Why Netflix Content Strategy Will Work in the Long Term
For online streaming providers, the Netflix market segment material is king. Perhaps even Americans are consuming more foreign content than domestic content. Let”s take the Spanish series about robbers as an example. The creators and actors had already admitted that the series was a flop when Netflix came along and bought it. Netflix renamed La Casa de Papel (“Paper House”) Money Heist (“Bank Robbery”) and added some advertising. And the unpredictable heist drama turned out to be one of Netflix’s best deals ever.
Netflix (NFLX 4.78%) is considered a pioneer in online video streaming. After all, nothing is more important to an online streaming company than its ability to attract and retain viewers. Still, with the likes of Apple (AAPL 0.20%) and Disney (DIS 1.68%) now set for an extreme venture, will Netflix’s massive bets on original content pay off?
Over the past 4 years, the average fee for a paid Netflix membership has grown by 26%. From January to September 2019, they grew by 21% year on year. Netflix sales have grown by an average of 30% over the past four years and 26% over the first three quarters of 2019. Netflix’s strong and growing subscriber base of 158 million subscribers gives it an edge over other players in the market.
Similarly, Netflix has achieved tremendous growth in the global market. It is already penetrating the markets of Latin America, Europe, the Middle East, Africa, and the Asia-Pacific region. To further accelerate this growth, Netflix is offering its cinematography in multiple world languages.
Focus on Netflix original content strategy
One of the key factors that have contributed to the astonishing growth in Netflix subscribers is their focus on compelling premium content. Although Netflix started streaming as the most convenient content distributor, it recognized the importance of producing its own content very early on. The business venture has discovered that if online streaming is destiny, it”s best to do it a few times until other media companies take the field themselves, instead of licensing their movies and TV offerings to Netflix. So with a library of unique content, Netflix began to brace for the opportunity, and Disney removed its content from Netflix to move to its own platform.
Netflix’s content strategy is facing strong opposition from companies like Warner Media and Disney, who own iconic film franchises like Star Wars and Marvel, as well as studios like Pixar. But losing the rights to big shows like Friends and The Office came as a blow to Netflix, it wasn’t a surprise. The agency”s decision not to pay higher fees for these impressions stems from an analysis of their viewing value versus prices. Netflix content strategy — strives to create blockbusters of its own.
$15 billion was spent on content in 2019, most of which was on unique apps. What’s more, the number of Oscar and Golden Globe nominations Netflix has received is a testament to the company”s commitment to creating quality content. Over the next few years, Netflix”s unique content should get stronger. You can see for yourself the originality of Netflix.
Admittedly, the cost of producing in-house offerings was too high for Netflix. Over the past few years, the company has been spending more money than it has earned. However, in the long run, developing your own content is cheaper, as the corporation works directly with the creators and saves on overhead costs. Moreover, he owns the rights to the produced content.
Netflix has been able to boost its sales in Latin American markets, even at a significantly lower cost, thanks to its large and growing customer base in those markets. In the US, despite a slight loss of users following the 2019 fee hike, the move boosted the company’s sales significantly. This suggests that Netflix”s pricing power is inside the US market.
Netflix expects it to remain profitable over the next few years due to poor streaming. Netflix”s huge and growing subscriber base must be supported to help improve sales in addition to margins.
While authentic programming is key, Netflix recognizes the importance of streaming popular offerings and movies. In general, the company intends to continue to offer its viewers a lot of the best content in different genres.
It won’t be easy for Netflix. But with his original programming strategy, huge subscriber base, and a growing number of Netflix contributors around the world, it could very well work. Based on its achievements to date, Netflix’s differentiated content strategy should allow it to grow its subscriber base, which will increase revenue.