Business Model Of Netflix, Helps To Build Smart Strategies
The business model of Netflix converted according to technological changes. They started from physical copies and now Netflix streaming customers favourite contents with the customer’s comfort.
Monday May 04, 2020,
4 min Read
Currently, almost 4.57 million people are active internet users globally and are approx 59% of the world population.
An increasing number of active users is helping OTT (Over-The-Top) service provider to make money.
In this article, we will discuss the business model of Netflix which is world's biggest OTT service provider.
Netflix was founded in 1997 by Reed Hastings and Marc Randolph in California. It is
the most successful OTT company.
Overview of Netflix
They started Netflix by providing mailing out physical copies of movies, shows, video games CD through the standard mailing system.
The business model of Netflix converted according to technological changes. They started from physical copies and now Netflix streaming customers favorite contents with the customer’s comfort.
Netflix has become the biggest player in the media industry and currently have more than 182 million paying streaming subscriber worldwide.
If we talk about only paying streaming subscriber-only in the United States so it has more than 69.9 million.
Netflix Subscription Model
In the first business model of Netflix, they started to let people take videos on rent by selecting it online and having it delivered at customer door.
Then they upgrade according to technology emerged and introduced a new business model of Netflix, where customer can rent DVD's online by paying a fixed amount per month.
Netflix Business Segments
First, let's understand what is business segments? so business segments are the area or niche of the business that has a separated strategy and thus has a different financial logic.
Netflix has three business segments which are :
1. Domestic Streaming: This business segment generates revenue from domestic streaming in the United States by monthly membership fees for Netflix services.
2. International Streaming: This segment of Netflix generate revenue from taking monthly membership fees from outside the United States.
3. Domestic DVD: Revenue generated by monthly membership fees for services consisting solely of DVD by mail.
List Of Netflix's Channels
Netflix platform can be accessed by users from:
1. User can access through the website that is online streaming.
2. As we know the mobile application is the best source to reach your audience the
same thing Netflix adopted and started streaming on the mobile app.
3. Smart TV apps and gaming consoles are also another great way of streaming.
4. Netflix's Mail delivery through DVDs.
Netflix Valuable Propositions
Netflix always focuses on providing the best customer experience by developing valuable content. Let's look at some Netflix's value propositions:
1. Their users can stream their favorite video 24x7 without ads.
2. Users can see shows and movies in high definition quality.
3. Now you don't need to go to the theater and DVD store you can watch your favorite movie and shows according to your conveniently anywhere.
4. Users get unlimited access to TV shows and movies.
5. if you are a new user then you can take a benefit of 1 month free Netflix services.
6. Sharing account is one of the best features of Netflix. It allows users to share the account with spouses, friends, or even you can share to group with specific filters.
Is Netflix a Profitable Company?
Yes, absolutely Netflix is a profitable company and if we talk about the money so they generated 20.15 billion U.S. dollars in 2019.
In the first quarter of 2020, Netflix generated total revenue of more than $5.76 U.S. dollars and this year will be excellent for Netflix because of COVID-19 lock-down number of Netflix's users has increased.
What Can We Learn From Business Model Of Netflix?
1. Address The Need Of Customer
Netflix teaches us always to focus on the need of your targeted audience. As we know how Netflix address the need and compete with video rental company Blockbuster in its initial days.
They always focus on changing technologies and adopt that technology in their business to give a shape to their business model according to requirement and users flexibility.
3.Focus On Business Growth
From the beginning, they focus on expanding their business with a future-focused approach that helped him to create an amazing business model.
Conclusion: Netflix is growing faster and its vision is very clear. If we talk about the revenue model of Netflix so that is profitable. Netflix second quarter revenue may be amazing because of COVID-19 lock-down in many countries. Amid Lock-down a huge number of people subscribed the Netflix plan that helps Netflix Business Model to generate more revenue.