Netflix Case Study

What is Netflix:

 Netflix, Inc. is an American over-the-top content platform and production company headquartered in Los Gatos, California. Netflix was founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California. The company’s primary business is a subscription-based streaming service offering online streaming from a library of films and television series, including those produced in-house.  

India Journey so far:

 Netflix entered India in January 2016. In April 2017, it was registered as a limited liability partnership (LLP) and started commissioning content. It earned a net profit of ₹2.02 million for fiscal year 2017. In fiscal year 2018, Netflix net profit shot up by 25 times to more than ₹50 million. But the growth got stagnated net year and Netflix couldn’t even double its profit in 2019. I would say Netflix is still under the scaling phase in India and it needs to find ways to move upwards on the growth trajectory.  

Problem Statement:

Overcome the competition and ensure a steady user growth resulting in higher profits for Netflix India.

Our Goals:

  • Come up with three Product solutions to drive user growth
  • Provide wireframes and explain the solutions in detail
  • Align metrics for the above solutions
  • Publish a press-release announcing the launch of the initiatives

Approach to address the problem:

  1. Know your customer (personas) & competitors
  2. Market Opportunity
  3. Value Proposition Design (how the solutions will address the problem at hand)
  4. Business Model Canvas (how the proposed solutions will affect the existing business model)
  5. Proposed Solutions
  6. Metrics to be captured
  7. Press Release

User Personas:

User personas are semi-fictitious representations of your target customers. In this case, I have chosen two of them who could well be the target customers of Netflix in future.

Competition:

Market Opportunity:

  • Population of India: 1.30 billion
  • If an average family size is 3 then total households: 0.43 billion
  • Only 50% of the families live in T1/2/3 cites: 0.22 billion families
  • Current subscriptions: 20 million
  • Current Competition (market captured by the competition): 100 million
  • Market opportunity: ~ 100 million

Value Proposition Canvas:

With the help of Value proposition canvas, I am trying to find a solution which could address the key pain points for the end users and create gains for them.

Updated Business Model Canvas:

Based on the customer feedback and usage metrics, we need to keep refining our business model. In this case Netflix has already reached to a product market fit stage hence their focus should be on the product growth. Based on the new insights, following is the updated business model for Netflix India.


Solution 1:

Review existing subscription model and introduce an annual subscription model. Make it competitive with Hotstar and Amazon prime. This will not only help in attracting new customers but also retaining the existing ones. Customers once subscribed to the annual plan are less likely to leave the platform in the middle of the subscription period.

Solution 2:

Introduce/invest in more original shows, web series especially from the Hindi heartland. At present middle and lower middle class are not able to connect with the western or upper-class shows. There is an opportunity as big production houses and corporates are venturing into non-theatrical platforms and they are considering app-based OTT platforms as an ideal medium for content creation. Besides, focus on the regional content. As India is a diverse country, we cannot have a single language program catalogue for the whole country. Having a regional flavor will surely help in reaching out to the subscribers in the remote places. Finally, focus more on quality than quantity, as without quality content, even lower subscription rates won’t help.

Solution 3:

In India, the majority of the population belongs to the middle & lower middle class and they could prove to be a major customer base for Netflix. The third solution that I am going to propose here is connected to hand-held mobile devices. Our target users are low to middle-income group users like Kirana shop keepers, teachers, clerks. In the majority of the cases, they prefer using cheap mobile phones having bad configurations which are often not very conducive to online streaming. This particular challenge is with other key streaming players like Disney Hotstar, Zee5, SONAYLIV and Prime video as well. If Netflix addresses the problem (render high-quality video streaming in low bandwidth hand-held devices) then it could potentially disrupt the market and can even attract users from other streaming platforms.

Netflix has already done something similar in past using big data for deep analysis and predictive algorithms to help provide the best experience for our members. A well-known example of this is the personalized movie and show a recommendation system that is tailored to each member’s tastes. 

So, my third solution is to invest in adaptive streaming algorithms and network technologies such as Open Connect to optimize streaming quality. We can start small, run a small spike and learn from the experiment.


Metrics:

Solutions 1 and 2 are relatively easy to implement. Once done we can track Netflix adoption with the help of the Pirate metrics (AA-RRR) i.e., over time how many users downloaded the app, opted for the yearly subscription and later referred it to their friends. These metrics help us to adapt and make necessary changes to the product strategy.

Another way to look at metrics is the Cohort Analysis which compares similar user groups over the period. This gives us a better picture in case the product is changing. The users who experience the trial in one month will have a different experience from those who experienced it in month three. Refer to the picture below, we can see though the revenue per customer is not changing much over months once we perform cohort analysis, we can see the subtle difference across various cohorts over time.


Press Release:

FOR IMMEDIATE RELEASE: 19/12/2020

Netflix INC

1800-201-2345

info@netflix.in

Netflix introduces new Subscription models

New Delhi, India:

Monika Shergill, head of Netflix India announced that starting 2021, Netflix is going to introduce new user subscription plans which will give users an option to choose between monthly and yearly subscriptions. Newly introduced subscription plans will be reasonably priced keeping Indian middle class in mind.

Besides the change in the subscription model, Netflix has also collaborated with prominent production houses like YRF and Dharma productions for the rights of their past blockbuster movies and have also bought digital rights of the upcoming films for next 3 years.

“Netflix is at the forefront of bringing great entertainment from anywhere in the world to everyone in the world, and I look forward to working with the board and all stakeholders to continue its traditions of innovation and growth here in India,” said Monika Shergill.

For more information, please visit our website – https://about.netflix.com/en/new-releases

About Netflix:

Netflix is the world’s leading streaming entertainment service with over 195 million paid memberships in over 190 countries enjoying TV series, documentaries and feature films across a wide variety of genres and languages. Members can watch as much as they want, anytime, anywhere, on any internet-connected screen. Members can play, pause and resume watching, all without commercials or commitments.