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GROUP #8

SWOT

ASSIGNMENT

NETFLIX

GROUP SWOT ASSIGNMENT - GROUP #8

SEUNGJOO YANG | KIU KIU MAK | JISEUL SHIN | SOMIN AN | PEI-YI HSIAO | EASON CHANG

NETFLIX

Netflix is the world’s leading streaming entertainment service company with 193 million paid memberships (2020) in over 190 countries enjoying TV series, documentaries and feature films across a wide variety of genres and languages

MISSION

- Grow streaming subscription business domestically and globally

- Improve customer experience with a focus on:

  • expanding streaming content
  • enhancing user interface
  • extending our streaming service to even more internet connected devices

VALUE

VISION

  • Judgement
  • Communication
  • Curiosity
  • Courage
  • Passion
  • Selflessness
  • Innovation
  • Inclusion
  • Integrity
  • Impact

“Becoming the best global entertainment distribution service.”

S - INTERNAL STRENGTH

INTERNAL STRENGTHS OF NETFLIX

INTERNAL STRENGTH

1. High Quality Algorithm System

1

  • Algorithm of Netflix recommends customized contents to customers using collaborative filtering and contents-based filtering

2. Originality

  • Netflix original series
  • Netflix produces its own contents

2

3. High Subscriber Inflow

3

  • Affordable pricing
  • Free first month trial for each customer
  • Continuous addition of new contents that customers want to stream
  • Good service systems - parental controls, offline streaming

4. STRONG BRAND IMAGE & REPUTATION

4

Netflix ranked 4th in Forbes’ “Top Regarded Companies” in 2019 showing its high brand reputation

W - INTERNAL WEAKNESS

INTERNAL WEAKNESS OF NETFLIX

INTERNAL WEAKNESS

1. Licensing

  • Different countries have different policies and restrictions
  • Content providers and rights holders could refuse to license

1

2. Stock price fluctuate significantly

2

  • Factors are beyond control (competitors, level of demand, operating results)

3. Lack of Customer Support

  • Pandemic, there was insufficient customer support --> numbers of Netflix accounts were hacked.

3

5.Increase in debt

4

  • as of 2020, Netflix reported $14.17 billion in debt and is announcing plans to offer $1 billion in junk bonds to fund operations and potential acquisitions.

O - EXTERNAL OPPORTUNITIES

EXTERNAL OPPORTUNITIES OF NETFLIX

EXTERNAL OPPORTUNITIES

1.Partnership

  • Netflix could collaborate with other companies to provide more contents

1

2.Expand Netflix's original series

2

  • can have partnership agreement with enterprises and create more original series

3

3. Adopt an Ad-based Model

  • Other companies such as YouTube, Amazon, etc produce huge revenue through advertising.
  • Netflix can increase revenue and pay their debt.

4. Introduce Cheaper Annual Subscription

4

  • Users tend to pay for a month only and cancel their subscription once they watched all the new content

  • Netflix loses a lot of revenue because of this reason

T - EXTERNAL THREATS

EXTERNAL THREATS OF NETFLIX

EXTERNAL

THREATS

1. Competitors

1

  • Disney Plus. Amazon prime, etc.

(limited contents vs. customer's taste)

  • Subscription cost is relatively high compared to others

(Apple TV $5, Disney $7 vs Netflex $9)

2. Digital Privacy

2

  • Customers might replicate and release contents illegally
  • Streaming on illegal website (free) leads to less subscription
  • Reputation of Netflix damaged - content provider refuse to license

  • Government decision influence range of contents

  • Restriction on information, perspective, exposure of media presentation

(limited variety of content in more conservative countries)

3

3. Change of Government Polices

PEST ANALYSIS

+ How did COVID-19 IMPACT the company?

PEST

ANALYSIS

1. POLITICAL FACTOR

1

  • Have strict restrictions on uploading Netflix in specific countries
  • Restricted in China - due to their restriction policies on control over-sea's sources
  • Create opportunities for every countries to access and share equivalent videos

2. ECONOMICAL FACTOR

  • Economic growth / interest rates - Social distancing increased subscriptions

2

  • Subscription rate will likely to decline once social distancing mandates are eased in the future
  • The first quarter of 2020, Netflix had gained 16 million new subscribers

3. SOCIAL FACTOR

3

  • Due to COVID-19 causing social isolation, people tend to stay home and watch Netflix.
  • From viewers outside --> building a global audience --> internalization is an advantage

4. TECHNOLOGICAL FACTOR

  • Due to COVID-19 and lock-downs of the cities, the majority of the production has paused around the world.

4

WORKS CITED

TITLE

  • Chong, D. (2020, May 2). Deep Dive into Netflix's Recommender System. Medium. https://towardsdatascience.com/deep-dive-into-netflixs-recommender-system-341806ae3b48.

  • Netflix Investor. (2020, October 2). Company Profile. Netflix. https://www.netflixinvestor.com/ir-overview/profile/default.aspx.

  • Murphy, A. (2019, September 18). [web log]. https://www.forbes.com/lists/best-regarded-companies/#1ede50ef124d.

  • Murphy, Andrea. Web log. The World’s Best Regarded Companies (blog), September 18, 2019. https://www.forbes.com/lists/best-regarded-companies/#1ede50ef124d.

  • Netflix Investor. (2020, October 2). Annual Reports & Proxies. Netflix. https://www.netflixinvestor.com/financials/annual-reports-and-proxies/default.aspx.

  • Spangler, T. (2020, April 22). Netflix Plans to Raise $1 Billion Through Debt Offering. Variety. https://variety.com/2020/digital/news/netflix-raise-1-billion-debt-offering-1234587050/.

WORKS CITED

TITLE

  • Warner, S. (2020, March 23). Hacked Netflix users complain they can’t get support because of coronavirus shutdowns. NME. https://www.nme.com/news/tv/netflix-hacked-users-coronavirus-customer-support-2633602.

  • Watson, A. (2020, July 17). Netflix - Statistics & Facts [Infographic]. Statista. https://www.statista.com/statistics/250934/quarterly-number-of-netflix-streaming-subscribers-worldwide/.

  • Bursztynsky, J. (2020, Apr 21). Netflix says these three effects of the coronavirus crisis are impacting its business. CNBC. https://www.cnbc.com/2020/04/21/netflix-q1-2020-earnings-three-effects-coronavirus-has-on-business.html.

  • Hastings , R. (2020, October 10). Netflix Mission, Vision & Values. Comparably. https://www.comparably.com/companies/netflix/mission.

  • .Netflix SWOT & PESTLE Analysis: SWOT & PESTLE. (2020, September 4) SWOT & PESTLE.com. https://www.swotandpestle.com/netflix/.
  • Netflix. (2020, April 21). FINAL-Q1-20-Shareholder-Letter.pdf. https://s22.q4cdn.com/959853165/files/doc_financials/2020/q1/FINAL-Q1-20-Shareholder-Letter.pdf.

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