Why is Netflix so successful?

Netflix is one of the most disruptive companies nowadays that have grown exponentially these last years. In these lines I want to comment 2 of the many reasons why is Netflix so successful and how this brand has become the number one content distributor:

2 key factors that explain Netflix success:

1. Smart worldwide expansion. Netflix is a 100% online platform that runs on the cloud. That makes the company very scalable and the marginal costs they have are very close to 0. This is crucial to the worldwide expansion that Netflix has reached thanks to a brilliant segmentation campaign. To read with more details you can click How Netflix Expanded to 190 countries in 7 years, by Harvard Business Review. The main highlights I want to point of this study are:

• Not enter all the markets at once. Study the differences and key particularities of each market.
• Partner with local stake holders to start entering a market and make the most of their know-how. Examples: Partnership with Telefonica in Spain and Latin America and the Partnership with KDDI in Japan.
• Understand the specific needs of each market. For instance, they noticed that for some countries mobile was much more used than the rest of devices, so they focused on improving the mobile experience.
• Customer centric approach. With sophisticated algorithms, Netflix predict which contents fits better the customers within the different markets and segments.

2. The second reason for Netflix’s success is the power of Distribution. Even though companies such as Disney have much more content, Netflix has conquered the distribution channel because they have more than 125 million members. Therefore, regardless having less content than other content distributors, Netflix have over 125 million people with the direct App installed in their terminals.

Whoever dominates the distribution channel is much more likely to “be the winner”

This is one of the most important reasons for Netflix’s success, that can apply also to other players and industries like Spotify in the music sector: “Whoever dominates the distribution channel is much more likely to be the winner”.

By the way, “recently” Netflix has started launching and producing their own movies and some of them are a clear success such as Bird Box. Check out the “Bird Box effect” and discover how this movie has reached more than 45 million views in the first week thanks to social media.

Netflix, thanks to all the brilliant marketing strategies they have implemented has reached millions of users all around the world. Netflix network effect (the more users, the more value) is very positive both for the business profitability and for the brand. The final result of all this combination of facts is that the American company is the leader in his sector and one of the most valuable corporations in the world whose net worth is over 9 billion $.

Finally, I would say that another important facto to explain why is Netflix so successful is because it is a subsription service… To discover The change in consumer habits due to subscription models click here.

Diego Gaminde Montesino Espartero, Digital Marketing professional.