It does not seem to long ago that Netflix entered the DVD rental market with their famous $0.99 offer for renting movies. It was so unheard of that many took the deal for a scam because the brand was relatively unknown. As you can imagine, it was not a scam.
Today however, things have changed. Although Netflix started out as an American company, they have grown to be a global brand. The company has taken advantage of positioning to increase growth. They are not just known for their DVD rental service, but their amazingly innovative online streaming of movies, TV shows, documentaries and more. From the start, Netflix was a market disruptor and pushed the limits of what can be offered to consumers in the digital space. In order to sustain their rapid growth and success, they will have to continue to maintain that same growth strategy and management approach.
Now that Netflix is growing internationally, they will be facing new challenges as they compete for rights to content in new countries. They will also face challenges in deal with local government law practices or lawsuits. Furthermore, they will have to deal with how to protect their services from being taken advantage of outside the respected country. For example, if someone in the US wants to enjoy UK shows (which are many times quite similar to the US), can Netflix, as a streaming online service, really stop them? And…
- How does that impact the contracts and royalty agreements they have agreed to?
- Will they have to put restrictions in place?
- If so, will people find ways around them anyways?
These are all concerns and challenges that Netflix will have to consider as the continue to expand into over 200 countries. But, it is much easier to deal with all of these obstacles of business growth when your revenues and investments are as high as Netflix’s.
Vast Global Opportunities
In addition to the challenges, growing internationally offers Netflix vast opportunities to become more profitable and useful around their world. If they stick to their winning management strategies, Netflix could stand to unify digital media and content distribution globally. This could afford them to lower costs and prices dramatically and knock out any competitors in any country. Think about it, people from all over the world subscribing to one streaming service for access to content everywhere. Not only is this an ambitious view of what Netflix should do, I personally believe they can do it by maintaining their strong management strategies.
Netflix Original Content
Additionally, as Netflix grows to be a global force of content distribution, they are also growing in other directions to make themselves stronger than before. Their investment in original content production is a perfect example. Within a few years, you might expect some of Netflix original series or movies to be some of the most watched online.
Not As Expected
Unfortunately, things may not have turned out as well as expected for Netflix International. Of course, after such success stateside, Netflix global plans seemed destined for similar achievements. Fast forward to 2016, and Netflix in other countries was not nearly as well received. Why is that? Well, there are several reasons.
Netflix Is Too Expensive
In many countries, such as Cambodia for example, the relatively low price of Netflix here in the states is considered exorbitant. In many developing Netflix regions, the $8 a month price tag is simply too heavy a burden to bear. When the company pushed to spread Netflix around the world, they failed to adjust pricing according to average incomes of a particular region. As you can imagine, if you are only making $1,000 USD per year, $8 is way too much money to spend on a luxury like the Netflix catalog of less than stellar movies.
Even stateside, there are still many issues with movie streaming due to lagging internet. Well, imagine trying to search Netflix from a developing country with far less broadband capabilities. As you can imagine, it just is not the same experience for many other Netflix countries. No one wants to deal with a movie or tv show pausing every two minutes to buffer. Especially when, as mentioned before, these other areas are paying top dollar for the streaming service.
As a business owner or investor, there is a lot to learn from the growth and expansion of Netflix and growth of places like Manchester, as well. Clearly, Netflix should keep up their profitable growth tactics. But, business owners and entrepreneurs alike should learn from rapid growth mistakes demonstrated by the company. And, perhaps, we should take a few notes on value creation and market disruption for growing enterprise businesses.
Image from http://variety.com/2015/digital/news/netflix-wants-the-world-can-it-really-expand-to-200-countries-in-2-years-1201411740/