Netflix Case Study

What changes have Netflix made (3)

- Basic with Ads
- Password Sharing Restrictions
- Video Games

Basic with Ads Change

- Came into affect during November 2022
- Reactive change due to decrease in market share
- Cheaper alternative to existing plans, 6.99 a month with 4 minutes of advertisements every hour

Password Restrictions change

- May 2023 implemented
- Reactive change due to decrease in market share
- 100 million people using Netflix via shared passwords
- Changed so only share password if same household
- Extra member fee 7.99/month

Video Games Change

- Implemented August 2023
- Proactive change
- Diversify revenue streams + enhance member engagement
- Games available as part of subscription, adding value

KPI that influenced changes

- Number of Sales
- Net Profits
- Percentage of Market share

KPI of Number of sales

- April 2022, subscriber growth declined for first time
- 1 million global subscribers lost between April and July 2022

KPI of Net Profits

- 12.22% decline in 2022 and 18.3% decline in first quarter of 2023

KPI of percentage of market share

- Netflix had market share of 47% in 2017, falling to 32% in the end of 2022.

Driving Forces for Change

Competitors, Pursuit of Profits, Societal Attitudes and Managers

Competitors as Driving Forces

- Disney +, Amazon Prime
- Customers deciding what services to subscribe to and which to cut

Pursuit of Profits as Driving Forces

- Ad based subscription increases subscribers and profits
- Attracts customers + advertising revenue
- reducing password sharing places pressure on households to be an extra member or their own subscriber
- Gaming opens up new markets and customers

Societal Attitudes as driving forces for change

- Australian households reducing number of streaming services
- Rising cost of living forcing Australians to cut back on spendings
- More pressure on streaming services to compete for new and current subscribers

Managers as a Driving Force for change

- COO Greg Peters wants to attract new users and cope with the decline in subscribers

Restraining Forces for Change (4)

Customers, Financial Considerations, Managers and Competitiors

Customers as a Restraining Force

- Customers dissatisfied with being forced into ad based subscription or higher cost subscription.

Financial Considerations as a Restraining Force

- High costs to implement technology for ad based subscription and tracking and monitoring password sharing
- Marketing Expenses increased by $127 million to promote new ad based plan
- Need to employ new team members to develop games

Competitors as a Restraining Force

- Binge and Disney + also offer ad based plan, but don’t crack down on password sharing making it more appealing
- Competitors also investing in cloud gaming

Porters Generic Strategies

- Differentiation Strategy