Netflix Business Model | Case study | How Netflix Earns Money? ๐Ÿ“ฑ

People often ask me how do I gather all the data about different business models for my Youtube channel( Intellectual Indies)

So I thought How about I assemble all the details about all the business models on my website lapaas.com. 

After reading this blog, I am sure youโ€™ll get all the details about the Business Model of Paytm from Funding to How do they earn

A man has been diagnosed with a Netflix addiction after spending eight hours a day over the past six months!

Are you that crazy for Web Series? If yes, have you wondered How Netflix business model operates?

Netflix Revenue Procedure?

Earn from Netflix?

Learn a new language with Netflix?

Yes, you heard it right! After reading this detailed Netflix case study you’ll know the ins and outs of the Netflix business model be it How do they earn, Funding, Expenditure and their marketing strategy.

What’s in it for me ?

Founders of Netflix, Reed Hastings, and Mark Randolph started with an idea of using the internet to rent movies on DVD.

A billion dollar company: Netflix with a subscriber base more than a third of Internet traffic. Crazy right?

The company operates on a subscription-based model. Access is given to the user via a monthly subscription plan.

With a presence in over 190 countries, User can instantly watch movies, TV shows.

According to an article published by Cnet Netflix, US members outrank HBO’s.

According to Wikipedia, Netflix has 154 Million users Worldwide(total) and 148 Million Paid users.

This detailed Netflix case study would help us get to know about their business model, revenue model of Netflix from scratch.

FOUNDATION YEAR: Netflix was started on Jan 1, 1997

FOUNDER: Netflix was founded by Marc Randolph and Reed Hastings.

ABOUT TOP MANAGEMENT: https://media.netflix.com/en/management-team

What is Netflix and How OTT(Over the top) Works? ๐Ÿ”

Netflix, a streaming content provider that allows users to binge watch TV Shows, Movies. It is a subscription-based stream OTT Service which provides online streaming consisting of a library of films and TV Shows.

THE BIGGEST OTT PROVIDER IS NETFLIX.

Netflix has the maximum percentage of total OTT viewing hours with 40%, YouTube has 18%.

In 2002 Netflix had an IPO of $309.7 billion.

Netflix is majorly raising funds through debt financial instrument.

INVESTMENTS

Netflix is funded by 7 investors in which 4 are the lead investors namely:

  1. TCV
  2. IVP (Institutional Venture Partners)
  3. Groupe Arnault
  4. Reed Hastings

ACQUISITIONS

Netflix has acquired 2 organizations:

  1. StoryBots (recently acquired on May 9, 2019)
  2. MillarWorld

How Netflix become a Billion dollar Titan(Success Story): ๐Ÿ•ตโ€โ™‚

Netflix was initially a DVD rental company, they brought these rental services online by creating an online portal and started providing online rental services.

Steadily, Netflix started producing their own content. Netflixโ€™s first self- commissioned content series was a house of cards released in 2013.

REVENUE MODEL | HOW NETFLIX EARNS? ๐Ÿ‘จ๐Ÿปโ€๐Ÿ’ผ๐Ÿค‘

  1. RENTAL INCOME THROUGH DVD RENTING.
  2. PROVIDING SUBSCRIPTIONS: Monthly/Annual Subscription Plans

DVD Rental Services is one of their Revenue sources which can not be included in the membership plans, Monthly membership fees depends on the number of Disc out-at-a-time and Discs per month.

HOW YOU CAN EARN MONEY THROUGH NETFLIX? ๐Ÿ˜

 LOL! You got it right. Main aim of Netflix case study is to educate people about how Netflix business model makes money.

With no doubt, Netflix has a worldwide audience associated with it. You can work as a translator as Netflix has a presence in over 190 countries

So, one can make money by translating the works of Netflix.

Are You Eligible to become a translator?

Company has designed a test for its selection procedure to avoid cranky translations.

Unfortunately, Netflix has disabled this feature ๐Ÿ™

LEARN A NEW LANGUAGE WITH NETFLIX: ๐Ÿ” 

Language Learning with Netflix is a chrome extension used as a translator. How does it work? Select the Subtitle of the language you’re interested in learning.

HERE THE QUESTION ARISES:

How much you can pay monthly for entertainment services? Comment below and share your thoughts  ๐Ÿ˜‰

IDEOLOGY ๐Ÿง 

Netflix is basically doing psycho-graphic segmentation.

Say for example an individual X has its office timings from 9 PM to 8 PM i.e. he will be able to devote time for entertainment after his office hours.

So he will be comfortable in watching the episodes of a web/tv series whenever he wants in his free time. Netflix has made this easier for these kinds of individuals.

Netflix target these types of audiences.

Psycho-graphic segmentation i.e. segmenting according to psychology.

Now, Revenue can not be calculated without expenditures analysis. Let’s have a look at that too:

EXPENDITURES OF NETFLIX ๐Ÿ’ฐ

Netflix has to bear a price binge watch your favourite web series. What are these costs?

  1. PRODUCTION COST
  2. LICENSING COST
  3. SERVER COST
  4. MARKETING COST

YOU CAN USE NETFLIX FOR FREE!

NETFLIX is providing 1-month free trial to every customer wherein a new customer can avail free entertainment for a period of 1 month.

PROBLEMS FACED BY NETFLIX IN INDIA ๐Ÿคฆโ€โ™‚

According to a survey conducted by intellectual Indies people, People in India are not willing to pay more than 500 Rs. monthly for availing OTT services.

A recent report by Counterpoint Research shared problems that Netflix has faced in India.

GROWTH IN INDIA: ๐Ÿ“ˆ

  • Netflix has started thinking locally in India. This fact is evident as Netflix is developing a political series in partnership with shah rukh khan owned Red Chillies Entertainment.
  • Association with Bollywood Stars.
  • Netflix may partner with Whats app ( to increase customer base)

YOU CAN DOWNLOAD THE CONTENT ON NETFLIX!

Netflix offers its customers to download the content on its portal and it has proven to be a great success in India. According to the market survey conducted by Netflix shows 88 percent of Indians download the content from Netflix.

What can be the reason for this?

I hate buffering and thatโ€™s my reason for downloading.

Comment below and share your thoughts!

COMPETITOR ANALYSIS ๐Ÿ“Š

Netflix is facing numerous threats from several of its competitors. Major competitiors: new emerging ott users:

  1. Amazon Prime Video
  2. HULU
  3. YOUTUBE
  4. DIRECTV
  5. HBO NOW
  6. HOTSTAR

Letโ€™s face it:  Netflix is no longer the only OTT service provider. Numerous companies have emerged that are giving stiff competition to Netflix.

Amazon prime (prime services) provides both entertainment services along with shopping.

Hotstar telecasts live matches on its portal giving it an edge ( as cricket is not a game but a religion)

WHICH OTT PROVIDER IS YOUR FAVORITE AND WHY? COMMENT BELOW!

SACRED GAMES: Netflix ๐Ÿ“บ

A Turning point for OTT in India

One of the most talked web series in the town. Starring Saif Ali Khan and Nawazudin Siddiqui the web series is available on Netflix.

sacred-games-netflix-case-study-business-model

Sacred Games has solely increased the customer base of Netflix in India and often compared with Narcos( a prosperous web series)

Have you watched sacred games on Netflix or not?

INSIGHTS FROM EARLY STAGE ๐Ÿ’น

Categories: Digital Entertainment, Media and Entertainment, TV, Video, Video Streaming

Headquarters Regions: San Francisco Bay Area, Silicon Valley, West Coast

Head Office: Los Gatos, California, United States

Founded Date: Jan 1, 1997

Founders: Marc Randolph, Reed Hastings

Operating Status: Active

Finding Status: IPO

Type of Funding (Last): Post-IPO Debt

Number of Employees: 1001-5000

Downloads(30 Days):  17,915,929

Monthly Download Growth -4.19%

Number of Current Team Members: 162

Netflix has 13 board members and advisors including Rich Barton.

Legal Name: Netflix, Inc.

Child Hubs: Netflix Alumni Founded Companies

Stock Symbol: NASDAQ: NFLX

No. of Acquisitions: 2

Logo of StoryBots
StoryBots
May 9, 2019 
Logo of StoryBots acquired by Netflix
StoryBots acquired by Netflix
Logo of Millarworld
Millarworld
Aug 7, 2017 
Logo of Millarworld acquired by Netflix
Millarworld acquired by Netflix

No. of Investments: 2 

Feb 20, 2019
Logo of InfraDigital Nusantara
InfraDigital Nusantara
โ€”
Logo of Seed Round - InfraDigital Nusantara
Seed Round – InfraDigital Nusantara
โ€”
Jun 19, 2017
Logo of Milk VFX
Milk VFX
No
Logo of Venture Round - Milk VFX
Venture Round – Milk VFX
ยฃ2M
Feb 4, 2008
Logo of Roku
Roku
โ€”
Logo of Series B - Roku
Series B – Roku
$6M
Total Team members: 162
ย 
Reed Hastings-employess-of-netflix-business-model-case-study
Reed Hastings
Co-Founder & CEO
ย 
Kelly Bennett-employess-of-netflix-business-model-case-study
Kelly Bennett
Chief Marketing Officer
ย 
Jonathan Friedland-employess-of-netflix-business-model-case-study
Jonathan Friedland
Chief Communications Officer
ย 
Ted Sarandos-employess-of-netflix-business-model-case-study
Ted Sarandos
Chief Content Officer
ย 
Neil Hunt-employess-of-netflix-business-model-case-study
Neil Hunt
Chief Product Officer
ย 
Cindy Holland-employess-of-netflix-business-model-case-study
Cindy Holland
Vice President of Original Content
ย 
Carlos Uribe-Gomez-Ryan Burgess-employess-of-netflix-business-model-case-study
Carlos Uribe-Gomez
VP of Product Innovation
ย 
Ryan Burgess-employess-of-netflix-business-model-case-study
Ryan Burgess
Software Engineering Manager

Company Type: For-Profit

Website: www.netflix.com

Netflix Website Audit: Lapaas seo audit

FREQUENTLY ASKED QUESTIONS โ‰

  • IS NETFLIX MODEL SUSTAINABLE?

Right now, Netflix is incurring too much cost on its working. If it continues to increase its customer base, definitely would help them in gaining more and more revenue and provide sustainability to it.

  • HOW DOES NETFLIXโ€™S RECOMMENDATION WORKS?

The recommendation system works by putting together data collected from different places. Based upon your watch history Netflix collects data and informs algorithms regarding it.

  • IS NETFLIX THE LARGEST STREAMING SERVICE OR NOT?

Closing in on 60 M Customers, Netflix Remains No. 1 U.S.  Streaming Service.

idea-validation-netflix-case-study-business-model

My New version

What are your views regarding the same? Comment Below and Share your ideas!

My Perspective on (Netflix Business Model): 

What if we keep the subscription Plan free for everyone on Netflix just like Youtube and revenue will be generated from Advertisements. 

I think this will make OTT easily accessible to everyone and those who want Ad-free Entertainment, a nominal charge would be applied. 

With this, Advertisers can target people on the basis of their interest. 

Suppose I run a Mobile cover Business if I want to target an audience who watches Sacred games and want to sell them Sacred Games Mobile Covers. What do you think? 

 

More Case Studies:

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Updated on 15th June 2019

Netflix Business Model | Case study | How Netflix makes Money? โœ…
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