Netflix — Addressing the Challenges and Opportunities
In the fast growing digital era we live in, Netflix has managed to become a staple streaming platform for movies, series and documentaries. With its ‘easy access’ approach to streaming it has managed to draw so many people in, with around 260 million paid subscribers worldwide as of the fourth quarter of 2023. Unpredictable events such as COVID has aided Netflix in that all people could do during that time was stay at home, which meant that their viewership grew massively, during the first half of 2020 only, when COVID lockdowns began , Netflix added more than 26 million global subscribers, proving the importance of how netflix is technologically ran, as it can be used on any device at any time, ranging from a tv to a mobile phone.
The technology behind Netflix and their recommendation algorithm allows them to cater to the certain preferences a user of Netflix may want, for example multiple movies or series of the same genre or style. They use a recommendation engine that allows them to display videos and films that are more likely to be watched from the user. This aids Netflix to deliver personalised content to enhance the experience for the viewer and therefore they are more likely to be satisfied and therefore continue to renew their Netflix membership.
Similarly, the technology that is now available to companies like Netflix allows them to massively improve and enhance viewer engagement. With Netflix introducing interactive features such as watch parties and game-like viewing experiences, for example Black Mirror Bandersnatch which gave different people different endings depending on the choices they made during the film, it has added another layer to the experience provided by Netflix. This in turn massively diversifies the experiences people can have on Netflix and therefore leads greater viewer retention and people to continue their membership.
Netflix are able to take advantage of the data available to them in order to optimise how and which content they output to their customers. The in-depth data and analytics drives Netflixs’ decision making. This allows companies like Netflix to better understand the large audience of people they have in greater depth.They can identify certain specific emerging trends and in turn act on them in order to accommodate the viewers preferences and create a better viewing experience for those who use Netflix.
Netflix have had multiple different collaborations in the past, for example Lacoste as well as Spotify, that have propelled their viewership further as they have been able to extend their business further than just a streaming company. Through online advertisement of these collaborations Netflix massively enhanced their viewership as a multitude of people will have been seeing it. Collaborations will also aid in attracting different age demographics, for example the Sidemen documentary that recently released on Netflix that will attract vast amounts of the younger demographic to netflix, showing how different collaborations can further grow their viewership.
Although Netflix does face vast amounts of challenges that they will have to overcome, and one of these is fast growing competition from other streaming companies such as Disney + and Amazon Prime. For example the number of people using amazon prime video jumped from 150 million in 2020 to 200 million in 2021. All these other digital platforms have slowly increased their viewership and audience , and therefore poses a threat to Netflix as there are so many different options of streaming platforms with so many different types of content. This therefore makes it difficult as Netflix has to accommodate for such a wide audience of people in order to stay on top when it comes to streaming platforms.
With such a successful company like Netflix, they will have to continue to produce high-quality films that will cost even more money, but this will also have to mean that the price of Netflix will be high as well. Their two highest costing movies being The Gray Man and Red Notice both costing around 200 million proves that in order to facilitate a high quality movie for audiences nowadays, movies will have to cost large amounts of money to produce due to the large amounts of different technology and CGI that now goes into almost every movie made. This in turn means people have to pay around £7.99 a month to have netflix without ads, and many people cannot afford that, in turn affecting their viewership.
Technology in the modern world continues to grow and evolve at extreme rates. This in turn means in order for Netflix to supply the most up to date experience for its subscribers, they will have to continue to adapt so that they can meet such demands. As well as this, keeping up to date with the latest technology ensures they remain the largest streaming platform ahead of the likes of Apple Tv and Amazon Prime, therefore this means they will have to spend more money continuously in order to be in tune with the latest trends and technology.
Another challenge that Netflix faces is that although vast amounts of different demographics are in tune with the latest technology, the elderly population fall behind when it comes to that category. For example only 55% of people over the age of 75 use the internet, therefore getting that demographic to use Netflix is very difficult as it is exclusively online and therefore the elderly will struggle to use Netflix as a platform for entertainment. This in turn means Netflix will inevitably lose out on subscriptions from a whole demographic.
Something that will continue to threaten not only Netflix but other streaming platforms is piracy and pirated films. The development technology that is available can enable people to illegally stream different movies and series that are on Netflix, and actually proves technological advancements to also be a large downfall. These pirated movies are favourable for many due to the high prices that Netflix charges for their services. This in turn will affect sales as people will rather use these pirated sites for free rather than paying for Netflix.
