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Netflix's Strategy: Choices and Change
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Netflix's Strategy: Choices and Change
Executive Summary
Netflix is a US-based company that provides streaming services for movies, television
shows, and documentaries. The company entered the Indian market in 2016, recognizing the
potential for growth in the country, hoping to tap into the local market and establish itself as a
leading online entertainment provider. However, the Indian market posed several challenges for
Netflix. Bollywood is a dominant force in the Indian entertainment industry, producing
thousands of movies and television shows each year that are popular with the local audience.
Netflix had to compete with established players in the market, including Amazon Prime Video
and Hotstar, which had already established a foothold. Netflix also had to navigate the local
cultural and regulatory landscape. Indian audiences strongly prefer local content, and Netflix had
to develop content that would resonate with the local audience. The company also faced
regulatory challenges, including censorship regulations and restrictions on foreign investment in
the media industry.
Source: Rupparel (2019)
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To overcome these challenges, Netflix developed a strategy to create local content that
would appeal to Indian audiences while leveraging its global reach to promote and distribute the
content. Netflix invested heavily in creating original content, including movies and television
shows that reflected Indian culture and values. The company also worked closely with local
production companies and filmmakers to produce content that resonated with the local audience.
Netflix also focused on building relationships with local talent, including actors, directors, and
writers, to ensure its content was authentic and reflected local culture. The company established
a local office in Mumbai and hired a team of local executives to lead its operations in the region.
Case Study Analysis
How And Why Netflix's overall Global Strategy Has Been Successful So Far
Netflix's global strategy is built on the idea of delivering high-quality, personalized
content to viewers worldwide, leveraging technology and data to enhance the viewing
experience. The company's focus on creating original content and expanding its reach in different
regions has helped it establish itself as a leading player in the global entertainment industry. To
achieve its goal, Netflix has invested heavily in technology and data analytics, leveraging its vast
trove of data to personalize content recommendations for individual users and identify emerging
consumer behaviour trends (Sull & Turconi, 2021). The company has also developed a strong
brand synonymous with innovation and quality, building a loyal and engaged customer base that
spans multiple regions and cultures. According to Sull and Turconi (2021), by the year 2019,
Netflix had become the dominant SVOD operating with 167 million paid subscribers globally. In
terms of international expansion, Netflix has pursued a targeted approach, focusing on specific
regions and countries where it sees growth opportunities. The company has invested heavily in
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developing local content in key markets, such as India and Brazil, while also making its global
content library available in every market it operates in
Netflix's success can be analyzed through several strategy models, including Porter's
Generic Strategies and Bowman's Strategy Clock. Porter's Generic Strategies suggest companies
can achieve competitive advantage through either cost leadership, differentiation, or focus
(Suleman et al., 2019). Netflix has adopted a differentiation strategy, offering unique and high-
quality content not available elsewhere. By investing heavily in original content, Netflix has
been able to differentiate itself from its competitors, offering a broad range of content that
appeals to audiences across the globe. Netflix's focus on original content has also enabled the
company to establish a strong brand identity associated with innovation and quality. The
company's brand is built around its ability to provide entertaining and thought-provoking, high-
quality content (Sull & Turconi, 2021). By creating a strong brand identity, Netflix has been able
to build a loyal and engaged customer base that spans multiple regions and cultures
Bowman's Strategy Clock offers another perspective on Netflix's global strategy. The
strategy clock suggests that companies can achieve a competitive advantage by offering low
prices, low prices with low perceived value, hybrid, differentiation, focused differentiation, and
premium pricing (Saqib, 2019). Netflix's strategy can be described as a hybrid strategy, as the
company offers high-quality content and affordable pricing. Netflix's pricing strategy is one of
its key strengths. The company provides a range of subscription plans that are affordable and
accessible to a wide range of customers. By offering reasonable pricing, Netflix has attracted a
large and diverse customer base, including customers in emerging markets with high price
sensitivity (Sull & Turconi, 2021). However, Netflix's pricing strategy is not solely focused on
affordability. The company also offers a premium pricing plan that provides access to higher-
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quality content and additional features. Through its premium pricing plan, Netflix has captured
value from customers willing to pay more for a premium experience. Another success factor for
the company is its focus on personalized content recommendations. By leveraging its vast data
trove, Netflix can provide customised content recommendations to individual users, increasing
engagement and satisfaction (Sull & Turconi, 2021). The personalization strategy is aligned with
the concept of customer intimacy, one of the critical components of the value discipline model.
Through more focus on customer intimacy, Netflix has developed a deep understanding of its
customers' preferences and behaviours that enables the company to tailor its content offerings to
individual customers, providing a more personalized and engaging experience.
In terms of international expansion, Netflix has pursued a targeted approach, focusing on
specific regions and countries where it sees opportunities for growth. The approach is aligned
with the concept of focus, one of Porter's generic strategies. By focusing on specific regions and
countries, Netflix has been able to tailor its content offerings to local markets and cultures,
increasing its relevance and appeal to global audiences. For example, in India, Netflix has
invested heavily in developing local content that reflects Indian culture and values. The local
content has been well-received by Indian audiences, enabling Netflix to establish itself as a
leading player in the Indian entertainment industry (Sull & Turconi, 2021). Besides, the company
has invested heavily in developing sophisticated algorithms that analyze customer behaviour and
provide personalized recommendations. The use of technology and data analytics is aligned with
the concept of operational excellence, another key component of the value discipline model. By
focusing on operational excellence, Netflix has achieved significant operational efficiencies,
enabling it to offer affordable pricing and high-quality content. Moreover, the company's use of
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technology has enabled it to scale its operations rapidly, expanding into new markets and easily
reaching new customers.
Sustainability of Netflix's Strategy in India
Netflix's strategy in India has focused on creating and promoting original content tailored
to the Indian market. The company's entry into India was part of its broader international
expansion strategy, targeting high-growth markets with significant potential for new subscribers.
Ansoff Matrix is among the common strategy used by the company in India. The Ansoff Matrix
considers four growth strategies: market penetration, market development, product development,
and diversification (Kukartsev et al., 2019). Netflix's strategy in India can be analyzed using
market and product development strategies. Market development involves expanding into new
markets with existing products. This is precisely what Netflix did when it entered India in 2016
through the Jio effect. Towards the end of 2017, Netflix had over 500,000 subscribers in India.
The company recognized the potential of the Indian market and saw an opportunity to expand its
subscriber base by offering content tailored to local tastes and preferences. Netflix's strategy in
India involved partnering with local production houses to produce original content that would
appeal to Indian audiences (Sull & Turconi, 2021). Product development, however, entails
creating new products for existing markets. Netflix's strategy in India also involved product
development, as the company created new content for the Indian market. Through this strategy,
the company invested heavily in local content creation and partnered with local production
houses to produce original series and films that would resonate with Indian audiences.
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Source: Rupparel (2019)
One significant challenge for Netflix in India is the intense competition from local and
international players. Based on the data provided in the table above, it means for Netflix to gain
more subscribers in India, the company has to lower its prices since India is regarded as a price-
sensitive country. That means 90% of India's population falls in the lower tier when it comes to
wealth distribution, with an annual income of less than $10,000 (Modak, 2018). As a result, most
people in this category tend to search for the most affordable way to consume content. Given the
wide range of economical, Over-The-Top options available, people are unlikely to miss Netflix.
The Indian market is highly competitive, with established players such as Hotstar, Amazon
Prime, and Zee5 competing for subscribers. Besides, new entrants such as Disney+ Hotstar have
entered the market, increasing competition further (Sull & Turconi, 2021). Netflix must continue
differentiating itself by offering unique and high-quality content unavailable elsewhere. Another
challenge for Netflix in India is the diversity of the market. India is a diverse country with
multiple languages and cultures, and preferences for content vary widely across different regions.
To sustain its success in India, Netflix will need to continue to invest in local content creation
that is tailored to the preferences of different regions and communities.
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Source: Rupparel (2019)
The graph above shows the most viewed Netflix shows as a percentage of all Netflix views. The
red bars indicates shows that are likely to be taken away since they are owned by other
companies such as Fox and Disney.
Netflix will also be forced to consider pricing and affordability as part of its primary
strategy. India is a price-sensitive market, and many customers are unwilling or unable to pay
high subscription fees. To sustain its growth in India, Netflix will need to continue offering
affordable pricing plans accessible to a wide range of customers (Nafees et al., 2021). Regarding
choices and options for India, Netflix could consider expanding its content offerings beyond
films and series to include other forms of entertainment, such as live sports or music, enabling
the company to appeal to a wider range of customers and differentiate itself from its competitors.
Another option for Netflix in India is to explore opportunities for diversification. While the
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company has primarily focused on producing and distributing original content in India, it could
explore other areas of the entertainment industry, such as gaming or virtual reality (Nafees et al.,
2021). As a result, Netflix will be able to tap into new revenue streams and differentiate itself
from competitors. Regulatory compliance should also be a key consideration for Netflix even as
it seeks to grow its operations in India. The Indian government has recently introduced new
regulations that could impact the company's operations. For example, the government has
introduced new guidelines for streaming services that require companies to classify content
based on age and restrict content that is deemed offensive or harmful. To remain compliant with
these regulations, Netflix will need to invest in content moderation and monitoring tools.
Generally, Netflix's strategy in India has been successful so far, but the company will need to
continue to innovate and adapt to maintain its competitive advantage.
Does Netflix Strategy in India Follow a Global Strategy?
Netflix's strategy in India aligns with its overall global strategy of investing in original
content to differentiate itself and appeal to local audiences. The company's approach in India of
partnering with local production houses and creating original content for the Indian market is
consistent with its broader strategy of international expansion and localizing its offerings. Scaled
Agile Framework (SAFe) is among the key models that explain the alignment of Netflix's
strategy in India with its overall global strategy. The SAFe criteria consider five dimensions of
strategy alignment: strategy, architecture, governance, funding, and team and culture. Netflix's
approach in India aligns with its global strategy of investing in original content to differentiate
itself and appeal to local audiences (Sull & Turconi, 2021). This is consistent with the company's
strategy in other markets, such as Europe and Latin America. Regarding architecture alignment,
Netflix's technology platform and content delivery infrastructure in India are consistent with the
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company's global architecture, enabling it to leverage its existing infrastructure and systems to
deliver content to Indian subscribers.
Source: BMC Software
Netflix's India approach is consistent with its global governance practices, which
emphasize decentralized decision-making and innovation. The company's local teams in India
have significant autonomy in making content creation and distribution decisions, enabling them
to adapt quickly to local market conditions. In terms of funding alignment, Netflix's investment
in India is consistent with its global funding practices, which prioritize long-term growth and
investment in original content. The company has committed significant resources to India,
including investments in content creation and partnerships with local production houses (Sull &
Turconi, 2021). Concerning team and culture alignment, Netflix's approach in India is consistent
with its global culture, which emphasizes creativity, risk-taking, and a customer-centric
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approach. The company's local teams in India are encouraged to experiment and innovate to
develop content that resonates with Indian audiences.
Another framework that can be used to evaluate the alignment of Netflix's strategy in
India with its overall global strategy is the Choice Matrix. The model considers four key factors:
market opportunity, competitive position, company capabilities, and strategic fit. In terms of
market opportunity, India is a highly attractive market for streaming services, with a rapidly
growing internet and mobile user base and a large population of young, tech-savvy consumers.
This aligns with Netflix's global strategy of expanding its subscriber base and increasing its share
of the global entertainment market. Netflix also faces significant competition in India from local
players such as Hotstar, Amazon Prime Video, and ZEE5 (Sull & Turconi, 2021). However, the
company's focus on original content and partnerships with local production houses has enabled it
to differentiate itself and gain a foothold in the market. This aligns with Netflix's global strategy
of differentiating itself from competitors by producing high-quality original content.
Netflix has significant expertise in content creation and distribution and a highly
sophisticated technology platform and infrastructure. This enables the company to deliver high-
quality content to subscribers in India and other international markets. The approach aligns with
Netflix's global strategy of leveraging its content creation and distribution strengths to expand its
reach and appeal to local audiences. Lastly, in terms of strategic fit, Netflix's approach in India is
consistent with its overall global strategy of investing in original content to differentiate itself
and appeal to local audiences. The company's focus on partnerships with local production houses
and investment in original content for the Indian market is well-aligned with its broader strategy
of international expansion and localization (Sull & Turconi, 2021). While the company faces
significant competition in India, its focus on differentiating itself through high-quality original
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content and partnerships with local production houses has enabled it to gain a foothold in the
market. By leveraging its strengths in content creation and distribution, adopting decentralized
decision-making practices, and investing in long-term growth and innovation, Netflix is well-
positioned to continue its success in India and other international markets.
Recommendations
Netflix's strategy of expanding its reach and appeal to local audiences through investment
in original content and partnerships with local production houses provides opportunities for the
company to launch in various countries with diverse cultures and languages. The company's
focus on long-term growth and innovation and its sophisticated technology platform and
infrastructure position it well for continued success in international markets. One potential target
is Southeast Asia, which has a rapidly growing internet and mobile user base and a large
population of young consumers. The region has a diverse mix of cultures and languages,
providing opportunities for Netflix to create localized content that resonates with local
audiences. Besides, the region has a nascent streaming market with relatively little competition,
making it an attractive target for Netflix. Countries in Eastern Europe and the Middle East are
also potential targets for Netflix, as both regions have large and growing populations of internet
and mobile users. These regions also have unique cultural and linguistic characteristics that
present opportunities for Netflix to create localized content. However, both regions also face
significant political and regulatory challenges that could make entry difficult. When considering
which countries to target next, Netflix will likely consider a range of factors, including market
size, growth potential, competitive landscape, regulatory environment, and cultural fit. The
company will also need to carefully evaluate the cost and feasibility of expanding its operations
in each new market and the potential return on investment.
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