case study on netflix

Table of Contents

Netflix target audience , what are the key principles of netflix marketing, marketing strategy of netflix, digital marketing strategy of netflix, 5 key takeaways from netflix marketing approach, conclusion , a case study on netflix marketing strategy.

Netflix was founded in 1997, offering online movie rentals with less than 1000 titles. Soon, it switched to the subscriber-based model, and in 2000 Netflix introduced a personalized movie recommendation system. By 2005 Netflix had over 4.2 million subscribers and started work on a video recommendation algorithm. And finally, in 2007, Netflix began its streaming services and original content creation. By 2016 Netflix had over 50 million subscribers; the story continues today as it is a worldwide presence in the video-on-demand industry. 

Become a Certified Marketing Expert in 8 Months

Netflix marketing strategy is undoubtedly a guide for digital marketers worldwide. It is a learning experience to know how this digital media streaming company outperformed all others in the market. 

Netflix's target market is young, tech-savvy users and anyone with digital connectivity. The audience of Netflix is from diverse age groups and demographics. 

However, most of the audience are teenagers, college-goers, entrepreneurs, working professionals, etc. Netflix aggressively works on content expansion and personalization to expand the user base. They separate the kids' and adults' audiences based on their maturity levels. 

Netflix is a fantastic example of an integrating marketing strategy . It is integrated, agile, and customer-driven to make the maximum impact. Netflix follows a customer-centric model to deliver a seamless experience. The platform follows integrated marketing for effective targeting and makes the best use of content marketing for data analytics. 

• Customer-centricity: Netflix focuses on creating a solid connection with its customers by engaging them personally and personalizing their viewing experience. They also use clever marketing tactics to get people to watch their shows.
• Integrated viewing experience: Multi-device and up-to-date no matter where you view it from, makes the experience combined.
• Innovation: Modern marketers must use data analytics to create experiences that delight consumers. Netflix uses customer data analytics to get content recommendations because it knows which movies its customers like to watch. For example, if a Netflix user likes Rocky, it will also offer them sports documentaries. As you manage your business, you, too, need to use data analytics for effective marketing and website optimization.  

Netflix uses data-driven and customer-centric marketing strategies that work in the digital age. Netflix's success relies on constant analysis and optimization, so you can use these tools for marketing your business online.

Netflix's marketing strategy is a surefire example of innovation and modern-day technology growth. The platform has been eager to bring the changes per market need or user demand. The evolution of the marketing tactics from time to time is one of the core reasons behind its success. 

Netflix proves that a brand can connect with customers easily through regular analysis and optimization. Simply put, Netflix's advertising strategy is full of agility, data-collection, user-centricity, personalization, and dedication. Major and minor brands can follow such a strategy and boost brand exposure and market value. 

Let's walk through 5 effective strategies of Netflix's advertising strategy that led them to the most disruptive business model. 

1. Use Personalized Content

Netflix is an excellent example of how personalized content can improve user satisfaction. Netflix knows what TV shows and movies its users like to watch. It uses this information to create customized recommendations for them. This allows them to find the content they enjoy without searching through many lists. It also ensures that users are always getting the latest and greatest content. This level of personalization is critical for online users because it enhances their experience and makes them more likely to return to a site in the future. 

2. Ensure Multi-mode Experience

Starting with a DVD service, Netflix's journey has been successful because of its multi-device strategy. You can open Netflix on TV, computer, smartphone, and tablet with seamless content continuity being watched. The company shows zero restriction in meeting the customers wherever required. Netflix follows both online and offline promotion strategies to boost user engagement. Be it any medium; their marketing strategy remains aligned wherever it can work. 

3. Blend Technology With Marketing Tactic

You wouldn't find two Netflix accounts with the same interface or suggestions. The recommendation shows order is as per user activity and ever-changing. They change the artwork frequently to add a sense of newness. Netflix puts modern-day technology to good use. The platform keeps on having new features to gain maximum engagement. Machine learning is a proven technology trend to transform marketing research to the next level. The blend of ML into advertising is what helps Netflix Marketing Strategy. 

4. Target Emails Like Any Other Marketing Channel

It is wrong to say or consider that email marketing is dead. Netflix is one solid example of a company making the most out of email marketing. They are one step ahead and pairing the email campaigns with machine learning systems. It helps gather more user data and preferences—further, the data segments into multiple user groups for precise and effective customer targeting. So, email marketing can introduce Netflix to new users and show relevant recommendations to the old users. One essential tip from Netflix email marketing is to be creative and take risks. Those old boring emails wouldn't help get such an impact as Netflix today. 

5. Create a Buzz With Better Interactions

Netflix has used the best content marketing strategy in the last decade. The company thinks of an out-of-the-box way to grab quick attention from users. They are bringing standalone products and unmatched experiences. On top of everything, the platform has a seamless communication channel to boost momentary awareness and recognition. The platform allows the audience to be involved in the story and make decisions. This unpredictable move is a proven game-changer for revolutionizing future television. The incomparable buzz in the platform keeps the user stuck to binge-watching. The users feel high engagement in the hopes of finding a happy ending. 

Hence, Netflix happens to be a unique example and inspiration for many fellow companies. They have done a commendable job in content, branding, business model, and product. Netflix marketing strategy has a lot to offer to market enthusiasts and students.

Learn about such integrated marketing strategies with Simplilearn's PGP Digital Marketing Certification Program . You will be taught by Facebook and Purdue University experts, providing a holistic learning experience. Sign-up now and make yourself - job ready! 

Our Digital Marketing Courses Duration And Fees

Digital Marketing Courses typically range from a few weeks to several months, with fees varying based on program and institution.

Recommended Reads

Digital Marketing Career Guide: A Playbook to Becoming a Digital Marketing Specialist

Netflix Recommendations: How Netflix Uses AI, Data Science, and ML

12 Powerful Instagram Marketing Strategies To Follow in 2021

Introductory Digital Marketing Guide

Walmart Marketing Strategy

What is Digital Marketing and How Does It Work?

Get Affiliated Certifications with Live Class programs

Post graduate program in digital marketing.

• Joint Purdue-Simplilearn Digital Marketer Certificate
• Become eligible to be part of the Purdue University Alumni Association
• PMP, PMI, PMBOK, CAPM, PgMP, PfMP, ACP, PBA, RMP, SP, and OPM3 are registered marks of the Project Management Institute, Inc.

A Case Study on Netflix’s Marketing Strategies & Tactics

As the spread of COVID-19 has affected most industries and economies worldwide, people have been forced to stay contained at home to prevent the spread of coronavirus. People have also been bored to death as they have nothing to do.

In this locked-up scenario, your best partner could be your Netflix account which contains thousands of interesting movies, series, and shows. We were discussing which brand to take up for this week’s case study, and then one of our team members got an idea, let’s take the famous OTT platform Netflix which has managed to entertain a large population in no time.

Today, we are going to discuss the story of a platform that is providing us streaming services, or as we call it video-on-demand available on various platforms- personal computers, iPods, or smartphones. Netflix cut through the competitive clutter and reached out to its targeted audience by curating some interesting  brand communication strategies  over the years.

Let’s get into the success story of Netflix’s Journey.

Netflix was founded on August 29, 1997, in Scotts Valley, California when founders Marc Randolph and Reed Hastings came up with the idea of starting the service of offering online movie rentals. The company began its operations of rental stores with only 30 employees and 925 titles available, which was almost the entire catalog of DVDs in print at the time, through the pay-per-rent model with rates and due dates. Rentals were around $4 plus a $2 postage charge. After significant growth, Netflix decided to switch to a subscriber-based model.

In 2000, Netflix introduced a personalized movie recommendation system. In this system, a user-based rating helps to accurately predict choices for Netflix members. By 2005, the number of Netflix subscribers rose to 4.2 million. On October 1, 2006, Netflix offered a $1,000,000 prize to the first developer of a video-recommendation algorithm that could beat its existing algorithm Cinematch, at predicting customer ratings by more than 10%.

By 2007 the company decided to move away from its original core business model of DVDs by introducing video on demand via the internet. As a part of the internet streaming strategy, they decided to stream their content on Xbox 360, Blu-Ray disc players, and TV set-top boxes. The ventures also partnered with these companies to online streaming their content. With the introduction of the services in Canada in 2010, Netflix also made its services available on the range of Apple products, Nintendo Wii, and other internet-connected devices.

In 2013, Netflix won three Primetime Emmy Awards for its series “House of Cards. By 2014, Netflix made itself available in 6 countries in Europe and won 7 creative Emmy Awards for “House of Cards” and “Orange Is the New Black”. With blooming streaming services, Netflix gathered over 50 million members globally. By 2016, Netflix was accessible worldwide, and the company has continued to create more original content while pressing to grow its membership. From this point, Netflix was unstoppable and today it has a worldwide presence in the video-on-demand industry.

Business Model of Netflix

The platform has advanced to streaming technologies that have elevated and improved Netflix’s overall business structure and revenue. The platform gives viewers the ability to stream and watch a variety of TV shows, movies, and documentaries through its software applications. Since Netflix converted to a streaming platform, it is the world’s seventh-largest Internet company by revenue.

Now, let’s have a look at the business model of Netflix. 1. Netflix’s Key Partners:

• Netflix has built more than 35+ partners across the world. They have partnered with different types of genres for subscribers to select from and enjoy watching.
• Built alliances with Smart TV companies like LG, Sony, Samsung, Xiaomi, and other players in the market.
• Built alliances with Apple, Android, and Microsoft platforms for the purpose of converting business leads from mail-in-system to streaming.
• Built alliances with telecom networks like Airtel, Reliance Jio, and Vodafone.

2. Netflix’s Value Proposition:  Netflix aims to provide the best customer experience by deploying valuable propositions. Here is how the online streaming brand strives to do so:

• With a 24*7 streaming service, users can enjoy shows and movies in high-definition quality from anywhere whether they are at home or traveling.
• Users get access to thousands of movies and tv shows and Netflix Original movies or shows.
• New signups can avail of a 30-day free trial and have the option of canceling their subscriptions anytime.
• Receive algorithmic recommendations for new items to watch.
• At Netflix, users have the flexibility to either turn on notifications and suggestions or keep them switched off.
• Netflix’s “user profiles” give leverage for users to personalize their user accounts and preferences. The User profiles allow the “admin-user” to modify, allow or ever restrict certain users.
• Sharing account options is one of the rarest features a movie platform can provide. Sharing accounts feature on Netflix allows spouses, friends, or even groups to share an account with specific filters and preferences already set.

3. Netflix’s Key Activities

• Maintain and continue to expand its platforms on the website, mobile apps
• Curate, develop and acquire licenses for Netflix’s original content and expand its video library.
• Ensure high-quality user recommendations to retain the customer base
• Develop and maintain partnerships with studios, content production houses, and movie production houses.
• Operate according to censorship laws. Netflix always promotes and operates within the boundaries of censorship.

4. Netflix’s Customer Relationships:  Netflix has designed a customer-friendly platform that offers:

• Self-Setup:  Netflix platform was originally designed to ensure that it is simple and easy to use. Developers of the website ensured to associate elements and themes that serve, promote friendliness, and provide self-setup.
• Unbelievable Customer Experience:  Customers can solve their queries by reaching the Netflix team through the website portal, emailing inquiries, and directly reaching the representative on call or live chat.
• Social Media Channels:  Netflix also engages its audience through social media platforms such as Facebook, Instagram, and LinkedIn. It advertises and offers deals to gain high attraction customers and enhance its customer base.
• Netflix Gift Cards:  Netflix offers its customers special promotional discounts and other gift cards as a part of their subscription plan.

Netflix’s Revenue Model

Netflix gained major popularity when the platform launched online streaming services. Let’s have a look at how the platform earns.

• Subscription-Based Business Model:  Netflix offers monthly subscription fees with three different price options basic, standard, and premium plan. Today, Netflix has over 125 million paid members from over 190 countries and generates $15 billion annually.
• Important partnerships:  Built alliances with a wide range of movie producers, filmmakers, writers, and animators to receive content and legally broadcast the contents required by aligning licenses.
• Internet Service Provider:  One of the most influential tactics implemented was its ability to build alliances with a wide range of movie producers, filmmakers, writers, and animators to receive content and legally broadcast the contents required by aligning licenses.

Netflix was able to establish a well-reputed image worldwide and increased its customer base day by day. When it comes to giving competition, the brand has devised various digital marketing strategies and has gained wide popularity on digital media platforms. With the help of the best digital marketing services, they have kindled the excitement and craze in the people to travel and host.

Digital Marketing Model of Netflix

In less than 4 years, Netflix has gathered a major share of the Indian market. Today a majority of households in India subscribe to Netflix, and that number is expected to rise this year and further in the years to come. The product is designed so well, that you remain engrossed in the content they deliver. They adopted top digital marketing strategies. Consult the best brand activation agencies. Further, let’s talk about a few of the digital marketing principles that Netflix has successfully implemented to gather customers.

1. Personalised Content Marketing:  People love using Netflix because they get a broad range of things to watch. Netflix’s library of TV shows and movies from all over the world is there for consumers to choose from at any time.

The reason that Netflix won the personalization game is that its advanced algorithm continues to rearrange the programs overtime on the basis of your viewing history. Hire some of the best  performance marketing agencies  for personalized content.

2. Website Development:  Netflix has designed its website with a user-friendly interface that allows customers to rate TV shows and movies, which then goes through Netflix’s algorithm to recommend more content they might enjoy. With the onsite optimization for the website, they have optimized each and every page for enhanced customer experience.

To easily get in the minds of customers, they have optimized their website for content by title, by an actor’s name, or even by a director’s name. By leveraging the  best website development services , they added a host of personalization features to their website with clean looks no matter which platform you are using.

3. Email Marketing:  Netflix tapped on email marketing techniques as a part of its digital marketing strategy and as a key component of customer onboarding and nurturing. New Netflix customers receive a series of emails that make content recommendations and encourage new users to explore the platform. Netflix marketers invest hours in building creative email marketing campaigns designed to engage and delight recipients. With the help of the  best email marketing services , they continue to enhance the experience of the customers

4. Search Engine Optimization:  Netflix makes use of search engine optimization services for the sake of improving organic research and establishing its brand presence. The brand aimed at the  best search engine optimization services  to drive traffic organically and adopted both on-page and off-page SEO strategies. They optimized their content with potential keywords that show up high in search results. They also tapped the strategy of International SEO to gain organic leads from the worldwide stage.

5. Social Media Optimization:  Today, social media platforms have become an integral part of digital marketing strategy. If you want to connect with your audience in real time, then it is the best platform to establish your brand image. As social media plays a vital role in the lives of people, Netflix decided to leverage the  best social media optimization services  that made them earn billions. They made use of the following platforms:

Through  creative social media optimization strategies,  Netflix has garnered more than 61 million Facebook followers. In just one year, the brand added 11 million followers to its account. Netflix posts nearly 90% of videos and the rests images. Videos featured on Netflix’s

Facebook pages are typically clips from interviews with the actors from the upcoming movies, clips from the upcoming movies and TV shows, offering audiences a sneak peek into what’s in store for them. Besides videos, the OTT platforms share images, GIFs, funny memes, and simple text posts featuring questions about current movies and TV shows.

Netflix carries 19 million followers. The majority of Netflix’s posts on Instagram are images, post scenes from TV shows featuring engaging captions to get a conversation going, and behind-the-scenes clips and interviews with actors. A recent video featured a behind-the-scenes bloopers video from the set of Stranger Things, which garnered 1.2 million views and almost 3,000 comments. Netflix uses a simple approach to posting, with most posts not featuring any hashtags at all.

Netflix carries 6.8 million followers on Twitter and has tweeted over 30,000 times. Netflix is renowned for its witty replies and comebacks on Twitter, and the brand tweets an average of 14 times a day. This shows just how important engagement is for the brand and how much it values brand awareness. These are the digital marketing techniques that the famous OTT platform adopted from time to time to the subscribers’ engagement and retention. Hence it has yielded high returns for their business.

Campaigns of Netflix

1. Netflix: The Spoiler Billboard:  Netflix’s new campaign uses spoilers of its most popular shows, including Stranger Things, Money Heist and Narcos, to promote social distancing amid the COVID-19 crisis, and while the effort is getting a lot of buzzes, it’s a fake.

2. FU2016:  To launch season four of the political drama House of Cards, Netflix worked with BBH New York and built a fake presidential campaign around the show’s lead character Frank Underwood. The campaign became the top trending topic on Facebook and Twitter during the debate, and it won a Grand Prix in the Integrated category at Cannes in 2016.

3. The Censor’s Cut:  The streaming company wanted to advertise Narcos Mexico in Thailand. Netflix worked with JWT Bangkok and cut around the offending images within each scene, leaving a clear enough outline that anyone could still identify what had been removed. The campaign achieved the opposite effect of what censorship is supposed to do by reaching 34 million people.

Conclusion Netflix is a rare example of a company doing everything right. From its branding and content right down to its business model and product, the company has always excelled at making smart, strategic decisions. With its large market share and focus on numbers, Netflix has managed to develop a deep understanding of its audience that very few others have. With this knowledge, paired with a strong, affordable product, there’s no limit to what this brand can do in the future.

Reach out to  Digital Marketing Agency for the best marketing strategies among different marketing platforms.

Experential

Netflix Product Strategy: A 2020 Case Study

Gibson Biddle

Previous VP of Product at Netflix.

Table of Contents

Netflix was the world’s largest streaming service in 2020 with over 193 million subscribers and climbing. Software as a service (SaaS) companies took notice and wanted in on the secret sauce to Netflix’s product strategy.  

What was their secret to onboarding new users and customer success?

I’m going to share a few models to help you define your product strategy. Each of these models will be brought to life with a mock 2020 articulation of Netflix's product strategy .

But First: How Netflix Started

Netflix’s product vision began with a simple goal – to get big on DVD. When Netflix started out, they were a DVD rental company, and customers had DVDs delivered to them via postal services. Then, the company’s vision evolved to become a leader in the streaming market. Going digital enabled Netflix to expand worldwide. Having achieved all of the above, Netflix is currently placing a strong focus on original content.

What is a Product Strategy?

Product strategy is a key part of product-led growth (PLG) . It’s a plan that helps your company establish a specific product vision and how teams work together to successfully achieve it. 

Before we begin to explore Netflix’s product strategy, it’s important to understand why product strategy is so important and necessary. 

Firstly, a strategic product plan helps us to communicate an inspired vision of the future . It’s one thing to have an idea in your head, but you need the right strategies in place to help communicate that vision to others.

Secondly, combining innovation and invention is no easy task. Inventing new solutions and features can be chaotic, and it’s almost impossible to be innovative without any chaos. However, products change, and company decisions cannot happen at random. There must be discipline, and a product development strategy is effective at blending these two forces.

A product development strategy is about forming hypotheses to what I call the DHM model . In other words, you need it to delight customers and do so in a margin-enhancing way. 

Finally, you need a product strategy to help facilitate prioritization . We must prioritize some things over others, and having a strategy in place can help you to do that while also communicating a plan.

As product leaders, we can do anything, but we can’t do everything . 

3 Product Strategy Frameworks 

A product strategy framework is a guiding light for every department in your SaaS company. I want to briefly introduce three models for product strategy because I’ll be sharing (in later sections) how to put each to use in the context of Netflix’s 2020 product strategy. 

Here are three models (or frameworks ) to define your product strategy:

• Get Big, Lead, Expand (GLEe) model is a product strategy model that helps provide a longterm vision. It’s about growing the company to get big in its first 5 to 10 years and then expanding into different chapters of growth later. 
• Grow, Expand, Monetize (GEM) model helps different departments like marketing, finance, and Product teams to align with each other. How do you prioritize growth, expansion, and monetization?
• Delight, Hard to Copy, Monetize (DHM) model is about delighting your users in hard-to-copy ways.  

The purpose of these models includes: 

• Encourage people to think long-term
• Build cross-functional alignment
• Help people to form hypotheses to compete long-term 

Netflix’s Product Strategy Framework: DHM

If you’re a product leader, like Netflix in 2020, your main job is to delight customers in hard-to-copy margin-enhancing ways.

So, how did Netflix’s product leaders achieve this?

Netflix uses a DHM framework.

The company offers customers a very convenient service with a wide selection of movies and TV shows they can stream instantly anytime, anywhere. Customers can navigate Netflix’s selection very easily, and they get a lot of value for their money. Plus, Netflix offers customers a range of high-quality and entertaining original content.

How Netflix’s Product Strategy Increases Profits

A key part of Netflix’s product strategy is to increase profits so they can reinvest in making an even better product in the future. I refer to this as margin-enhancing and Netflix effectively increases profits in various ways.

Let’s take a closer look at the last point in the graphic above [– right-size original content investment. 

Since Netflix wants to offer a wide range of movies and TV shows to suit all types of tastes and preferences, the company likes to invest in original content. However, they want to pay the right amount for this content. 

To do this as accurately as possible, Netflix predicts how many people will watch a certain TV show or movie and then line up the cost of investment with their prediction.

For example, Netflix predicted that 100 million people would watch their original series Stranger Things . Therefore, they were willing to invest $500 million in that series. The series Bojack Horseman was predicted to gain 20 million viewers, so the right-size investment in that show was estimated to be $100 million.

What Made Netflix’s 2020 Product Strategy Hard to Copy

In 2020, Netflix wasn’t the world’s biggest streaming service for nothing. It was very hard for other companies and streaming services to copy what Netflix did, and that made it difficult for competitors to compete.

Netflix is a trusted brand. You can trust Netflix to keep your personal details private. Their brand promise is “movie enjoyment made easy,” and they achieve this by providing viewers with personalized service and the freedom to watch on almost any device with an internet connection.

Here’s why Netflix is hard to copy:

• Unique technology
• Network effect 
• Economies of scale

The brand promise of Netflix is movie enjoyment made easy. The company is a movie subscription service that delivers fast, easy entertainment in a friendly, straightforward way. 

Netflix Product Team’s Priorities

The product team at Netflix prioritizes monthly retention as the company’s high-level engagement metric. The team prioritizes other metrics too, including growth and monetization.

When the COVID pandemic hit in 2020, movie theaters were closed, and more people had free time at home. The company’s product team focused on key high-level product strategies (see below):

Here’s an example of the Netflix 2020 rolling roadmap, which shows how Netflix is implementing each strategy every quarter:

Netflix Case Studies

Now, let's look at some ways Netflix was able to win their users' attention by offering additional products.

Case Study 1: Netflix Party

Netflix Party (now Teleparty ) is a Chrome extension app that has become increasingly popular since COVID-19. It allows users to watch the same movie at the same time. They can even chat with each other while watching a movie or TV show. 

In an isolated time, such as a lockdown during the pandemic, many people enjoyed using this Chrome extension to watch movies with friends and family long-distance.

But is this an idea that Netflix should execute itself?

In the past, Netflix has tried a few variations of social experiments, including Friends in 2009, Xbox Party Mode in 2010, and Tell a Friend in 2018. All three were killed off because not enough people used the features.

However, Netflix Party has proven to be quite a success. In 2020, the app grew from 500 thousand to one million in just 60 days and acquired 10 million downloads. This data shows a substantial proof of concept, making it a possible worthwhile investment for Netflix. But the question remains – will this delight in hard-to-copy, margin-enhancing ways?

Well, this extension is hard to copy, and it would take competitors years to mimic something of this scale. It has the potential to enhance profits via word-of-mouth and increase retention. 

Case Study 2: Auto-Cancel Inactive Members

Should Netflix auto-cancel inactive members ?

In 2020, one-half percent of Netflix members hadn’t used the service in the last 12 months. However, those members were still paying for the service despite rarely using it.

Some might argue that a better alternative would be to send those members an email notification alerting them to the fact they’ve been inactive for so long. The email could say something like, “Would you like to cancel?” Then, the user could decide whether they wanted to continue paying for the monthly subscription or cancel their membership.

If members say no, then their service would continue as normal. If they say yes, then their membership would be canceled. However, what happens to the members who don’t respond? Should their membership be auto-canceled?

In 2020, if Netflix were to auto-cancel all of the inactive members, the company would lose $100 million. Clearly, introducing the auto-cancel option was not a great way to enhance profits, as the company would be losing millions of dollars each year. But what about the delight and hard-to-copy side of their product strategy?

Offering the auto-cancel feature for inactive users may delight customers since Netflix automatically stops payments. The user could always rejoin if they choose to do so.

Auto canceling inactive Netflix users, in my opinion, would be a worthwhile strategy for Netflix to implement and here’s why:

I think that product teams and product leaders can learn a lot from Netflix’s winning 2020 product strategy, which can help you make more strategic day-to-day decisions and implement product strategies that will help you reach your vision and goals.

Most Popular Posts

Free Trial Model or Freemium? Here's Why it Doesn't Actually Matter (& how to choose one).

How to Craft a Winning Business Strategy for SaaS in 2024

Why the right environment matters when you’re building a world-class team

3 simple tactics to improve organizational efficiency and effectiveness .

How to build a company that runs itself

How and why you need an accountability chart for your product-led business

How to scale your SaaS past 8-figures without a sales team

How to slow churn and drive user success with SaaS onboarding coaches 

6 best practices to boost your SaaS free-to-paid conversion rate

How to crush product-led acquisition bottlenecks and improve conversion

How to use incentives to drive velocity of your growth loops

• Harvard Business School →
• Faculty & Research →
• May 2007 (Revised April 2009)
• HBS Case Collection
• Format: Print
• | Pages: 15

About The Author

Willy C. Shih

Related work.

• August 2014
• Faculty Research

Netflix in 2011

• Netflix in 2011  By: Willy Shih and Stephen Kaufman

The Power of Digitalization: The Netflix Story

• Conference paper
• First Online: 18 May 2020
• Cite this conference paper

• Manuel Au-Yong-Oliveira 20 , 21 ,
• Miguel Marinheiro 20 &
• João A. Costa Tavares 20  

Part of the book series: Advances in Intelligent Systems and Computing ((AISC,volume 1161))

Included in the following conference series:

• World Conference on Information Systems and Technologies

5383 Accesses

2 Citations

8 Altmetric

The evolution of technology, and mainly the evolution of the Internet, has improved the way business is done. Nowadays, most services are offered through a website or through an app, as it is much more convenient and suitable for the customer. This business transformation made it possible to get a faster and cheaper service, and companies had to adapt to the change, in order to fulfill customers’ requirements. In this context, this paper relates to this digital transformation, focusing on a case study about Netflix, a former DVD rental company and currently an online streaming leader. We aimed to understand Netflix’s behavior alongside this digital wave. Thus, we performed a survey, which had 74 answers, mainly from Portugal, but also from Spain, Belgium, Italy, Turkey, Georgia and Malaysia. Of the people who answered the survey, 90.1% were stream consumers, but only 59.1% had premium TV channels. From those 90.1%, 58.3% also said that they watched streams between two and four times per week, but the majority of premium TV channel subscribers (63.8%) replied that they watch TV less than twice in a week. We see a trend in which the traditional TV industry is in decline and streaming as a service has increased in popularity. Consumer habits are changing, and people are getting used to the digitalization era. Netflix is also confirmed in our survey as the market leader of the entertainment distribution business, as stated in the literature, and the biggest strength of this platform is its content.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

• Available as PDF
• Read on any device
• Instant download
• Own it forever
• Available as EPUB and PDF
• Compact, lightweight edition
• Dispatched in 3 to 5 business days
• Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Leiner, B., Cerf, V., Clark, D., Kahn, R., Kleinrock, L., Lynch, D., Postel, J., Roberts, L.G., Wolff, S.: Brief History of the Internet—Internet Society (2009)

Google Scholar  

Investopedia. https://www.investopedia.com/articles/personal-finance/121714/hulu-netflix-and-amazon-instant-video-comparison.asp . Accessed 03 Dec 2019

Littleton, C., Roettgers, J.: How Netflix Went From DVD Distributor to Media Giant (2018). https://variety.com/2018/digital/news/netflix-streaming-dvds-original-programming-1202910483/ . Accessed 31 Oct 2019

Business Insider. https://www.businessinsider.com/how-netflix-has-looked-over-the-years-2016-4#in-2010-streaming-begins-to-be-more-than-an-add-on-and-gets-prominent-real-estate-on-the-home-page-5 . Accessed 03 Dec 2019

Netflix. https://www.netflix.com/browse . Accessed 03 Dec 2019

Oomen, M.: Netflix: How a DVD rental company changed the way we spend our free time (2019). Business Models Inc. https://www.businessmodelsinc.com/exponential-business-model/netflix/ . Accessed 31 Oct 2019

Venkatraman, N.V.: Netflix: A Case of Transformation for the Digital Future (2017). https://medium.com/@nvenkatraman/netflix-a-case-of-transformation-for-the-digital-future-4ef612c8d8b . Accessed 31 Oct 2019

BMI - Business Models Inc. https://www.businessmodelsinc.com/exponential-business-model/netflix/ . Accessed 03 Dec 2019

Calia, R.C., Guerrini, F.M., Moura, G.L.: Innovation networks: from technological development to business model reconfiguration. Technovation 27 (8), 426–432 (2007)

Article   Google Scholar  

Ritter, T., Lund, C.: Digitization capability and the digitalization of business models in business-to-business firms: past, present, and future. Ind. Mark. Manag. (November), 1–11 (2019)

Hong, S.H.: The recent growth of the internet and changes in household-level demand for entertainment. Inf. Econ. Policy 19 (3–4), 304–318 (2007)

Evens, T.: Clash of TV platforms: how broadcasters and distributors build platform leadership. In: 25th European Regional Conference of the International Telecommunications Society (ITS), Brussels, Belgium, 22–25 June 2014. ECONSTOR (2014)

Aliloupour, N.P.: Impact of technology on the entertainment distribution market: the effects of Netflix and Hulu on cable revenue. Open access senior thesis. Bachelor of Arts. Claremont Graduate University (2015)

Johnson, C.M.: Cutting the cord: leveling the playing field for virtual cable companies. Law School Student Scholarship, Paper 497 (2014)

Pardo, A.: Digital hollywood: how internet and social media are changing the movie business. In: Friedrichsen, M., Muhl-Benninhaus, W. (eds.) Handbook of Social Media Management, pp. 329–348 (2013)

Bryman, A., Bell, E.: Business Research Methods, 4th edn. Oxford University Press, Oxford (2015)

Alvarez, E.: Netflix is taking a wait-and-see approach to virtual reality (2018). Engadget. https://www.engadget.com/2018/03/07/netflix-virtual-reality-not-a-priority/ . Accessed 31 Oct 2019

Nhan, J., Bowen, K., Bartula, A.: A comparison of a public and private university of the effects of low-cost streaming services and income on movie piracy. Technol. Soc. 60 , 101213 (2020)

Comissão Europeia - Portugal – A PAC no seu país. https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/by_country/documents/cap-in-your-country-pt_pt.pdf . Accessed 20 Jan 2020

Gonçalves, R., Oliveira, M.A.: Interacting with technology in an ever more complex world: designing for an all-inclusive society. In: Wagner, C.G. (ed.) Strategies and Technologies for a Sustainable Future, pp. 257–268. World Future Society, Boston (2010)

Fontoura, A., Fonseca, F., Piñuel, M.D.M., Canelas, M.J., Gonçalves, R., Au-Yong-Oliveira, M.: What is the effect of new technologies on people with ages between 45 and 75? In: Rocha, Á., et al. (eds.) New Knowledge in Information Systems and Technologies, WorldCist 2019, La Toja Island, Spain, 16–19 April. Advances in Intelligent Systems and Computing (Book of the AISC Series), vol. 932, pp. 402–414. Springer (2019)

Download references

Author information

Authors and affiliations.

Department of Economics, Management, Industrial Engineering and Tourism, University of Aveiro, 3810-193, Aveiro, Portugal

Manuel Au-Yong-Oliveira, Miguel Marinheiro & João A. Costa Tavares

GOVCOPP, Aveiro, Portugal

Manuel Au-Yong-Oliveira

You can also search for this author in PubMed   Google Scholar

Corresponding author

Correspondence to Manuel Au-Yong-Oliveira .

Editor information

Editors and affiliations.

Departamento de Engenharia Informática, Universidade de Coimbra, Coimbra, Portugal

Álvaro Rocha

College of Engineering, The Ohio State University, Columbus, OH, USA

Hojjat Adeli

FEUP, Universidade do Porto, Porto, Portugal

Luís Paulo Reis

DIMES, Università della Calabria, Arcavacata, Italy

Sandra Costanzo

Faculty of Electrical Engineering, University of Montenegro, Podgorica, Montenegro

Irena Orovic

Universidade Portucalense, Porto, Portugal

Fernando Moreira

Rights and permissions

Reprints and permissions

Copyright information

© 2020 The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG

About this paper

Cite this paper.

Au-Yong-Oliveira, M., Marinheiro, M., Costa Tavares, J.A. (2020). The Power of Digitalization: The Netflix Story. In: Rocha, Á., Adeli, H., Reis, L., Costanzo, S., Orovic, I., Moreira, F. (eds) Trends and Innovations in Information Systems and Technologies. WorldCIST 2020. Advances in Intelligent Systems and Computing, vol 1161. Springer, Cham. https://doi.org/10.1007/978-3-030-45697-9_57

Download citation

DOI : https://doi.org/10.1007/978-3-030-45697-9_57

Published : 18 May 2020

Publisher Name : Springer, Cham

Print ISBN : 978-3-030-45696-2

Online ISBN : 978-3-030-45697-9

eBook Packages : Intelligent Technologies and Robotics Intelligent Technologies and Robotics (R0)

Share this paper

Anyone you share the following link with will be able to read this content:

Sorry, a shareable link is not currently available for this article.

Provided by the Springer Nature SharedIt content-sharing initiative

• Publish with us

Policies and ethics

• Find a journal
• Track your research

• About / Contact
• Privacy Policy
• Alphabetical List of Companies
• Business Analysis Topics

Netflix Five Forces Analysis & Recommendations (Porter’s Model)

Netflix’s external environment is examined in this Five Forces analysis of competitive forces and external factors based on Michael Porter’s model. The company provides streaming services and movies, series, and games. Online business operations facilitate Netflix’s international market reach but also position the company against multinational competitors in the industry. This Five Forces analysis of Netflix accounts for the multinational operating environment and the factors of the five forces, namely, competitive rivalry, customers’ power, suppliers’ power, threat of substitution, and threat of new entry. Netflix’s long-term success depends on its competitive advantages and strategies for overcoming competitive pressures illustrated in this Five Forces analysis.

This Five Forces analysis indicates that competitive advantages and effective competitive strategies ensure the achievement of business goals that realize Netflix’s mission statement and vision statement despite competitive challenges in the industry. The achievement of the company’s goals and performance targets are subject to the five forces, but carefully designed strategies can successfully promote Netflix’s business growth despite competition in the entertainment and content streaming industry.

Summary: Porter’s Five Forces Analysis of Netflix

The external factors linked to competitors, customers, suppliers, substitutes, and new entrants create a challenging competitive environment for entertainment content streaming services. This Five Forces analysis of Netflix illustrates the following intensities of the five forces:

• Competitive rivalry: Moderate
• Buyer power: Moderate
• Supplier power: Weak
• Substitution threat: Moderate
• New entry threat: Weak

Recommendations. This Five Forces analysis establishes the significance of competition and variables linked to subscribers in influencing Netflix’s competitiveness and strategic positioning. Although the industry has aggressive competitors, production capabilities and original content are competitive advantages that limit the impact of competition. The core competencies and competitive advantages detailed in the SWOT analysis of Netflix can provide support for strategic efforts to mitigate the effects of competitors, buyers, and suppliers assessed in this Five Forces analysis. For example, the company’s original movies and series help reduce its dependence on content suppliers or producers. It is recommended that Netflix further develop its content production capabilities to improve competitive advantages based on original content that attracts target customers. These competitive advantages mitigate the influence of media and entertainment competitors and limit the impact of customer/buyer power and the threat of substitutes.

Another recommendation is for Netflix’s diversification and product development strategies, which reduce the effects of the competitive challenges detailed in this Five Forces analysis. Netflix’s generic competitive strategy and intensive growth strategies include objectives for new products and business operations in addition to movies and series production and streaming. The company already offers games as part of its product development and diversification strategies. However, with the competition and buyer power in this Five Forces analysis case, it is recommended that Netflix continue developing more games to improve its position as a provider of gaming content that strengthens the popularity of its movies and series used as basis for such games.

Competition/Competitive Rivalry: Moderate

This component of Porter’s Five Forces analysis assesses the degree of competition and competitors’ impact on Netflix. The following external factors lead to the moderate force of competition on Netflix:

• Low differentiation of streaming services
• High differentiation of content producers
• Subscribers’ moderate switching costs

Most streaming services are similar in function and types of content available. In this Five Forces analysis of Netflix, such a competitive condition strengthens rivalry by making it easier for viewers to transfer between streaming services. However, high differentiation of content producers reduces competitive pressure by discouraging viewers from transferring to other service providers that may not have the same content. For example, some Netflix originals are not available from streaming and content-producing competitors, like Disney , Sony , NBCUniversal, as well as YouTube ( Google (Alphabet) ), Apple TV Plus, Amazon Prime Video, Facebook (Meta) , and Microsoft Movies & TV (Films & TV). Netflix subscribers also experience moderate costs when switching to other streamers, such as additional membership or subscription fees and lack of access to some original content. As a result, many customers keep accounts with multiple streaming services. The strategic factors in this Five Forces analysis illustrate that competition is significant but limited because of original content that functions as a competitive advantage of Netflix.

Bargaining Power of Netflix’s Customers: Moderate

Customers’ influence on prices, profits, market share, and business performance is assessed in this component of the Five Forces analysis. The following external factors reinforce the moderate bargaining power of Netflix’s customers:

• Small size of individual subscribers
• Subscribers’ moderate price sensitivity

A subscriber’s payment is small and has insignificant individual impact on Netflix. In Porter’s Five Forces analysis model, this small size limits or reduces individual customers’ effect on the online company. Also, subscribers’ switching costs limit buyer power over Netflix. For example, switching may come with additional expenses and loss of access to the company’s original movies and series, which are a competitive advantage that discourages subscription cancellations. However, Netflix is subject to the price sensitivity of subscribers. The Five Forces analysis model considers this external factor as a contributor to customers’ bargaining power, as streaming competitors can use affordability as a competitive advantage. The external factor of price sensitivity is included in decisions for Netflix’s marketing mix (4Ps) , particularly strategies for pricing the streaming service. Overall, these factors enable moderate customer power in this Five Forces analysis case.

Bargaining Power of Suppliers: Weak

This component of Porter’s Five Forces analysis refers to suppliers’ influence on the cost of supply or inputs and, thus, Netflix’s business costs, performance, and competitiveness. The following external factors lead to the limited and weak bargaining power of suppliers over Netflix:

• Large number of content producers
• High switching costs for content producers/suppliers

Netflix’s most significant suppliers are content producers, such as local and multinational media and entertainment companies. Considering the uniqueness of each movie, series, or game, these suppliers have a high degree of differentiation. In this Five Forces analysis of Netflix, high differentiation is an external factor that increases the bargaining power of suppliers by making their content desirable and not easily replaced. However, the large number of content producers reduces their individual bargaining power. Furthermore, suppliers experience high switching costs in this Five Forces analysis case. For example, because of Netflix’s international market reach, many suppliers are unlikely to pull out of Netflix, although popular multinational entertainment producers can do so more easily. Netflix’s operations management ensures that the streaming service optimizes business performance while managing strategic concerns involving content producers and their weak bargaining power established in this Five Forces analysis.

Substitutes/Substitution Threat to Netflix: Moderate

The impact of substitution and the competitiveness of substitute products are assessed in this component of Porter’s Five Forces analysis model. The following external factors are responsible for the moderate threat of substitution affecting Netflix:

• Moderate costs of switching to substitutes
• Moderate availability of substitutes
• Subscribers’ moderate propensity to substitute

Substitutes for Netflix satisfy customers’ entertainment needs. In this Five Forces analysis case, substitutes include live shows and performances, free TV channels, and content on discs, tapes, and other media. Although these substitutes offer entertainment, customers are only moderately likely to switch to them because of various costs, like additional spending and inconvenience, in contrast to the affordability and convenience of accessing online content from Netflix. Also, many substitutes have limited availability with inflexible schedules or locations. This external factor limits the substitution threat in this Five Forces analysis case. Moreover, many customers are satisfied with Netflix’s online content and streaming services and are only moderately likely to use substitutes, such as during moments of boredom or when seeking different activities. Overall, this component of the Five Forces analysis of Netflix establishes the moderate threat of substitution.

Threat of New Entrants/New Entry: Weak

This component of Porter’s Five Forces analysis assesses the likelihood of new competitors and their impact on Netflix’s prices, profits, and business performance. The following external factors lead to new entrants’ weak threat to Netflix:

• Moderate cost of doing business
• High supply chain costs
• High cost of reaching critical mass for network effect

Netflix’s operations in the entertainment and content streaming industry involve moderate costs for developing and maintaining IT infrastructure. Also, developing original content is costly, while getting support and content from various media companies requires time and accompanying processing, business, and legal costs. These strategic factors reduce the threat of new entry in this Five Forces analysis of Netflix. Moreover, new entrants need to spend considerable time and capital before reaching critical mass, which is the point where they already have enough content and subscribers to easily attract more subscribers and content producers. This component of the Five Forces analysis establishes that new entrants pose a weak threat to Netflix.

• Davis, S. (2023). What is Netflix imperialism? Interrogating the monopoly aspirations of the ‘World’s largest television network’. Information, Communication & Society, 26 (6), 1143-1158.
• Gómez, R., & Munoz Larroa, A. (2023). Netflix in Mexico: An example of the tech giant’s transnational business strategies. Television & New Media, 24 (1), 88-105.
• Netflix, Inc. – Form 10-K .
• Netflix, Inc. – Long-Term View .
• Netflix, Inc. – Top Investor Questions .
• Sforcina, K. (2023). Digitalizing Sustainability: The Five Forces of Digital Transformation . Taylor & Francis.
• U.S. Department of Commerce – International Trade Administration – Media and Entertainment Industry .
• Wayne, M. L., & Uribe Sandoval, A. C. (2023). Netflix original series, global audiences and discourses of streaming success. Critical Studies in Television, 18 (1), 81-100.
• Copyright by Panmore Institute - All rights reserved.
• This article may not be reproduced, distributed, or mirrored without written permission from Panmore Institute and its author/s.
• Educators, Researchers, and Students: You are permitted to quote or paraphrase parts of this article (not the entire article) for educational or research purposes, as long as the article is properly cited and referenced together with its URL/link.

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Reading Lists
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

How Netflix Reinvented HR

• Patty McCord

When Netflix executives wrote a PowerPoint deck about the organization’s talent management strategies, the document went viral—it’s been viewed more than 5 million times on the web. Now one of those executives, the company’s longtime chief talent officer, goes beyond the bullet points to paint a detailed picture of how Netflix attracts, retains, and manages stellar employees. The firm draws on five key tenets:

Hire, reward, and tolerate only fully formed adults. Ask workers to rely on logic and common sense instead of formal policies, whether the issue is communication, time off, or expenses.

Tell the truth about performance. Scrap formal reviews in favor of informal conversations. Offer generous severance rather than holding on to workers whose skills no longer fit your needs.

Managers must build great teams. This is their most important task. Don’t rate them on whether they are good mentors or fill out paperwork on time.

Leaders own the job of creating the company culture. You’ve got to actually model and encourage the behavior you talk up.

Talent managers should think like businesspeople and innovators first, and like HR people last. Forget throwing parties and handing out T‑shirts; make sure every employee understands what the company needs most and exactly what’s meant by “high performance.”

Trust people, not policies. Reward candor. And throw away the standard playbook.

Sheryl Sandberg has called it one of the most important documents ever to come out of Silicon Valley. It’s been viewed more than 5 million times on the web. But when Reed Hastings and I (along with some colleagues) wrote a PowerPoint deck explaining how we shaped the culture and motivated performance at Netflix, where Hastings is CEO and I was chief talent officer from 1998 to 2012, we had no idea it would go viral. We realized that some of the talent management ideas we’d pioneered, such as the concept that workers should be allowed to take whatever vacation time they feel is appropriate, had been seen as a little crazy (at least until other companies started adopting them). But we were surprised that an unadorned set of 127 slides—no music, no animation—would become so influential.

• PM Patty McCord was the chief talent officer at Netflix from 1998 to 2012 and now advises start-ups and entrepreneurs. She is the author of Powerful: Building a Culture of Freedom and Responsibility (Silicon Guild, 2018).

Partner Center

• AI Development Use ML tools and algorithms to build intelligent AI-driven apps
• Generative AI Build intelligent generative AI solutions that adapt and evolve
• ML Development Build and deploy custom ML models to automate tasks
• MLOps Build sophisticated ML and CI/CD pipelines and shorten production cycles
• LLM Development Accelerate LLM adoption and streamline its implementation
• Data Science Consulting Get expert guidance to leverage data for operational improvements
• Gen AI and ML Build domain-specific generative AI solutions on AWS
• Migration and Modernization Move your current workloads to AWS Cloud environment
• SaaS Migration and Engineering Build, migrate, and optimize SaaS applications through cloud-native solution
• Data Science and Engineering Build and optimize your data processing pipelines to improve operational efficiency
• Serverless Manage complex workflows and ensure optimal resource utilization
• Cloud Management Improve AWS efficiency, automation, and visibility for better cloud operations
• Product Engineering and Development Build products powered by latest tech stacks and design thinking
• Custom Software Development Build scalable, robust software designed to meet your business needs
• Performance Engineering and Testing Build products that perform optimally in normal and extreme load conditions
• Quality Engineering Ensure product quality and customer satisfaction
• Project Strategy Build an agile, adaptive, and transformative project strategy
• Digital Experience Design Create digital experiences that engage users at every touch point
• Financial Services Build secure, scalable, precision-engineered BFSI solutions
• Retail and E-commerce Ensure a consistent customer experience and operational efficiency
• Healthcare and Life Sciences Build secure, compliant solutions for better patient care and improved efficiency
• Supply Chain & Logistics Bring agility, resilience, and intelligence to your supply chain
• Marketing and Technology Transform marketing efforts and optimize campaigns through intelligent automation
• Manufacturing Adopt modern solutions to automate workflow and improve product quality
• Case Studies
• AI & ML Insights Gain insights on the latest stories, reports, surveys, and updates on AI/ML
• Product Engineering Insights Get a deeper understanding of product development with our expert insights
• Cloud Engineering Insights Stay updated with the latest trends and best practices in cloud engineering
• Blog A collection of insights on latest technology, best practices and proven strategies
• Ebooks Download ebooks from our experts to know the winning strategies, technologies, and trends
• News and Tech Insights Keep up with the latest technology news and insights

How Netflix Became A Master of DevOps? An Exclusive Case Study

Find out how Netflix excelled at DevOps without even thinking about it and became a gold standard in the DevOps world.

Table of Contents

• Netflix's move to the cloud

Netflix’s Chaos Monkey and the Simian Army

Netflix’s container journey, netflix’s “operate what you build” culture, lessons we can learn from netflix’s devops strategy, how simform can help.

Even though Netflix is an entertainment company, it has left many top tech companies behind in terms of tech innovation. With its single video-streaming application, Netflix has significantly influenced the technology world with its world-class engineering efforts, culture, and product development over the years.

One such practice that Netflix is a fantastic example of is DevOps. Their DevOps culture has enabled them to innovate faster, leading to many business benefits. It also helped them achieve near-perfect uptime, push new features faster to the users, and increase their subscribers and streaming hours.

With nearly 214 million subscribers worldwide and streaming in over 190 countries , Netflix is globally the most used streaming service today. And much of this success is owed to its ability to adopt newer technologies and its DevOps culture that allows them to innovate quickly to meet consumer demands and enhance user experiences. But Netflix doesn’t think DevOps.

So how did they become the poster child of DevOps? In this case study, you’ll learn about how Netflix organically developed a DevOps culture with out-of-the-box ideas and how it benefited them.

Simform is a leading DevOps consulting and implementation company , helping businesses build innovative products that meet dynamic user demands efficiently. To grow your business with DevOps, contact us today!

Netflix’s move to the cloud

It all began with the worst outage in Netflix’s history when they faced a major database corruption in 2008 and couldn’t ship DVDs to their members for three days. At the time, Netflix had roughly 8.4 million customers and one-third of them were affected by the outage. It prompted Netflix to move to the cloud and give their infrastructure a complete makeover. Netflix chose AWS as its cloud partner and took nearly seven years to complete its cloud migration.

Netflix didn’t just forklift the systems and dump them into AWS. Instead, it chose to rewrite the entire application in the cloud to become truly cloud-native, which fundamentally changed the way the company operated. In the words of Yury Izrailevsky, Vice President, Cloud and Platform Engineering at Netflix:

“We realized that we had to move away from vertically scaled single points of failure, like relational databases in our datacenter, towards highly reliable, horizontally scalable, distributed systems in the cloud.”

As a significant part of their transformation, Netflix converted its monolithic, data center-based Java application into cloud-based Java microservices architecture. It brought about the following changes:

• Denormalized data model using NoSQL databases
• Enabled teams at Netflix to be loosely coupled
• Allowed teams to build and push changes at the speed that they were comfortable with
• Centralized release coordination
• Multi-week hardware provisioning cycles led to continuous delivery
• Engineering teams made independent decisions using self-service tools

As a result, it helped Netflix accelerate innovation and stumble upon the DevOps culture. Netflix also gained eight times as many subscribers as it had in 2008. And Netflix’s monthly streaming hours also grew a thousand times from Dec 2007 to Dec 2015.

After completing their cloud migration to AWS by 2016, Netflix had:

And it handled all of the above with 0 Network Ops Centers and some 70 operations engineers, who were all software engineers focusing on writing tools that enabled other software developers to focus on things they were good at.

Migrating to the cloud made Netflix resilient to the kind of outages it faced in 2008. But they wanted to be prepared for any unseen errors that could cause them equivalent or worse damage in the future.

Engineers at Netflix perceived that the best way to avoid failure was to fail constantly. And so they set out to make their cloud infrastructure more safe, secure, and available the DevOps way – by automating failure and continuous testing.

Chaos Monkey

Netflix created Chaos Monkey, a tool to constantly test its ability to survive unexpected outages without impacting the consumers. Chaos Monkey is a script that runs continuously in all Netflix environments, randomly killing production instances and services in the architecture. It helped developers:

• Identify weaknesses in the system
• Build automatic recovery mechanisms to deal with the weaknesses
• Test their code in unexpected failure conditions
• Build fault-tolerant systems on day to day basis

The Simian Army

After their success with Chaos Monkey, Netflix engineers wanted to test their resilience to all sorts of inevitable failures, detect abnormal conditions. So, they built the Simian Army , a virtual army of tools discussed below.

• Latency Monkey

It creates false delays in the RESTful client-server communication layers, simulating service degradation and checking if the upstream services respond correctly. Moreover, creating very large delays can simulate an entire service downtime without physically bringing it down and testing the ability to survive. The tool was particularly useful to test new services by simulating the failure of dependencies without affecting the rest of the system.

• Conformity Monkey

It looks for instances that do not adhere to the best practices and shuts them down, giving the service owner a chance to re-launch them properly.

• Doctor Monkey

It detects unhealthy instances by tapping into health checks running on each instance and also monitors other external health signs (such as CPU load). The unhealthy instances are removed from service and terminated after service owners identify the root cause of the problem.

• Janitor Monkey

It ensures the cloud environment runs without clutter and waste. It also searches for unused resources and discards them.

• Security Monkey

An extension of Conformity Monkey, it identifies security violations or vulnerabilities (e.g., improperly configured AWS security groups) and eliminates the offending instances. It also ensures the SSL (Secure Sockets Layer) and DRM (Digital Rights Management) certificates were valid and not due for renewal.

• 10-18 Monkey

Short for Localization-Internationalization, it identifies configuration and runtime issues in instances serving users in multiple geographic locations with different languages and character sets.

• Chaos Gorilla

Like Chaos Monkey, the Gorilla simulates an outage of a whole Amazon availability zone to verify if the services automatically re-balance to the functional availability zones without manual intervention or any visible impact on users.

Today, Netflix still uses Chaos Engineering and has a dedicated team for chaos experiments called the Resilience Engineering team (earlier called the Chaos team).

In a way, Simian Army incorporated DevOps principles of automation, quality assurance, and business needs prioritization. As a result, it helped Netflix develop the ability to deal with unexpected failures and minimize their impact on users. 

On 21st April 2011 , AWS experienced a large outage in the US East region, but Netflix’s streaming ran without any interruption. And on 24th December 2012 , AWS faced problems in Elastic Load Balancer(ELB) services, but Netflix didn’t experience an immediate blackout. Netflix’s website was up throughout the outage, supporting most of their services and streaming, although with higher latency on some devices.

Netflix had a cloud-native, microservices-driven VM architecture that was amazingly resilient, CI/CD enabled, and elastically scalable. It was more reliable, with no SPoFs (single points of failure) and small manageable software components. So why did they adopt container technology? The major factors that prompted Netflix’s investment in containers are:

• Container images used in local development are very similar to those run in production. This end-to-end packaging allows developers to build and test applications easily in production-like environments, reducing development overhead.
• Container images help build application-specific images easily.
• Containers are lightweight, allowing building and deploying them faster than VM infrastructure.
• Containers only have what a single application needs, are smaller and densely packed, which reduces overall infrastructure cost and footprint.
• Containers improve developer productivity, allowing them to develop, deploy, and innovate faster.

Moreover, Netflix teams had already started using containers and seen tangible benefits. But they faced some challenges such as migrating to containers without refactoring, ensuring seamless connectivity between VMs and containers, and more. As a result, Netflix designed a container management platform called Titus to meet its unique requirements.

Titus provided a scalable and reliable container execution solution to Netflix and seamlessly integrated with AWS. In addition, it enabled easy deployment of containerized batches and service applications.

Titus served as a standard deployment unit and a generic batch job scheduling system. It helped Netflix expand support to growing batch use cases. 

• Batch users could also put together sophisticated infrastructure quickly and pack larger instances across many workloads efficiently. Batch users could immediately schedule locally developed code for scaled execution on Titus.
• Beyond batch, service users benefited from Titus with simpler resource management and local test environments consistent with production deployment.
• Developers could also push new versions of applications faster than before.

Overall, Titus deployments were done in one or two minutes which took tens of minutes earlier. As a result, both batch and service users could experiment locally, test quickly and deploy with greater confidence than before.

“The theme that underlies all these improvements is developer innovation velocity.” 

-Netflix tech blog

This velocity enabled Netflix to deliver fast features to the customers, making containers extremely important for their business.

Netflix invests and experiments significantly in improving development and operations for the engineering teams. But before Netflix adopted the “Operate what you build” model, it had siloed teams. The Ops teams focused on deploy, operate and support parts of the software life cycle. And Developers handed off the code to the ops team for deployment and operation. So each stage in the SDLC was owned by a different person and looked like this:

The specialized roles created efficiencies within each segment but created inefficiencies across the entire SDLC. The issues that they faced were:

• Individual silos that slowed down end-to-end progress
• Added communication overhead, bottlenecks and hampered effectiveness of feedback loops
• Knowledge transfers between developers and ops/SREs were lossy
• Higher time-to-detect and time-to-resolve for deployment problems
• Longer gaps between code complete and deployment, with releases taking weeks

Operate what you build

To deal with the above challenges and drawing inspiration from DevOps principles, Netflix encouraged shared ownership of the full SDLC and broke down silos. The teams developing a system were responsible for operating and supporting it. Each team owned its own deployment issues, performance bugs, alerting gaps, capacity planning, partner support, and so on.

Moreover, they also introduced centralized tooling to simplify and automate dealing with common development problems of the teams. When additional tooling needs arise, the central team assesses if the needs are common across multiple development teams and built tools. In case of too team-specific problems, the development team decides if their need is important enough to solve on their own.

Full Cycle Developers

Combining the above ideas, Netflix built an even better model where dev teams are equipped with amazing productivity tools and are responsible for the entire SDLC, as shown below.

Netflix provided ongoing training and support in different forms (e.g., dev boot camps) to help new developers build up these skills. Easy-to-use tools for deployment pipelines also helped the developers, e.g., Spinnaker. It is a Continuous Delivery platform for releasing software changes with high velocity and confidence.

However, such models require a significant shift in the mindsets of teams/developers. To apply this model outside Netflix, you can start with evaluating what you need, count costs, and be mindful of bringing in the least amount of complexities necessary. And then attempt a mindset shift.

Netflix practices are unique to their work environment and needs and might not suit all organizations. But here are a few lessons to learn from their DevOps strategy and apply:

• Don’t build systems that say no to your developers

Netflix has no push schedules, push windows, or crucibles that developers must go through to push their code into production. Instead, every engineer at Netflix has full access to the production environment. And there are neither strict policies nor procedures that prevent them from accessing the production environment.

• Focus on giving freedom and responsibility to the engineers

Netflix aims to hire intelligent people and provide them with the freedom to solve problems in their own way that they see as best. So it doesn’t have to create artificial constraints and guardrails to predict what their developers need to do. But instead, hire people who can develop a balance of freedom and responsibility.

• Don’t think about uptime at all costs

Netflix servers their millions of users with a near-perfect uptime. But it didn’t think about uptime when they started chaos testing their environment to deal with unexpected failure.

• Prize the velocity of innovation

Netflix wants its engineers to do fun, exciting things and develop new features to delight its customers with reduced time-to-market.

• Eliminate a lot of processes and procedures

They limit an organization from moving fast. So instead, Netflix focuses on hiring people they can trust and have independent decision-making capabilities.

• Practice context over control

Netflix doesn’t control and contain too much. What they do focus on is context. Managers at Netflix ensure that their teams have a quality and constant flow of context of the business, rather than controlling them.

• Don’t do a lot of required standards, but focus on enablement

Teams at Netflix can work with their choice of programming languages, libraries, frameworks, or IDEs as they see best. In addition, they don’t have to go through any research or approval processes to rewrite a portion of the system.

• Don’t do silos, walls, and fences

Netflix teams know where they fit in the ecosystem, their workings with other teams, dependents, and dependencies. There are no operational fences over which developers can throw the code for production.

• Adopt “you build it, you run it” culture

Netflix focuses on making ownership easy. So it has the “operate what you build” culture but with the enablement idea that we learned about earlier.

• Focus on data

Netflix is a data-driven, decision-driven company. It doesn’t do guesses or fall victim to gut instincts and traditional thinking. It invests in algorithms and systems that combs enormous amounts of data quickly and notify when there’s an issue.

• Always put customer satisfaction first

The end goal of DevOps is to make customer-driven and focus on enhancing the user experience with every release.

• Don’t do DevOps, but focus on the culture

At Netflix, DevOps emerged as the wonderful result of their healthy culture, thinking and practices.

Get in Touch

Netflix has been a gold standard in the DevOps world for years, but copy-pasting their culture might not work for every organization. DevOps is a mindset that requires molding your processes and organizational structure to continuously improve the software quality and increase your business value. DevOps can be approached through many practices such as automation, continuous integration, delivery, deployment, continuous testing, monitoring, and more.

At Simform, our engineering teams will help you streamline the delivery and deployment pipelines with the right DevOps toolchain and skills. Our DevOps managed services will help accelerate the product life cycle, innovate faster and achieve maximum business efficiency by delivering high-quality software with reduced time-to-market.

Hiren Dhaduk

Hiren is CTO at Simform with an extensive experience in helping enterprises and startups streamline their business performance through data-driven innovation.

Cancel reply

Your email address will not be published. Required fields are marked *

Your comment here*

Sign up for the free Newsletter

For exclusive strategies not found on the blog

Sign up today!

Related Posts

Kubernetes Architecture and Components with Diagram

11 Powerful Docker Alternatives to Revolutionize Containerization in 2024

DevOps, CI/CD and Containerization: 44 Images Explaining a Winning Trio

Get insights on Gen AI adoption and implementation in 2024. Download the survey report now!

• All Solutions
• Audience measurement
• Media planning
• Marketing optimization
• Content metadata
• Nielsen One
• All Insights
• Case Studies
• Perspectives
• Data Center
• The Gauge TM – U.S.
• Top 10 – U.S.
• Top Trends – Denmark
• Top Trends – Germany
• Women’s World Cup
• Men’s World Cup
• Big Data + Panel
• News Center

Client Login

News Center > Corporate

Nielsen launches the media distributor gauge, first convergent tv comparison of its kind, 8 minute read | may 2024, building on industry-defining the gauge™, new insight shows total cross-platform view of audience engagement by media company., disney tops april’s media distributor gauge, claiming 11.5% of time spent watching tv..

NEW YORK – May 14, 2024 – Nielsen, a global leader in audience measurement, data and analytics, today launched The Media Distributor Gauge , a first of its kind, cross-platform view of total TV consumption across broadcast, cable and streaming, aggregated and ranked by media company. The new insight removes the siloes of traditional television versus streaming, and puts all content distributors on a level playing field to allow for additional perspective of TV viewing today. This new view is being released in addition to The Gauge™ report for April 2024, which is detailed below. 

 “With more programs available across platforms, it’s vital for creators, advertisers and the industry at large to understand what and where audiences are watching,” said Karthik Rao, CEO of Nielsen. “The Media Distributor Gauge is a perfect complement to the The Gauge and serves as the first convergent TV comparison of its kind. Together, these reports paint the most complete picture of TV viewing today, which is critical as we head into the Upfront.”

This new insight is created by mapping all the various national media distributors — including broadcast and cable networks and streaming services — up to their parent company. Nielsen calculates the total minutes viewed on the TV screen for each network’s services and aggregates those totals based on initial distributor mapping, ultimately arriving at a share of total TV usage for each parent company. The minimum reporting threshold for a parent company in The Media Distributor Gauge is a 1.0% share of TV. Similar to the fluctuation of monthly TV usage tracked in The Gauge, rankings within the media company view will also demonstrate shifts that correlate with the seasonality of TV viewing. 

In Nielsen’s first report of The Media Distributor Gauge, 14 media companies achieved a 1.0% or greater share of total TV usage. As the top performer in April, Disney accounted for 11.5% of TV viewing, with 42% of its share attributable to viewing on Disney+ and Hulu. YouTube was the No. 2 overall company with a 9.6% share of TV in April, followed by NBCUniversal at 8.9%, Paramount at 8.8%, and Warner Bros. Discovery at 8.1% to round out the top five. Netflix was sixth with 7.6% of TV, and the second-highest streaming distributor reported.

The Gauge™: Nielsen’s monthly snapshot of total TV usage in April 2024

April saw record-breaking viewership: the NCAA women’s basketball tournament coverage on broadcast and cable, and Amazon Prime Video’s new original series Fallout, which set a new high watermark for the streamer as its most successful program to date. From an overall usage perspective, time spent watching TV was fairly flat both month-over-month (down 2%) and on an annual basis (down 0.6%). 

Across the primary viewing categories:

• Cable was the only category in The Gauge to escape decline as it achieved a second consecutive monthly increase in share, moving up from 28.3% of TV in March to 29.1% (+0.8 pt.) in April. Cable sports viewing increased 28% vs. March, bolstered by NCAA basketball tournament coverage, NBA playoffs and the NFL draft. Women’s NCAA basketball finals and semifinals coverage accounted for four of the top six cable telecasts in April, and the WNBA draft notched 17th. While cable viewing increased about 1% on a monthly basis, a year-over-year comparison shows viewing has declined 8.2% vs. April 2023, and its share has lost 2.4 points.
• Broadcast viewing was down 3% in April, which equated to a 22.2% share of TV (-0.3 pt.). Similar to cable, women’s sports were the bright spot in the broadcast category this month. The NCAA women’s basketball championship game drew 17.6 million viewers on ABC (plus over 1 million more tuned in on ESPN), making it the top broadcast telecast in April by a large margin. The drama genre accounted for 29% of broadcast viewing, driven by Tracker, NCIS and Young Sheldon on CBS, and Chicago Fire and Chicago Med on NBC.
• Streaming viewership declined 1.9% from March to April, prompting the category to lose just 0.1 share point to account for 38.4% of total television. Amazon Prime Video saw the largest increase among streaming services this month with a 12% monthly increase for 3.2% of TV (+0.4 pt.). Prime Video’s April success was driven by its original series Fallout, which also topped all streaming titles this month with over 7 billion viewing minutes. YouTube, despite a 3% monthly decline in viewing, added a 15th month to its streak as the top streaming platform in The Gauge with a 9.6% share of TV in April.

About The Gauge™

The Gauge™ is Nielsen’s monthly snapshot of total broadcast, cable and streaming consumption that occurs through a television screen. It was expanded in the April 2024 report to include The Media Distributor Gauge, which reflects total viewing by media distributor across these categories. Underpinned by Nielsen’s National TV measurement and Streaming Platform Ratings services, in addition to complimentary insights from its Streaming Content Ratings service, The Gauge provides the industry with a holistic look at the various content audiences are watching. The latest edition of The Gauge is always available at nielsen.com/thegauge .

About Nielsen

Nielsen shapes the world’s media and content as a global leader in audience measurement, data and analytics. Through our understanding of people and their behaviors across all channels and platforms, we empower our clients with independent and actionable intelligence so they can connect and engage with their audiences—now and into the future. Nielsen operates around the world in more than 55 countries. Learn more at www.nielsen.com and connect with us on social media ( Twitter/X , LinkedIn , Facebook and Instagram ).

Press Contact

Lauren Pabst [email protected]

Find the right solution for your business

In an ever-changing world, we’re here to help you stay ahead of what’s to come with the tools to measure, connect with, and engage your audiences.

How can we help?