Netflix SWOT Analysis - In-depth report on all factors
Complete and in-depth Netflix SWOT analysis to help recognize the brand’s strengths, weaknesses, opportunities and threats.
Netflix is one of the most popular and top rated streaming service providers in the world. In the Q1 of 2021 alone, the platform had close to 208 million paying subscribers. With its well curated content, Netflix is well ahead of its game with 47% Americans preferring it over any other service. Internationally, the platform accounts for 8% of all time spent watching videos (stats source - link). These numbers are quite promising, but let’s do an in-depth Netflix SWOT analysis to see how it actually fares.
With watching content using a streaming service being the present day trend, a number of streaming services provide a healthy competition to the firm. Amazon Prime Video, Disney+ etc. are also becoming quite popular names in the streaming industry. Not only these, but you’d see new platforms added to the list of OTTs, providing exclusive content every few days. As such, what are Netflix’ strengths and weaknesses? Where are its opportunities and what are the threats the firm faces?
In the below sections, we’ve given a detailed Netflix SWOT analysis and highlighted all major points which account for the company’s success and downfalls, if any. Check out how the OTT platform is performing in the present day.
TABLE OF CONTENTS
Netflix - Overview
Before diving into the Netflix SWOT analysis, here are some facts and figures about the company to refer to:
|Company Name||Netflix, Inc.|
|Founder(s)||Reed Hastings, Mark Randolph|
|Company Headquarters||Los Gatos, California, United States|
|Present CEO(s)||Ted Sarandos (16 Jul 2020–), Reed Hastings (Sep 1998–)|
|Number of Employees||12,135 (2021)|
|Annual Revenue||25 billion (2020)|
|Operating income||4.585 billion USD (2020)|
|Area of service||Worldwide, not including China, Crimea, North Korea, or Syria.|
|Link to website||www.netflix.com|
Complete Netflix SWOT Analysis
The strengths of a company are what comes into play when planning to expand. Having been around for a while now, Netflix has a number of strengths that make it one of the top streaming service providers. These strengths include:
- Brand reputation: As mentioned, the company has been active since 1997. Users have been relying on Netflix for their content instead of television channels for a while now and this strong brand reputation gives an edge to Netflix over competitors. Naturally, something which has stood the test of time deserves to be trusted.
- International functioning: Apart from a few countries, Netflix is available all over the world at standardized rates according to the country. This proves to be advantageous with the market scenario changing every so often. For example, although the platform was launched in India in 2016, its revenue in the financial year 2020 was 9.24 billion Indian rupees.
- Extensive and Original content: Netflix has over 15k titles and this gives users the chance to find something new to watch all the time. The company provides an opportunity to filmmakers to showcase their original, never seen before content, ensuring that the audience enjoys it.
- No ads: Perhaps a strength which applies to most paid OTTs nowadays, the ad-free experience Netflix offers makes for a pleasant experience to users. Given that cable TV makes you wait for a few minutes in between important shows, the ad-free experience was a great boost initially.
- High adaptability: Netflix has kept up with the changing times. The firm has made sure that they stream content which is appealing to all age groups and interests. You can find films and shows from the 20th century as well as content which was just released one day ago on the platform. This makes it one of the most in-demand platforms out there.
Netflix has a number of strengths as shown in the earlier section. However, this does not mean that the company is perfect and it does have weaknesses. These internal weaknesses act as a hindrance to Netflix’ productive growth and the company needs to find ways to deal with them. Netflix’ weaknesses are:
- Content copyrights: Given the number of other players looking to also stream good content to their viewers, the amount of content which Netflix has exclusive ownership over is limited. This proves to be a challenge in user retention.
- Limited content in countries: In some countries, Netflix doesn’t show original content. This is because when these originals were created, the service was available in a limited number of countries. This makes Netflix heavily dependent on customers in North America.
- Customer service: Netflix’ customer service isn’t really great and this means that users don’t get support when they need it. This has led to unsatisfied customers and is a weakness Netflix needs to confront if it wishes to continue doing well.
- Imitable model: The success of Netflix would obviously mean competition, and a lot of these competitors have copied the exact same business model that Netflix has. This is an internal strategic factor which makes the business weak.
- Need for steady internet: Agreed, the content on Netflix can now be downloaded instead of having to stay online all the time. Even then, you’d still need to be online when downloading. This is not an ideal situation in places where the internet infrastructure is not well developed. Frustrated customers may find newer, faster ways to download content using lesser data.
Now that we know the strengths and weaknesses of Netflix, it’s time to move on to the next segment in this Netflix SWOT analysis, the opportunities. With the market demands constantly changing and the users looking for OTT content, what are the opportunities that Netflix has? How can the firm capitalize on these? Here’s a list:
- Heavy demand: The demand for OTT platforms has seen a huge rise in recent years. Netflix already has a good reputation in this sector and can expand accordingly.
- Other exclusive content: Now that a huge number of users already trust Netflix, the firm can expand beyond just streaming movies and shows. There are a number of other products they can expand to such as live sports. The brand doesn’t show any live or pre-recorded sports content and this can be a good opportunity to expand with the enormous consumer base.
- Global expansion: Netflix is yet to provide services in some major countries such as China. Most of its competitors also don’t provide services there and expanding into other international markets is an amazing opportunity that Netflix can tap.
- Partnering in local markets: The brand is already a globally recognized one. Using this brand name, Netflix can try to strategically partner with local market firms and create content which is more appealing to individual countries. This will serve in strengthening the subscriber base.
- Multilingual content: Along with capturing the audience in a particular country, it is important to make the content resonate with that audience. For this, providing content in regional languages is a great opportunity for Netflix to gain a loyal fanbase.
While Netflix has a number of areas it can flourish in, like all companies, the firm is faced by external threats, too. A number of reasons seem to be proving as blocks towards Netflix successfully capitalizing on all the opportunities it has. Here’s a list of all the conditions that threaten Netflix’ growth:
- Competition: As is obvious, the increasing demand for OTT content gives an opportunity to competitors of Netflix to flourish. These platforms are buying copyrights to content, effectively taking away Netflix monopoly and also making interesting content of their own.
- Piracy: The rates which Netflix charges are not exactly the most affordable to a number of people. Due to this, a large number of the platform’s users prefer to find pirated content from third-party content distributors for free, causing big hits in Netflix’ profits.
- Government regulations: Netflix can’t simply showcase content as they wish to users across the world. The firm has to get through a number of government regulations to display content and this is a major hindrance to expansion. Strict censorship in some areas also makes the content less interesting.
- Account sharing: A standard plan on Netflix can be used on two devices at the same time. At a few extra bucks, users can avail of the premium plan which can be used on 4 devices simultaneously. Taking advantage of this, users do not purchase an account, but simply share one with friends. So, although the actual number of users is big, Netflix doesn’t profit from all of them.
Key points from the Netflix SWOT analysis
The Netflix SWOT analysis given above shows that while the firm has some major strengths given that it was an early bird in the market and produces content which users like, it also has internal weaknesses. Improving customer service and making the content easily accessible is something that the company should work towards. Among external factors, the ever-increasing competition stands as a threat to Netflix’ growth, but Netflix can find ways to effectively capitalize across regions, given the demand.