Netflix SWOT Analysis 2024: Explore The Magic of Streaming

Netflix ranks as the 73rd company worldwide by market cap. The streaming service is known for its huge library, quality collection, and original content. To understand the success behind the TV industry killer, we’ll go through the Netflix SWOT analysis and reveal its secrets.

Netflix: Company Overview

Netflix started its business in 1997, offering to mail DVDs to its users in a subscription format by 1999. Co-founders Reed Hastings and Marc Randolph started prioritizing personalization in 2006 and managed to find a working method by 2009. By 2013, it had published its 1st original, House of Cards. Netflix is now a virtual media streaming platform with a market cap of $157.59 billion. The company is headquartered in Los Gatos, California, and employs 12,800 staff. The company generated $31.61 billion as revenue in 2022.

Product & Services of Netflix
Movies | TV Series | Documentaries | DVDs

Netflix Competitors
HBO MAX | Disney+ | Amazon Prime | Hulu | Sling TV | YouTube TV | Showmax

Did You Know?

Netflix was originally named Kibble after Founder Marc Randolph’s dog.

Strengths – Netflix SWOT Analysis

Popular to Millennials: Netflix has become a part of the millennial existence through using word of mouth and allowing account sharing. A 2017 survey reported 92% of its 6,567 millennial participants used Netflix.
But 54% were using family accounts, and 5% were using their partner’s or ex-partner’s accounts. And Netflix ended up benefitting heavily, as 55% of its 214 million subscribers in September 2021 came from the millennials and later generations.

Clever Marketing Tactic: Netflix has invested heavily in alternative marketing tactics as much as it has in conventional. In a 2017 survey lasting from August to September, over 75.6% of millennial participants stated that they have heard and possibly passed on good things about Netflix in close circles.
This is Word of Mouth or WOM marketing at play, and Netflix can promote itself this way without much effort. Just by having exclusive content that viewers love and talk about, non-users feel left out and get Netflix subscriptions, adding to the growing pool.

Blue Ocean Advantage: Netflix was the 1st ever company to launch a media streaming platform. And it had years before any serious competitors managed to wrestle away any of its market shares. Technically, Netflix is not the 1st ever streaming platform, as YouTube was offering streaming services in 2005.
But Netflix forked from the type of content YouTube offered and made a new market of its own. Amazon Prime launched a year earlier, and Hulu launched in the same year, but both failed to offer any unique features and services and take the market seriously enough.

Offering Original Content: Netflix’s biggest advantage is that it offers its users a vast library of original content. Having quality exclusive series such as Bridgerton, The Witcher, Lupin, Stranger Things, Money Heist, The Queen’s Gambit, Squid Game, and more allows the platform to draw in viewers only from reviews and WOM marketing. In 2022, Squid Game alone generated 1.65 billion watch hours, season 4 of Stranger Things generated 1.35 billion watch hours, and Wednesday generated 1.19 billion.

Adaptable Business Model: Netflix uses the subscription business model, creating a customer base that provides a continuous revenue stream instead of a higher one-time yield. However, Netflix has recently begun to use an ad-supported subscription, generating high revenue from advertising brands. For invading any local market, Netflix offers a collection of local content along with internationally popular ones. By continuously keeping up with business and market trends, the platform stays relevant and dominates its opposition.

Weaknesses – Netflix SWOT Analysis

Overspending On Production And Licensing: To generate more interest in its platform, Netflix has been spending more and more to produce original media and license viral content. The Crown had a production of value of $13 million per episode, Stranger Things $12 million, The Get Down $11 million, and The Witcher and Marco Polo both cost $10 million each. Netflix original movies such as The Grey Man took $200 million to make, and Red Notice matched the cost. Unfortunately, spending so much causes the ROI to become lower, and not every content made with a high budget generates profit.

Content Blocking: Netflix’s attempts to invade local markets by creating and pushing local content in that region. However, sometimes these contents gain traction or become viral, and international users want to see it. Netflix cannot often allow users to access media that is not licensed or permitted in their country, and consequently is forced to region block them. However, its aggressive policing and banning users from bypassing the restrictions have upset the majority of its user base.

Increase In Competitors: Along with the already existing competition, such as Hulu, Amazon Prime, and Apple TV, Netflix now has to face new competition from Disney. Right after launching in November 2019, Disney’s Marvel universe, Pixar, Lucasfilm, and other studios helped it offer a huge collection of movies, animated content, series, and more.
By March 2021, the service already had 100 million subscribers, and in 2022 Q4, it reached a staggering 164.2 million. Amazon Prime and Apple TV also have begun producing original content that has caught on, such as Central Park, Dickinson, Finch, The Boys, Fleabag, and Utopia.

Shrinking User Base: Netflix saw a meteoric rise in subscribers during the pandemic, reaching the 150 million subscriber mark right as 2020 rolled around. However, from 2021, the platform began losing its subscribers rapidly. That is because of its increasing the subscription fee by more than 50% in the US and nearly 1000% in the UK since the price was listed in 2019. It is charging more for shared accounts in some countries in South and Central America. Due to this issue, Netflix has lost over 1 million subscribers and has barely managed to slow down the falling numbers.

Opportunities – Netflix SWOT Analysis

Exploiting Animated Content: Netflix has recently seen animated series such as Arcane and Cyberpunk Edgerunners. Arcane reached 75 million watch hours by November 2021, while Edgerunners generated over 14 million watch hours in its launch week. However, the most impressive aspect is that both shows boast near-perfect ratings from both critics and the audience and have generated a lot of WOM publicity for Netflix. Netflix can continue to produce or license more from the animated series genre to draw in subscribers.

Creating An Enriched International Library: Netflix can get around its subscribers’ grievances of region-locking content by including the most viral content in its international collection. This would require Netflix to license shows for international release and to comply with the laws of each country. But the platform should be able to offer most content for the US and UK audiences.

Making More Low Budget Hits: Squid Game is Netflix’s biggest release to date and may have generated more than $900 million for the platform alone. However, Netflix only acquired the series for only $21.4 million to make in total, compared to millions per episode of many Netflix originals. The platform can find and acquire other low-budget series or movies that may generate hype and follow viewer trends. This will help keep the production cost low and make the profits higher as a result.

Threats – Netflix SWOT Analysis

Chasing Diversity Over Quality: Netflix originals have been tanking in views and generating negative publicity. The Witcher is the latest victim of this trend, where the Show Writers and Director refuse to stick to the original plotline and attempt to create a new narrative fueled solely by having a diverse cast.
The Witcher: Blood Origin is the spinoff of the original series, and it was rated 39% by Rotten Tomatoes, while critics called it bland and unimaginative. Producing low-quality content for longer can cause the platform to face hostile and existing viewers.

Regulation And Censorship: Due to the censorship and regulations in many local markets, Netflix is unable to provide internationally popular content to its subscribers. These bans prohibit the platform from drawing in more audience and cause it to take action if a viewer attempts to bypass the region locking. By forced compliance, Netflix is creating a bad brand image for itself that can turn away its audience.

Piracy: Netflix has been losing views, especially in the Asian market, thanks to piracy. A study in 2019 claimed the platform might be losing $192 million per month due to piracy. Many viewers opt to download Netflix’s original from pirate sites for free instead of paying the platform, and Netflix is unable to prevent it.

[Bonus Infographic] SWOT Analysis of Netflix

Recommendations for Netflix

To save its platform, Netflix can try the following recommendations:

• Netflix should push harder to achieve an ad-supported tier and keep fees low.
• It should be writers, directors, and cast through a rigorous vetting process instead of favoring diversity.
• The company can invest low budget documentaries and movies.
• Netflix can create animated originals for popular games.

Frequently Asked Questions (FAQs)

Final Words on Netflix SWOT Analysis

Netflix took the world by storm through a blue ocean advantage and an innovative model. However, it is now at risk due to producing bad content, powerful competition, and overpricing. If it doesn’t implement solutions soon, it will lose its subscribers faster than it had gained them.

References

• Wikipedia contributors. (n.d.). Netflix, Inc.. Wikipedia.
• Bell, J. (2022, January 4). The 10 Best Originals on Apple TV+ in 2022. How-To Geek.
• Cyberpunk Edgerunners is Breaking Records For Netflix. (2022, September 23). Steam.
• Netflix (NFLX) – Market capitalization. (n.d.). CompaniesMarketCap.
• Was Netflix the First Streaming Service? (n.d.). DIY SmartThings.
• Gruenwedel, E. (2018, September 27). No Surprise: Millennials Love Netflix. Media Play News.
• Hosch, W. L. (2023, January 19). Netflix | Founders, History, Shows, & Facts. Britannica.
• Netflix Statistics in 2023: The Status of the Internet Streaming Giant. (n.d.). InternetAdvisor.
• Iqbal, M. (2023, January 9). Disney Plus Revenue and Usage Statistics (2023). Business of Apps.
• Jansen, B. (2023, January 30). Netflix Blocking VPN: Why & What to Do About It? vpnAlert.
• Johnson, L., & Janowski, E. P. (2022, November 3). Netflix has launched its ad-supported tier — here’s everything we know about how the streaming giant is pitching advertisers. Business Insider.
• Moore, K. (2021, November 25). How Well Has ‘Arcane’ Done on Netflix? All The Stats So Far. What’s on Netflix.
• O’Rourke, R. (2021, October 13). ‘Squid Game’ Reportedly Only Cost Netflix $21.4 Million From Their Massive Piggy Bank. Collider.
• Parker, G. (2018, January 26). 20 Fun Facts You Never Knew about Netflix. Money Inc.
• Pereira, D. (2022, July 15). Netflix Business Model. Business Model Analyst.
• Perez, S. (2019, February 28). Netflix may be losing $192M per month from piracy, cord cutting study claims. TechCrunch.
• Rodriguez, A., & Low, E. (2022, December 26). How Netflix has changed the global entertainment industry. Business Insider.
• Rollings, G. (2022, April 20). The 8 reasons people are turning off Netflix – from price hikes to preachy woke documentaries. The Sun.
• Rowles, D. (2022, September 13). The 20 Best Amazon Prime Original Series Right Now. UPROXX.
• Schiesser, T. (2015, January 4). Netflix begins blocking users who bypass region locks. TechSpot.
• Shaw, L. (2021, October 17). Netflix Estimates ‘Squid Game’ Will Be Worth Almost $900 Million. Bloomberg.
• Netflix loses almost a million subscribers. (2022, July 20). BBC News.
• Stewart, K. (2022, December 21). The 12 Most Expensive Netflix Movies Ever Made. Boss Level Gamer.
• Stoll, J. (2022, November 9). Number of Disney Plus subscribers worldwide from 1st quarter 2020 to 4th quarter 2022. Statista.
• Tassi, P. (2021, September 29). Netflix’s Top 10 Most Popular Original Shows Have A Lot Of Surprises. Forbes.
• Tassi, P. (2022, September 17). ‘Cyberpunk Edgerunners’ Has Some Of Netflix’s Highest Audience Scores Ever. Forbes.
• Staff, T. (2022, December 26). Top 10 Most Watched Netflix Shows Ever, As Of 2022. Toofab.
• Tyler, A. (2022, December 23). Why Witcher: Blood Origin’s Reviews Are So Terrible. ScreenRant.
• Vena, D. (2017, April 13). Millennials Love Netflix, but Will They Pay for It? Fox Business.