Case Study: Netflix’s Strategy in 2020
My first financial interest in Netflix was when I learned the company was trying to sell itself to Blockbuster and was rejected. I thought to myself, digital download rentals can only go up as technology improves. I saved up my money and followed the stock for a little while before deciding to take the plunge. Netflix has been a proud part of my investment portfolio of stocks for over 10 years now.
Throughout 2017 and the first three months of 2018, Netflix was on a roll. Movie and TV show enthusiasts across the world were flocking to become Netflix subscribers in unprecedented numbers, and shareholders were exceptionally pleased with Netflix’s skyrocketing stock price. Over the past eight years, the company had successfully transformed its business model from one where subscribers paid a monthly fee to receive an unlimited number of DVDs each month to a model where subscribers paid a monthly fee to watch an unlimited number of movies and TV episodes streamed over the Internet. In 2018, Netflix was the world’s leading Internet television network with over 117 million streaming memberships in over 190 countries enjoying more than 140 million hours of TV shows and movies per day, including original series, documentaries, and feature films. Netflix members could not only watch as much streamed content as they wanted anytime, anywhere, on nearly any Internet-connected screen. They could also play, pause, and resume watching, all without commercials. Netflix experienced swift growth in the United States and has expanded its international subscribers pushed the company’s stock price to an all-time high of $586.34 on January 20, 2021, up from an opening price of $124.96 on January 3, 2017. As the biggest and best-known Internet subscription service for watching TV shows and movies, Netflix has concerns about increasing subscribers and increasing profits in the future.
Read the case study and answer the following questions:
1) What forces are driving change in the global digital entertainment streaming market and how could they affect Netflix strategies?
2) What are the top priority issues Netflix management needs to address?
3) What recommendations would you make to Netflix CEO concerning each of the top priority issues previously identified?
4) Using Netflix current Form10K, how has the company been performing and what problems or opportunities are there in the company’s future?
