Netflix uses a 'ladder strategy'

August 4, 2023
2 minutes

By Sorin Anagnoste

Strategy | Business Models | Tech


Source: Gene J. Puskar/Associated Press

Netflix’s strategy
Anyone can have a strategy, but to deliver on it it’s totally another thing. Netflix has done both in the last ~ 26 years. Here was their strategy:

1/ Netflix began its journey by offering content that was easily accessible (DVDs) to differentiate itself from the established competitor, Blockbuster. This approach allowed Netflix to attract a wide user base and gain recognition in the market.

2/ As Netflix’s user base grew and its financial strength increased, it strategically acquired streaming rights, which disrupted the traditional model of linear television networks. This move further expanded their user base and enhanced their brand, while also giving them more purchasing power in the industry.

3/ With a well-established brand, a large user base, and significant financial resources, Netflix ventured into producing original programming, which challenged the conventions of traditional content buyers. Creators were given greater creative control, and they were guaranteed the freedom to produce entire seasons at once. Initially, creators also retained the rights to their creations, allowing them to use their work elsewhere.

4/ When reached the full potential of ad-free subscribers they launched their ad-service plan. Guess what? Ads can bring you a lot of money. How? Well, at this point between 35$-45$ per 1,000 views, which is in line with what some other subscription video services charge. And yes, Netflix with ads can at some point be free. (2$ or 4$ with ads will still be considered free)

I remain bullish on Netflix’s potential. LINK

P.S. On the 29th of August, the company will celebrate its 26th anniversary.


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