SWOT analysis of Netflix
This article is about a detailed SWOT analysis of Netflix. It examines the strengths and the weaknesses of Netflix. It also explores the opportunities and the threats facing the company. Netflix, Inc. is the world’s leading Internet entertainment service. It is an American company, headquartered in California. It was founded by Reed Hastings and Marc Randolph in 1997.
Strengths of Netflix
The Netflix subscribers can watch TV shows and movies instantly with a streaming-only plan. Undoubtedly, Netflix is a global name for online streaming content. It serves members in over 190 countries. As of October 2018, it has 137 million subscribers worldwide (Netflix, 2018). This strength offers the company a competitive advantage over its competitors.
There are three major categories of contents provided by Netflix i.e. licensed non-first-window content, licensed original first-window content, and owned original first-window content. Netflix has recently focused heavily on original contents as it has now its own TV and film studios. This focus helps the company reduce over reliance on outside studios and take control over its original contents (Netflix, 2018).
The global focus is also an area of strength. With such focus, Netflix now offers original contents in some of the major countries in the world. For instance, Sacred Games in India and La Casa de las Flores in Mexico are original contents and have become big hits.
Netflix has won a number of prestigious nominations and awards over the years. For instance, it received 31 Emmy nominations in 2014. It earned six Golden Globe Award nominations in 2013. Likewise, it received 112 nominations overall in original programming in 2018 alone. The streaming service won 23 awards in 2018, including the best drama series award for ‘Game of Thrones’ (Statista, 2018). It also managed to secure its first ever Academy Award with a Best Documentary win for Icarus in 2018 (Mccreesh, 2018).
Weaknesses of Netflix
Weakness is the next element to discuss in the SWOT analysis of Netflix. Though Netflix offers its original contents, it is still heavily dependent on partners. According to the Chief of Netflix Content, the licensed contents will consume the vast majority of the budget ($8 billion) of 2018. Similarly, producing original contents is also extremely expensive (Bowman, 2017).
The subscribers need to have high speed Internet connection to watch Netflix services. Netflix’s minimum recommended broadband connection speed is 1.5 Megabits per second, while 25 Megabits per second for Ultra HD quality. It is worth noting that high speed Internet is not available to everyone and across all countries and regions.
Opportunities for Netflix
Increasing the number of subscribers is a big opportunity. Likewise, increasing monthly subscription fees is an opportunity as well. However, Netflix must exercise extra caution before increasing the monthly subscription fees as it may make some subscribers unhappy.
Expansion into mainland China is also a great opportunity. Likewise, producing hit shows like House of Cards and Stranger Things will certainly boost the company’s image and market position. Diversification into other markets is also worth exploring.
Threats to Netflix
Threat is the last element to address in the SWOT analysis of Netflix. No doubt that an increasing number of competitors are challenging Netflix on a great scale. Traditional networks like CBS and Disney have launched or announced plans for their own streaming services (Bowman, 2017). The challenge from Hulu (a joint venture between several of the major broadcast networks) is also very substantial. Other major competitors of Netflix are Amazon, YouTube, and HBO. Numerous television Channels around the world are also considered indirect competitors of Netflix.
Netflix has been sued a number of times over the years. For example, it was sued in 2004 for advertising with regards to the claims of ‘unlimited rentals’ with one-day delivery. Likewise, it was caught up in a copyright lawsuit in 2015 involving the 1948 Italian film Bicycle Thief (Gardner, 2015). In addition to lawsuits, Netflix also faces big threats from digital piracy.
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Last update: 18 December 2018
Bowman, J. (2017) Netflix has one big weakness, available at: https://www.businessinsider.com/netflix-has-one-big-weakness-2017-10?r=US&IR=T (Accessed 15 December 2018)
Gardner, E. (2015) Netflix Hit With Copyright Lawsuit Over Classic Italian Film ‘Bicycle Thief’, available at: https://www.hollywoodreporter.com/thr-esq/netflix-hit-copyright-lawsuit-classic-833908 (Accessed 10December 2018)
Mccreesh, L. (2018) Oscars 2018: Netflix wins its first Academy Award, available at: https://www.digitalspy.com/movies/oscars/a851511/oscars-2018-netflix-academy-award-icarus/ (Accessed 12 December 2018)
Netflix (2018) Netflix Corporate Information, available at: https://help.netflix.com/en/node/2101 (Accessed 12 December 2018)
Statista (2018) Number of nominations and wins for Netflix original programs at the Primetime Emmy Awards from 2013 to 2018, available at: https://www.statista.com/statistics/324190/nominations-winners-netflix-original-programs-emmy-awards-usa/ (Accessed 12 December 2018)
Photo credit: Amazon UK
Author: M Rahman
M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He is a graduate of Leeds Metropolitan University and London South Bank University.