NETFLIX INTERNATIONAL EXPANSION CASE

ANALYSIS

NETFLIXS JOURNEY - TIMELINE

Launched in Australia,
New Zealand, Japan. 3rd
European exp: Italy,
Portugal and Spain

Launched in
Netherland

Further European
expansion (company's
first non-English
language shows)

Launched in
Latin & central
America and
Carribean

Launched in
Canada

Launched in UK
and Ireland
1 Million
subscribers

A partnership with
Best Buy gives
exposure in the
chains 1,800
stores

On January 6, 2016 Netflix announced a major

international expansion into 130 new territories; its
service would now be available nearly "worldwide"

Introduction to
Video streaming
devices

Founded by Marc
Randolph and
Reed Hasting in
California

Revenue
sharing deals
signed with
WB
Beggins offering
DVD rental and
sales

Q.01: SWOT ANALYSIS

STRENGTH

WEAKNESS

Need to strike strong deals with content owners

Award winning original content, high-value licensed

content like Orange is the new Black, House of
Cards, Narcos, etc

Adapts with the change in industry, from mail order

DVD to internet streaming & VOD

Netflix has developed an ecosystem for use on

various
Internet-connected
devices,
including
televisions, computers, and mobile devices.

OPPORTUNITY
Entry into Regional language content

Netflix is still not available

international expansion
partners

to

in

further

High subscription prices

Low profit margins due to the cost of international

expansion and currency fluctuation

Dependence on content licensing costs and

relationships with distributors.

Potential dependences on regulations and laws in

different countries.

THREAT
Local & International competition like Amazon Prime,

YouTube
China-

more

Finding local
expansion

international

Capitalizing on its exiting user base

Scale and popularity will help potentially lower their

content licensing fees and can potentially increase
their average revenue per user per month

Black market around the world i.e. Piracy

Rising content costs, limited access to content due

to stiff competition with cable tv's and conflicts with
content owners.

Competition and price wars between streaming

services.

legal issues with local authorities and content

providers because of licensing and violation off

Q 02: Challenges and Strategies

CURRENT STRATEGIES

Huge Content
Catalogue
availability to
consumers

Adapting
according to the
expansion

Stretching hands on
acquiring new content by
collaborating with
entertainment providers

Aggressive
spending on
marketing to raise
brand awareness

Proprietary software
technology Netflix
developed was alarge part
of thestrategy

CHALLENGES
THE CONTENT CONUNDRUM
a.Regional markets content
b.Content
in
limited
languages
c.People are reluctant to
pay
and
find
local
competitor
more
affordable
This is especially relevant
because
many
regional
competitors in developed
markets, like Germany and
France, have looked to
Netflix's success in the US
as inspiration to get their
own offerings into the

PRICE ARBITRAGE
Expensive price point in
certain markets.Netflix
has made the choice to
not chop down its price
point
significantly
in
developing markets. This
makes it relatively more
expensive compared to
competitors,
many
of
which have lower price
points.

GOVERNMENT
CENSORSHIP
Regulatory restrictions,
global licensing deals
and cultural factors are
an issue which requires
a lot of time and money
to move way forward.
E.g Chinese market.

CHALLENGES
INTERNET SPEED AND
INFRASTRUCTURE
In India we have speed at
which video doesnt buffer
properly. This means that
people
with
an
Internet
connection speed of 1Mbps or
2Mbps and with a data cap of
40 to 50 GB which is roughly
the average in India will find
it difficult to use Netflix
heavily. Watching a handful of
movies and TV shows could
eat up a little over half of a
users data cap, make them
quickly hit their FUP limit, and

COMPETITION
IN
GLOBAL MARKETS

THE

a. Television operators
b. VOD service providers
c. Indian competitors like
Hotstar, Spuul, Eros Now,
Ditto
d. Underdeveloped
Infrastructure: Poor Network
quality

COMPETITION DTH
DTH
is
giving
tough
competition
to
Vod
platforms.
TataSky for example has
its own VoD platform
which gives 5000 titles
where one can watch
several movies and TV
shows,
on
demand.
Similarly, TataSky has its
own mobile app whereby
paying a fixed fee one can
access all the content
library.

Partner with
Multichannel
Television
Provider

Continue
International
Expansion

Leverage
offline
streaming
Technology

Digital India
Campaign

Netflix will be able to

provide its members
with access to
additional TV series,
offering exclusive
content, it is a
necessity for Netflix to
continue to expand its
content library and
make it accessible
across multiple
channels.

There are many

territories that Netflix
need to target like
China. This will
provide advantage
toNetflix, related
economies of scale,
andearly mover
benefits in many
international markets.

Allowing customers to
offline buffer content
toview when internet is
unavailable willattract
more customers.
Customers in India
often dont get to view
online streaming
content in many areas
asit consumes
maximum bandwidth.

With the
advancement of
Digital India
campaign and
introduction of 4G
services, Internet
bandwidth and
services
will grow and Netflix
should tie with them
for the advancement.

STRATEGIES TO OVERCOME CHALLENGES

Q 03: Competitor Analysis

THE SHOW IS OVER!