitesh Bhasin, December 12, 2021