How does the Netflix Business Model work?

Netflix is still a subscription-based service, making customers access an entire library of TV shows and movies in one easily-accessible place – and from multiple internet-connected devices like mobile phones, tablets, laptops, smart TVs, and media sticks.

As stated earlier, Netflix’s business model is subscription-based. It is an online streaming platform offering on-demand video.

In addition, Netflix aired its first in-house production -House of Cards, a critically-acclaimed political drama starring A-List actors like Kevin Spacey under the brand name Netflix Originals.
Its further production contains Orange Is The New Black, Stranger Things, and 13 Reasons Why Have You Followed.

Let us dive deeply to know more about the main components depicting Netflix’s Business Model Canvas.

Customer Segments

Netflix platform has a large subscriber base. Because of this, its profile covers multiple titles, e.g., it has films, documentaries, and shows of all genres, which is enough to entertain fans of all ages and preferences.

Hence, customer segmentation is both usage and geographical, but only to verify what type of content works best for each audience.

Value Addition

Besides providing diversified content, convenience is also an essential component of Netflix’s business model.

It has an easy-to-navigate user interface and a host of handy features like the ability to skip the opening credits of a show or watch trailers, along with deleted scenes. Thus, the company understands the viewing habits of its users.

Netflix keeps an eye on following consumer trends in general. In addition, the content suggestions are also highly personalized. For instance, users can watch content anywhere and anytime.

Less Fluff More Quality

Netflix values its customers, and that’s one of the core components of its business model. Its ability to provide high-quality shows/movies on demand. In addition, Netflix Business Model helps users with:

• Access to an in-depth catalog of products, with content for all genres, age groups, and preferences.
• On-demand online entertainment streaming, with 24/7 access – without ads.
• Original and high-quality content.
• Users account for optimum individual personalization.
• All internet-connected devices support Netflix.

Barton Crockett, JP Morgan’s analyst, put out a statement in 2007, wherein he said Netflix, which pioneered online DVD rental and dominated the industry with over 6.8 million paid users, experienced competition from big players like Blockbuster that is much tougher than we had initially predicted.

He said that Netflix is going through a challenging competition by the back-then DVD rental – Blockbuster.

Because Netflix in 2007 was facing very peculiar crunch circumstances. Furthermore, after the news came out, the stock prices of Netflix went down by 5%.

Moreover, in general, the market became highly suspicious about Netflix’s future growth.
However, Netflix was so strategically competent to steer through this position that in the next 15 years, Netflix evolved as one of the best-performing stocks across the globe.

During the last few years, Netflix cultivated a return of 10,000% from 2017 to 2018.

In this aticle, let us decipher such an impactful analysis and the business model of the world’s largest OTT platform – Netflix. First, let us understand the business model of Netflix, followed by its strategies and money-magnet approach. Nevertheless, before we move further, let us take a bird’s eye view of how Netflix works.