Subject category:
Strategy and General Management
Published by:
International Institute for Management Development (IMD)
Length: 4 pages
Data source: Published sources
Abstract
This is part of a case series. Case (A) discusses the company's growth until July 2011. Case (B) tells the story of Netflix's sharp share price decline after it announced it was splitting the business in two and increasing prices. Case (C) covers the years 2012/13, when Netflix found its way back to success. Seeing that the industry bottleneck was shifting from the channel (who can reach the viewers?) to the content (who owns the movie rights?), Netflix started to produce its own TV shows (eg, House of Cards, Hemlock Grove). Case (D), set in 2020, focuses on a diverse set of strategic challenges Netflix is facing. First, as indicated already in the (C) case, the cost of content through licensing and production continued to increase. Netflix users had to get used to more frequent cancellations of their favorite show. Second, the 'streaming wars' between Netflix, Disney , Hulu, HBO Max, Apple TV, Amazon Prime Video and YouTube was intensifying on two fronts: competition for subscribers and for content. Third, Netflix was increasing its global presence to accelerate economies of scale by introducing new pricing strategies in foreign countries. Fourth, most movies are watched on mobile phones, where a vertical format is more natural than the traditional horizontal format. It was an open question whether movie producers should adopt this trend set by Instagram and TikTok. Thanks to the growing subscriber base, Netflix's revenue and profitability were increasing. But is the company well equipped for the intensifying 'streaming wars'?
Time period
The events covered by this case took place in 2020.Geographical setting
Region:
World/global
Country:
United States
Featured company
Netflix
Employees:
5001-10000
Turnover:
USD 24.9 billion
Industry:
Media
About
Abstract
This is part of a case series. Case (A) discusses the company's growth until July 2011. Case (B) tells the story of Netflix's sharp share price decline after it announced it was splitting the business in two and increasing prices. Case (C) covers the years 2012/13, when Netflix found its way back to success. Seeing that the industry bottleneck was shifting from the channel (who can reach the viewers?) to the content (who owns the movie rights?), Netflix started to produce its own TV shows (eg, House of Cards, Hemlock Grove). Case (D), set in 2020, focuses on a diverse set of strategic challenges Netflix is facing. First, as indicated already in the (C) case, the cost of content through licensing and production continued to increase. Netflix users had to get used to more frequent cancellations of their favorite show. Second, the 'streaming wars' between Netflix, Disney , Hulu, HBO Max, Apple TV, Amazon Prime Video and YouTube was intensifying on two fronts: competition for subscribers and for content. Third, Netflix was increasing its global presence to accelerate economies of scale by introducing new pricing strategies in foreign countries. Fourth, most movies are watched on mobile phones, where a vertical format is more natural than the traditional horizontal format. It was an open question whether movie producers should adopt this trend set by Instagram and TikTok. Thanks to the growing subscriber base, Netflix's revenue and profitability were increasing. But is the company well equipped for the intensifying 'streaming wars'?
Settings
Time period
The events covered by this case took place in 2020.Geographical setting
Region:
World/global
Country:
United States
Featured company
Netflix
Employees:
5001-10000
Turnover:
USD 24.9 billion
Industry:
Media