People are evolving day by day. The thrust of getting entertained has not been limited to social gatherings or games or movie theaters. After the invention of televisions, people started rethinking the possibilities of entertainment. Thus various shows and TV contents started to get exposure. When the internet came into the world, people started to seek new forms of entertainment online. Thus Netflix started to boast up in the market. It was founded in the year 1997 as a DVD subscription and rental company. But Now, Netflix is providing Online Contents and Originals over 190 countries (1). So let us not waste any time and get to explore the SWOT of Netflix.
SWOT Analysis of Netflix
The Netflix SWOT will give us a clear view of the company’s structural and operational aspects. So the SWOT of Netflix is explained as follows:
The Strengths of Netflix: The Number One Online Streaming Service
Netflix has been a prominent name in the Paid Streaming Service available in the world. It is a company that heavily relies on the strengths. Let us describe the strengths of Netflix.
Sorting out the Entertainment Factor
Netflix has become one of the most popular online streaming platform which is gaining momentum rapidly. As far as 2020 is concerned, Netflix has 182.86 million subscribers streaming contents all around the globe. (2) People are getting entertained with some awesome contents and shows that are offered in the platform.
Growth and Pricing
As Netflix is a paid online streaming platform, the consumers has to subscribe on monthly packs. The pricing starts from 7.99 US Dollars to 11.99 US Dollars comparing with the streaming quality and time limit. (3) This is very competitive in the online market and the easy payment gateway is phenomenal.
Versatility in Contents
Netflix has been covering various eye catching contents on almost all the genres including featured movies, television shows, web series, reality shows, documentaries and a lot more. This versatile covering of contents allows Netflix to grab more subscribers as they can please everyone with every genre. This is a strength.
Original Shows and More
Netflix has been serving us with all our favorite contents in the audiovisual entertainment arena. The main attraction of the said platform is that they produce and fund unique shows and series that are only available in their platform. Which potentially adds up new subscribers. This has been a game changer.
The Weaknesses of Netflix: Imitable Business Model and More
Every platform has a weakness, so does Netflix. Netflix has been in a rough patch recently and we will be putting the spotlight on those.
An Imitable Business Model
No one can deny the fact that Online Streaming platform is not a new thing anymore. Netflix has certainly become weak after prominent companies like Amazon and HBO chose to go online with their contents. Not renewing or improvising the business model has been a weakness of the Streaming Company.
Funding Originals, Up-scaling Debts: Netflix has been reportedly going under debts while they are spending too much on funding new originals which sometimes misfires. Netflix’s income solely relies on their contents which means that if their content doesn’t work or fail to attract the crowd, they starts to lose money which influences them to lend money from the market.
Not Going Green
Where prominent companies and Tech Giants like Facebook, Amazon and Google choosing to use all their resources over and over again and make them renewable energy to save the environment and the planet, Netflix still has not taken any initiative regarding that. They have been using non-renewable sources which increases the costs.
Shows that End up Failing to Win Hearts
Netflix has been funding some shows and series which will be considering as the originals of the streaming platform. But shows and films like ‘Ghost Stories’, ‘Freud’ and ‘The English Game’ failed to catch the attention of the crowd and the critics. (3) This resulting in lesser views and is a huge loss.
The Opportunities of Netflix: The Areas where the Ball should be thrown!
There are many opportunities where Netflix can work on for a better feedback. The opportunities are given as follows:
Expand and Grow
Netflix is available in most parts of the world, but there are some countries where Netflix has still not managed to put their foot in. They need to expand in those countries as well. Also they can produce exclusive contents there to attract the audiences of the countries a bit more.
Make Some Friends
In order to survive in the market, a particular business platform should make some friends and allies so that they can have a better chance of being able to proceed and prosper. Mutual agreements and tie ups with certain companies can be more beneficial for Netflix in the long run.
Revamping the Privacy Policies
There are certain privacy policies that Netflix need to sort out for more exposure whatsoever. Revamping the privacy policies will ease up the view flow and it will be able to engage more and more potential subscribers to the streaming platform. This is a viable opportunity for the streaming company.
Region Based Contents
As Netflix is available in 190 countries, it can make a new breakthrough by covering region based contents on their platform. People who can relate themselves with familiar contents from their culture will be much more engaged which will create revenue and Netflix will gain popularity in the specific region.
The Threats of Netflix: The Darkness of the Clouds
As it is an Online streaming platform, Netflix has some threats which can prove to be lethal in the distant future. The threats are as follows:
Streaming Platforms Catching up
Streaming platforms like, Amazon Prime, Hulu, Apple, HBO, Disney Plus is getting more and more agile day by day. Netflix is being fallen behind as they are trying to capture the market either by buying shows or out biding Netflix. (4) This is a constant threat of Netflix being dethroned shortly.
Piracy Concerns
Netflix is losing a big chunk of money every month for piracy. Piracy is a major setback for online paid streaming platforms like Netflix. It is estimated that Netflix will lose almost 192 million US Dollars every month (5). This is a lethal threat for any paid online streaming company.
Local Government Regulations
As Netflix is initiating its services worldwide, it has to stream the shows in various parts of the world where various nations are involved as well as their government. For example, China’s government doesn’t allow to stream foreign contents. That’s why Netflix cannot operate in China. (6) This is a threat.
Debts and Economic Occurrence
Netflix is under serious debt of 14.17 billion US Dollars by the end of March. This amount of money is huge compared to the equity of the company. Though the company is expanding rapidly, if anything goes wrong, the company will end up losing its share and equity real soon. (7)
Recommendation for Netflix
Netflix has been one of the most appreciated Online streaming platform around the globe. The Originals of the platform is very demanding and they are attracting a lot of new subscribers all together. By the end of 2020, 182.8 million subscribers were registered in the streaming platform. (8) Undoubtedly it is the world’s largest paid streamer of all time. A little here and there, some remodeling and making some new friends and allies will do the trick for the company. That was all for today folks, hope to see you all in another analysis. Till then, stay safe and stay home.
Related: SWOT Analysis of HTC Corporation
Reference Links
- https://help.netflix.com/en/node/14164
- https://www.statista.com/statistics/250934/quarterly-number-of-netflix-streaming-subscribers-worldwide/
- https://www.insider.com/the-best-and-worst-netflix-originals-this-year-2020#some-critics-thought-the-letter-for-the-king-spread-itself-thin-14
- https://www.bbc.com/news/technology-50077673
- https://techcrunch.com/2019/02/27/netflix-may-be-losing-192m-per-month-from-piracy-cord-cutting-study-claims/
- https://www.cnbc.com/2019/05/10/netflix-has-a-china-strategy-it-doesnt-involve-launching-there-soon.html
- https://variety.com/2020/digital/news/netflix-raise-1-billion-debt-offering-1234587050/
- https://www.nytimes.com/2020/04/21/business/media/netflix-q1-2020-earnings-nflx.html
Hey Guys! My name is Richard Andrew. I am a contributor to the Strategy Watch. I have finished my graduation with a major in Economics. My interest areas are Economics, Financial Analysis, Stock Analysis, and Business Strategy.