So, what was the last film or web show you watched on Netflix? I am assuming you may be having a Netflix subscription or at least heard its name. Netflix is a dominant OTT platform in the current era. It is a one-stop solution if you are looking to watch the content of multiple genres in one place. It is accessible across countries and people are binge-watching using this platform. Being a user we do not really introspect about any company from the perspective of the business is running. There are lots of ups and downs for any business. This applies to the giant Netflix as well which is dominating the market of OTT platforms.
In this article, you’ll see a SWOT analysis on Netflix.
You’ll see the Strengths, Weaknesses, Opportunities, and Threats of Netflix.
You might also wanna read:
A quick overview of Netflix
Founded | August 29, 1997 |
Founders | Reed Hastings and Marc Randolph |
Headquarters | Los Gatos, California, United States |
Employees (2022) | 12000+ |
Annual Revenue (2022) | $31.6 Billion |
Official Website | Netflix |
SWOT Analysis Of Netflix: Binge It!
For this article, we are considering SWOT as our method to analyze Netflix as a business. However, there are other business tools as well. You may wanna read our article on alternatives to SWOT. I am hoping you will find it insightful.
So, let us begin the SWOT analysis!
Strengths Of Netflix
Global Presence
Netflix is a global brand. It is present in every country except China, North Korea, Crimea, Syria, and Russia. This helps Netflix serves customers across the globe. As of 2023 April, Netflix has around
230.7 million active subscribers. This is a massive number compared to the competitors of Netflix. Having a global presence is one of its biggest strengths. So, in every country, you can find and watch your shows or films.
Netflix currently doesn’t offer any video streaming service in China due to a challenging regulatory environment in the country. Netflix faced challenges given the increase in sanctions and growing payment in Russia after which it suspended its services. Adding to this, Netflix is not present in Crimea, Syria, and North Korea due to U.S. sanctions and regulations.
Exclusive Original Content
You can search Netflix’s massive catalog and you’ll find plenty of content. One remarkable proposition offered by Netflix is the original content that it is producing. Netflix has produced a lot of original content that has been well-received by the audience. If I name them, you’ll be amazed if you never knew they are under Netflix’s original content house. Money Heist, Stranger Things, and Mindhunter are some of the names to mention here for giving you a gist.
Apart from just producing original content, many shows and films on Netflix have been winning awards across the globe. As of 2023 April, here are some numbers of nominations the original content of Netflix has received.
HBO – 107 nominations
NBC – 47 nominations
ABC – 36 nominations
FOX – 33 nominations
CBS – 23 nominations
This proves that the original content provided under Netflix is mass appealing.
Various Pricing Models
Netflix is quite flexible in pricing models for its subscribers. As Netflix is operating in almost every country, It has rolled out multiple pricing models depending on the local territory and even devices. Netflix has a separate pricing model for mobile devices. So, if you want to subscribe and watch Netflix only on your mobile device, this is possible. This has Netflix gained more subscribers as the pricing model for mobile separately falls under the affordable range for many people.
Rapid Financial Growth
Netflix has grown immensely over the years in terms of finances. If we look at the data, we can clearly see an upwards trajectory for Netflix.
Here is revenue data for the last 5 years
$31 Billion | |
$29 Billion | |
$24 Billion | |
$20 Billion | |
$15 Billion |
This is a great achievement by Netflix over the last 5 years. However, there is a catch. You’ll see that in the weaknesses of Netflix. Still, this is a strength as it improves the financial stability of Netflix.
Weaknesses Of Netflix
Low-Value Content For Some Territories: Losing Subscribers
Netflix produces a lot of original content. However, most of the original content is aimed at people in Europe, South America, and North America. The content they are providing for such areas is amazing. But, there still needs to be produced a lot for other areas and countries.
Netflix has low-value content for Asian countries and especially India. India has a large consumer base alone. However, Netflix has not been able to utilize this market. In recent times, Netflix has lost around 1 million active subscribers from the Indian market in a short span of time. This leaves a huge impact on the company’s profit margins.
Rising Debts
Netflix produces a lot of content. This content requires a lot of resources and time. For maintaining smooth operations for the company, Netflix has been calculating its debts. Netflix has borrowed around $16 billion as debt in the past decade. The primary reason behind this was to invest money into production and generate profitable revenue margins.
As of today, Netflix is assuring that it has made a lot of money to repay all the debts in time. However, this is still due. The company is still trying to repay the debts while maintaining the budget for new shows and series. The major strategy of Netflix is to attract more customers while retaining the old ones. This sounds simple and straightforward. But implementing such a strategy is easier said than done!
Major Revenue Centered Around North America
Yes, Netflix is present in almost every country. Moreover, it is also providing various pricing models to attract customers. However, the primary revenue source for Netflix still remains the North American market. Around 50% of its revenue comes from North America. The rest comes from Europe and the Middle East. The smallest chunk of revenue is from Asian countries.
Copyright Issues
Netflix content that is not originally produced by the company itself comes with a copyright license. The license allows Netflix to stream that particular content on its platform. When the license expires, it is up to Netflix to renew the license to continue the streaming of that content on its platform. However, in some situations, other OTT platforms are able to compete and purchase the copyright license. Hence, the content shifts from Netflix to other OTT platforms.
Opportunities For Netflix
Produce More Local Content
Netflix has remarkable content for major markets like North America, Europe, and the Middle East. The content produced and streamed in such areas is profitable and quite sustainable. However, as discussed in the weaknesses of Netflix, there are many Asian countries for which Netflix does not have enough content. Asian countries have a large consumer base that is still not a part of Netflix only due to low content relating to their local culture. Netflix can grab this opportunity to produce content that is more localized for some particularly profitable market areas.
Integrate Advertising Based Model
As you see many platforms are using advertising to drive their revenues, Netflix can also think of having such a model. You see YouTube driving huge revenue per day only from advertisements. Netflix can have a similar business model. It can allow certain content to be watched by everyone that would include advertisements to cover expenses. And if someone wants to subscribe, they can always subscribe and remove all advertisements from their streaming service. Most tech giants are already exploiting the advertising model of driving revenues.
Threats To Netflix
Stiff Competiton From Other Platforms
The major threat Netflix faces is the stiff competition from its competitors. I have already linked our article on the competitors of Netflix at the beginning of the article. As of 2023, there are major OTT platforms that are giving Netflix a run for its money. Some of the competitors include Disney+, Amazon Prime Video, HBO Max, Hulu, and many more. These OTT platforms are presenting refreshing content along with flexible pricing models. The entire market becomes tough for Netflix to retain its subscribers.
Digital Piracy
Just like any other OTT platform, Netflix faces a lot of risk of digital piracy. There is no fixed solution to prevent piracy. Every now and then, you can see the content of Netflix available for download on various websites for free. This costs huge money on every content leaked online. Apart from Netflix, all other OTT platforms face this issue. There are laws regarding digital piracy in almost all countries. However, the implementation to catch the main culprits behind digital piracy is still lacking. For every content released, the pirated versions become available within a few hours. The subscribers may watch it on Netflix. But the people who are not subscribed enjoy it without paying any money. This cycle continues and people who are not subscribers may never actually subscribe knowing they can watch the content for free.
Bottom Line
Netflix is a great OTT platform. When it comes to streaming, Netflix is the word that may come to our minds. Like every established business, Netflix has its own share of strengths, weaknesses, opportunities, and threats.
Here is a quick overview of the entire SWOT analysis of Netflix.