Netflix SWOT Analysis | Business Teacher

1576 words (6 pages) Swot Analysis

28th Feb 2020 Swot Analysis Reference this

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  • Brand Name – After ten years, Netflix has become the sole brand name for online streaming content with a share price increase of over 6000% since 2007 (Bradshaw and Bond, 2017).
  • Large customer base – Through serving 190 countries, Netflix has access to over 100 million subscribers. This strength gives the company bargaining power when in talks with studios to secure exclusive content (Bradshaw and Bond, 2017)
  • Original content – Through careful acquisitions, Netflix have secured numerous original shows that have appealed to audiences. In 2017, two Netflix shows are so popular they have pushed subscribers from 83m to over 100m in one quarter (Bradshaw, 2017).
  • Cost of original content – While its original content creates a competitive advantage for the company, the cost continues to grow to support this content. In 2017, it is expected for Netflix to invest $2.5bn solely on securing original content rights (Bradshaw, 2017).
  • Lack of rights to original content – Unlike many traditional television studios, Netflix does not own most of their original programming. Due to this, usually rights expire after a year and the original content can be shown on rival services (Bradshaw, 2017)
  • Environmental cost – Netflix has been ranked 'D' in terms of environmental awareness. This has garnered bad publicity for the company as rival competitors Amazon and Facebook use over 40% renewable energy with their services (Lewis, 2016)
  • Expansion into China – Difficulties with licensing has left Netflix unable to enter China through traditional means. The company must find a 'joint-venture' to capitalise on the 500m Chinese users who currently stream media content (Russell, 2017),
  • Partnerships in Europe – To meet new European laws, Netflix can partner with the BBC and Canal Plus to gain access to a wealth of native-language European content and grow customers in local markets (Murgia, 2017).
  • Growth of technology – With the growth of VR and 4K UHD content, Netflix has new ways to allow customers to access their content and provide further competitive advantages (Mintel, 2016).
Region specific content- A growing market for content is foreign-language programming. Partnerships with local-language content will curb traditional criticism that US-based streaming services only offer English-speaking content (Mundy, 2016).
  • Increased competition – Facebook is the latest to try and take on traditional media by launching its own original content. Amazon, Hulu, HBO, YouTube are all competing for audiences to subscribe to their platforms. For Netflix, this will continue to develop as more companies seek to buy the latest 'original content' exclusively for their platform (Kuchler & Bond, 2017).
  • Digital piracy – For more than 30 content providers (including Netflix), piracy has led to 5.4bn downloads of media content in 2016 alone. This threatens the whole of Netflix's business model and ability to fund content in the future (Opam, 2017).

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