Introduction
The main propositions of the current marketing strategy of Netflix, Inc. (Netflix) include the fast and easy manner of subscription online, the unlimited amount of video streaming, and the concentrated attention on receiving feedback from customers. For those reasons, the company has a strong presence in the American marketplace as a leading video streaming service and occupies a unique niche because it uses over 76,000 very specific customized genres.
However, the company is smaller in terms of the revenues and profits than its main competitors, one of which is Amazon.com, Inc. In comparison to the latter, Netflix’s gross profit at the end of 2015 was just over two million dollars, whereas Amazon.com, Inc. earned $35,355,000 (“AMZN Company Financials” par.1). Hence, the position of Netflix on the international market might need some improvement.
Therefore, the objective is to present a new marketing strategy for Netflix that would allow the company to improve its strengths at the level of the worldwide marketing. The first objective of this proposal is to review the background information about the company and the business context in which it functions and to estimate the timeframe and budget for the implementation of the new strategy. Secondly, the objective is to explain how the final goal of the enhancement of the international presence can be achieved with the help of the improvement of original content and collaboration with other brands.
New strategies for improving upon the company´s strengths
The background information and context
Since the company was founded in 1997, there were some strengths and weaknesses of its marketing and business strategies, some of which still demand the attention in the modern context. The easy online subscription gives users mobility. They are directly provided with the service they pay for, and they can easily renew or terminate it online. It contributed to both managerial and marketing aspects of the company’s business model.
Another marketing appeal that Netflix originally implemented was the cooperation with various TV channels, film studios, networks, and production companies. The wider range of content options of different genres helped Netflix to achieve two goals. First of all, it helped to gain more feedback from the customers on various genres. However, the main advantage is the marketing potential that the wide spectrum of the content from different production sources can provide, which is the appeal to the customers of different social groups.
The objective of the new marketing strategy is to go even further with this approach and start to work with the production companies and studios not only in the English-speaking countries but worldwide. Currently, Netflix cooperates merely with the British BBC and with minor production studios on the smaller projects (“Netflix: Financial Statements Charts” par.1). Engaging more foreign film and video makers would raise the appeal among the people with other cultural backgrounds. The further additional improvement is introducing the multi-language content.
Estimated timeframe and budget
Considering Netflix’s add-free policy, the potential weakness lies in the financial side of the strategy. Therefore, to sustain the company’s growth, it needs to engage new subscribers, which means that Netflix needs to find them at the international market. In terms of budget and timeframe, the most important aspect is selecting the first markets in which to put the cooperation to the new level. Depending on the level of the company’s presence and the budget needed for the different regions, the first market to enter should be the West-European countries.
The time scale should be calculated on the basis of an average duration of pre-production, production, and post-production periods of the new piece of content that Netflix needs while cooperating with the studios. The budget should not exceed the company’s average for its original shows.
The top budget spend by Netflix on one show was $100 million dollars, but it is an unacceptable cost for the experimental show in the new market (Perlberg par.3). Meanwhile, the average production of the 10-13 episodes of one show is $8-25 million dollars (“Netflix: Financial Statements Charts” par. 21). Thus, the optimal budget for one show produced for the Netflix audience overseas needs to be at least $10 million dollars. The average timeline of creating one season of a Netflix show is 12-14 months, which can be followed using the new strategy.
The strengths and weaknesses (SWOT analysis) of the new strategy
Enhancement of the international presence: limitations to the strategy
At the moment, the main competitor on the global market is Amazon.com, Inc. with the gross profit of $35,355,000 (“AMZN Company Financials” par.1). However, both companies have the same weakness, which is the low level of the regional adaptation of their product. With the help of SWOT analysis of Netflix’s perspectives can be represented in the table below.
The most important threat is the presence of the local streaming service providers, including the influence of the Alibaba Group video service in the Southeast Asian region. The opportunity for Netflix lies in their system of feedback from customers and collaboration with other local and international brands, as their experience of working together with Marvel Worldwide, Inc shows. In the SWOT analysis table, the main threat and the main opportunity look as follows:
Improving the original content
The production original content based on customers’ preferences is the factor that led Netflix to its success. Therefore, when entering the new market, the company should offer it something that neither local TV-channels, subscription channels, nor on-demand services can. Aside from that, people are more likely to trust the familiar brands and production companies. Therefore, an important aspect of the new marketing strategy should be the cooperation with the different studios, production companies, and channels at the local markets.
Collaboration with other brands
The results of Netflix’s more than successful cooperation with Marvel Worldwide, Inc show the effectiveness of the brand collaborating. Netflix has already launched a number of TV series based on the Marvel heroes (Perlberg par.5). The similar strategy can be applied in other markets worldwide if Netflix chooses to work with the local cultural concepts and brands that represent them.
The opportunity to implement is Netflix’s researchers of the customers’ preferences that can help to articulate the ideas for the shows aimed at the audience of a particular cultural background. In particular, at the planning stage of the project, the company will need to contact the local film and TV production studios and cooperate with them to create the new content within the estimated budget and timeline. In such a way, Netflix will be able not only to maintain its standards of production but also to benefit from the partner company’s market knowledge.
Conclusion
Creating original content in collaboration with the other brands overseas can be an efficient new marketing strategy for Netflix. The business context and background information suggest that the company is capable of carrying out the new strategy. Estimated timeframe and budget for the new markets should not exceed those of the Netflix’s US-based contents.
The main advantage of the strategy is that engaging new customers is the basis of the company’s growth. The weakness is the low level of the regional adaptation of their product. The most important threat is the presence of the local streaming service providers. However, Netflix has the unique opportunity to adapt to the preferences of the customers by means of the customized genres approach, and create the new original content based on it.
Works Cited
AMZN Company Financials 2016. Web.
Netflix: Financial Statements Charts 2016. Web.
Perlberg, Steven. “How Netflix Is Shaking Up Its Marketing Strategy.” Wall Street Journal. 2015. Web.