Netflix Business Model | Case study | How Netflix Earns Money??
2 Minute Summary
Netflix is on the Biggest Online Movie Platform which penetrating in India very fast. Founders of Netflix, Reed Hastings, and Mark Randolph started with an idea of using the internet to rent movies on DVD. Also, Netflix is with a subscriber base more than a third of Internet traffic. 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, Users can instantly watch movies, TV shows. According to Wikipedia, Netflix has 154 Million users Worldwide(total) and 148 Million Paid users. 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. For more read the Blog.
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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’s 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?
- What is Netflix and How OTT(Over the top) Works
- How Netflix become a Billion dollar Titan(Success Story)
- Netflix Revenue Model | How Netflix earns?
- How You can earn Money ?
- Expenditure Of Netflix
- Problems Faced by Netflix in India
- Growth in India
- Competitor Analysis
- Sacred Games a turning point for Netflix in India
- Insights from early-stage
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, Users 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??
Netflix, a streaming content provider that allows users to binge-watch TV Shows, Movies. It is a subscription-based stream OTT Service that 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.
Netflix is funded by 7 investors in which 4 are the lead investors namely:
- IVP (Institutional Venture Partners)
- Groupe Arnault
- Reed Hastings
Netflix has acquired 2 organizations:
- StoryBots (recently acquired on May 9, 2019)
- Millar World
How Netflix become a Billion dollar Titan(Success Story): ?♂
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 content. Netflix’s first self- commissioned content series was a house of cards released in 2013.
REVENUE MODEL | HOW NETFLIX EARNS? ????
- RENTAL INCOME THROUGH DVD RENTING.
- 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 depend on the number of Disc out-at-a-time and Discs per month.
HOW YOU CAN EARN MONEY THROUGH NETFLIX? ?
LOL! You got it right. The main aim of the Netflix case study is to educate people about how Netflix’s 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?
The company has designed a test for its selection procedure to avoid cranky translations.
Unfortunately, Netflix has disabled this feature 🙁
LEARN A NEW LANGUAGE WITH NETFLIX: ?
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 😉
Netflix is 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?
Netflix has to bear a price binge-watch your favourite web series. What are these costs?
- PRODUCTION COST
- LICENSING COST
- SERVER COST
- MARKETING COST
YOU CAN USE NETFLIX FOR FREE!
NETFLIX is providing a 1-month free trial to every customer wherein a new customer can avail free entertainment for 1 month.
PROBLEMS FACED BY NETFLIX IN INDIA?♂
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:?
- 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 per cent of Indians download the content from Netflix.
What can be the reason for this?
I hate buffering and that’s my reason for downloading.
Comment below and share your thoughts!
Netflix is facing numerous threats from several of its competitors. Major competitors: new emerging ott users:
- Amazon Prime Video
- HBO NOW
Let’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?
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 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?
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
|May 9, 2019|
StoryBots acquired by Netflix
|Aug 7, 2017|
Millarworld acquired by Netflix
No. of Investments: 2
|Feb 20, 2019|
Seed Round – InfraDigital Nusantara
|Jun 19, 2017|
Venture Round – Milk VFX
|Feb 4, 2008|
Series B – Roku
Company Type: For-Profit
Netflix Website Audit: Lapaas SEO audit
FREQUENTLY ASKED QUESTIONS⁉
- 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 NETFLIX’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.
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 based on their interests.
Suppose I run a Mobile cover Business if I want to target an audience who watches Sacred games and wants to sell them Sacred Games Mobile Covers. What do you think?
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