netflix case study 2022

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Journal of Business Strategy

ISSN : 0275-6668

Article publication date: 27 November 2023

Netflix is the market leader in the streaming entertainment industry. In 2020 and 2021, Netflix’s subscriber numbers and revenue increased. During the first two quarters of 2022, Netflix lost millions of subscribers, revenue and profit declined and its share price and market capitalization deteriorated. The purpose of this study is to investigate how and why a company with such a strong track record as Netflix can experience this crisis and, most importantly, how it overcame the crisis and returned to growth.

Design/methodology/approach

This case study investigates Netflix’s rise, fall and recovery between 2020 and 2023 using qualitative research methods. It examines earnings calls, transcripts and letters to shareholders as well as the views of investment analysts, journalists and academics.

Netflix turned its fortunes around because its leaders faced the crisis head-on. They acknowledged that previous strategic decisions were no longer working, that no advertisements were on the platform and that there was no account sharing and they reversed these decisions. Netflix also realized that it needed to innovate, so it partnered with Microsoft to execute its go-to-market with advertising. It also launched games, made strategic acquisitions of gaming studios and developed its capabilities with new products.

Originality/value

This is a valuable case study. Investigating how a company as successful as Netflix can encounter a severe decline and how it changed its strategies and tactics to reverse the decline provides important lessons for other companies.

• SVOD (subscription video on demand) industry

de Zilwa, D.K. (2023), "Netflix: rise, fall and recovery", Journal of Business Strategy , Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JBS-08-2023-0177

Emerald Publishing Limited

Copyright © 2023, Emerald Publishing Limited

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Netflix’s Competitive Strategy & Growth Strategies

Netflix’s competitive strategy and growth strategies define the operational activities and tactics for developing the business. The competitive advantages based on the company’s generic competitive strategy support competitiveness against many large firms in the entertainment industry. Netflix’s intensive growth strategies use these competitive advantages to grow the business, such as by competing to grow the company’s market share. The company’s strategic objectives indicate the importance of low costs and a large international subscriber base. The combination of Netflix’s competitive strategy and growth strategies ensures that the company improves its financial performance and finds new ways to generate more revenues.

The appropriateness of Netflix’s competitive strategy depends on the industry situation and the competitive environment. The company’s strategic prioritization of cost effectiveness for competitive advantage is based on the industry environment where many firms compete based on price. As a result, Netflix’s growth strategies prioritize market share growth to ensure profitability despite low-cost measures.

Netflix’s Competitive Strategy

Netflix’s competitive strategy is cost leadership , which functions as the primary strategy for the company’s competitive advantages. According to Porter’s model of generic strategies, cost leadership ensures competitive advantage based on low costs that can be used to offer competitive prices to the company’s target customers, e.g., subscribers. The cost-based nature of this competitive strategy has wide-ranging effects on Netflix’s strategic objectives. For example, competitive prices facilitate market reach maximization, which is a strategic goal based on Netflix’s mission statement and vision statement . Low costs enable profitable operations despite low prices, which attract more subscribers around the world. This means that Netflix’s competitive strategy of cost leadership facilitates endeavors for growing the company’s market share.

Netflix also uses differentiation as a secondary competitive strategy. The goal of this strategy is to develop competitive advantages based on factors that make the company stand out when compared to rivals. For example, as one of Netflix’s competitive strategies, differentiation is implemented in the production of original content (movies and series), which ensures the company’s competitive advantages by retaining subscribers who prefer to watch content that is not available from competing video streaming services. These competitors include the entertainment production and streaming services of Disney , NBCUniversal, and Sony , as well as Google’s (Alphabet’s) YouTube, Apple , Amazon , Microsoft , and Facebook (Meta) . The Five Forces analysis of Netflix demonstrates that these companies’ competitive strategies create a challenging industry environment. Netflix’s competitive strategy of differentiation helps address this competition and its strategic challenges.

Netflix’s Growth Strategies

Netflix’s growth strategy is market penetration , which is the primary driver of the company’s growth and expansion in the international market. In Ansoff’s matrix, this intensive growth strategy’s objective is to grow the business by selling more of current products to the company’s current market. For example, Netflix aims to gain more subscribers through its current operations in North America, Europe, and Asia. A bigger market share equates to higher revenues and a bigger market presence that can be used to launch new products. For this intensive growth strategy of market penetration, the competitive advantages enumerated in the SWOT analysis of Netflix are used to penetrate markets and gain market share despite competition. Also, the generic competitive strategies of cost leadership and differentiation enable attractive pricing and unique entertainment content, respectively, to attract more subscribers for this growth strategy of market penetration.

Netflix also uses product development as a secondary growth strategy. The Ansoff matrix states that this intensive growth strategy involves offering new products to the company’s current market. In this case of Netflix’s growth strategy, the company’s strategic objective is to produce new original movies and series, which are new products for current and new subscribers in current markets. New original content makes the company’s streaming service an attractive option for customers. The requirements of product development as an intensive growth strategy apply to Netflix’s operations management , such as in maximizing productivity in producing new movies and series. New entertainment content resulting from the application of this growth strategy contributes to uniqueness that enables the company’s generic competitive strategy of differentiation.

Netflix applies diversification as a minor growth strategy with a limited impact on the company’s current business growth. In Ansoff’s matrix, this intensive growth strategy’s objective is to produce new products for new markets. In this case of Netflix’s growth strategy, product development involves offering entirely new products other than the company’s initial core offerings. For example, the company now offers mobile games. The mobile gaming market can support new business growth by attracting gamers, especially those who do not yet have a Netflix account. As a growth strategy, diversification involves new teams, groups, or divisions in Netflix’s organizational structure (business structure) , which influences the availability of resources for implementing this growth strategy. The generic competitive strategy of differentiation ensures that these new products are unique. Also, Netflix’s competitive strategy of cost leadership determines the cost structure and limits for these new products’ competitive advantage based on low costs that translate to affordability.

• 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.
• Iordache, C., Raats, T., & Mombaerts, S. (2023). The Netflix Original documentary, explained: Global investment patterns in documentary films and series. Studies in Documentary Film, 17 (2), 151-171.
• Leppänen, P., George, G., & Alexy, O. (2023). When do novel business models lead to high performance? A configurational approach to value drivers, competitive strategy, and firm environment. Academy of Management Journal, 66 (1), 164-194.
• Netflix, Inc. – Form 10-K .
• Netflix, Inc. – Long Term View .
• Netflix, Inc. – Top Investor Questions .
• U.S. Department of Commerce – International Trade Administration – Media and Entertainment Industry .
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Netflix, Inc.

By: Frank T. Rothaermel, David R. King

The case is set in 2023. The protagonists are Ted Sarandos and Greg Peters, co-CEOs of Netflix, a subscription streaming service and content production company. In Q4 2022, Netflix gained 7.7 million…

• Length: 26 page(s)
• Publication Date: Feb 2, 2023
• Discipline: Strategy
• Product #: MH0080-PDF-ENG

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The case is set in 2023. The protagonists are Ted Sarandos and Greg Peters, co-CEOs of Netflix, a subscription streaming service and content production company. In Q4 2022, Netflix gained 7.7 million new subscribers (223 million worldwide) after losing 1.2 million in the year's first half. The scale of subscriber defection (in Q1 and Q2) across all geographic regions other than Asia concerned investors. By mid-2022, Netflix's share price plummeted by over 72%. The streaming company's market capitalization fell from $306 billion in November 2021 to a low of $74 billion, a loss of $232 billion. Dubbed the streaming wars, Netflix must contend with a host of competitors, some of them with deep pockets: Amazon Prime, Apple TV+, Disney+, HBO Max, Hulu, Paramount+, Peacock, and YouTube TV, among others.

Learning Objectives

Strategic leadership; strategy process, industry life cycle; business strategy (core competencies), innovation & technology strategy (disruptive innovation); business model innovation (matching business model and technology strategy; network effects; long tail; corporate strategy; diversification (vertical integration along the value chain; products and services; geography); international expansion (CAGE distance model; liability of foreignness); strategy implementation and execution

Feb 2, 2023

Discipline:

Geographies:

Asia, Europe, United States

Industries:

Advertising industry, Broadcasting and streaming media industry, Film and video industry, Media industry, Media, entertainment, and professional sports

McGraw-Hill Education

MH0080-PDF-ENG

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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.

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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.

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Netflix Organizational Change & Organizational Structure 2024

Netflix Organizational Change. Netflix Organizational Structure 2024. Case Study Netflix Change Management. Organizational Structure of Netflix.

Netflix is an online video streaming platform that allows users to watch movies, dramas, TV shows, and cartoons. The user can watch all these videos through a subscription service. Netflix regularly adds new films, series, and TV shows to the chart so users can watch them instantly.

It ranks top 50 sites, following Google, YouTube, Yahoo, Facebook, and Twitter. Thus, Netflix has become the most popular video streaming site or web portal in the world now.

What is Organizational Change?

Organizational change means business transformation in which a company changes its business tools, such as policy, strategy, operation, structure, and culture. The critical reasons for organizational change are technology, globalization, new market condition, poor performance, and customer demand.

The management changes enable the company to cope with the digital era. Therefore, many organizations have accepted technological changes to adjust to the digital age. It assists the company in changing old systems with new tools to achieve the business goal.

Organizational Change Examples

Netflix is one of the best examples of management change. It accepts the changes to cope with the new context. Netflix’s organizational change is a real-life example of Lewin’s change management model . The management needs to pass a few stages to complete the full process. Technology, culture, and environment are the most significant factors that foster an organization to accept change.

Netflix’s Organizational Change has replaced the old procedures with new techniques to adjust to the current situation. So, Netflix is the most general example of management change. Additionally, Wipro, Infosys, Samsung, and Amazon accepted the change to achieve business success.

Netflix Change Management Case Study

The Netflix change management case study includes the organizational change at Netflix. Additionally, It describes the history of the Netflix business change model. The author presents a change management case study of Netflix for students.

Netflix Organizational Change

Technology has changed the world in many ways, including education, business, sports, entertainment, etc. Many renowned companies have been closed due to new technology such as computers, smartphones, and social media. Some have managed to cope with the force of change by applying sophisticated strategies and accepting organizational change.

Netflix is one of the best examples that has changed its business model and strategy to survive. It has handled the force of organizational change to achieve a competitive advantage. Hence, it has become netizens’ most popular video streaming site.

Netflix was founded in 1997 in California, USA. However, In 1998, Netflix started its business by selling DVDs and rentals by mail.  The product was a rent-by-mail DVD, and the payment system was the pay-per-rental model.

The following year, in 1999, Netflix launched its new subscription feature for customers to rent DVDs at a monthly rate. This service allowed the subscribers to enjoy unlimited DVD rental with monthly payments. So, the change was from the pay-for-use model to a monthly subscription model. The subscribers choose the movie and video titles from Netflix’s official website. After that, the distributors send the shows in the form of DVDs to the subscribers.

In 2007, Netflix introduced a new video streaming feature for films and television series. The proper utilization of the force of change has helped to achieve success. However, it is believed that Netflix is one of the most popular platforms for watching new movies, drama series, TV shows, and so more. They have achieved competitive advantages by adopting new features as per audience demand.

The three main divisions of Netflix management are functional, geographical, and product teams. The operational division includes the CEO, content, communication, talent, finance, legal, etc. Additionally, the geographical team consists of local and international services. Finally, the product team controls and ensures quality content.

Additional Change Management at Netflix

In 2011, Netflix introduced its mobile apps and iOS service for smartphone users. Smartphone users can download the apps free from the Play Store.

Recently, Netflix changed from HTTP to HTTPS encryption to ensure viewers’ privacy.

In 2016, Netflix launched its offline playback system to cache the contents. Therefore, Netflix mobile app users can watch high-quality cache content without an internet connection.

In 2018, Netflix added “the Skip Intro” option for customers to avoid intros of the shows. So, the users can skip the video if they want.

In 2022, Netflix started alerting customers to share their account IDs and passwords with others.

In 2022, Netflix intended to extend its business into the video gaming industry. The 200 million subscribers of Netflix can reach with a bundle of games like Apple Arcade. Video games play a significant role in attracting potential customers.

In 2023, Netflix launches a new advertising tier for subscribers. The new AVOD tier increases revenue. Users can buy a subscription at a lower cost but must encounter ads while watching videos.

Over the years, Netflix has navigated numerous organizational changes to stay competitive and meet the evolving needs of its customers in the rapidly changing entertainment industry. These changes have been driven by factors such as technological advancements, shifting consumer preferences, and global market expansion. Let’s delve into some key organizational changes that Netflix has implemented:

Shift to Streaming Services

One of the most significant organizational changes for Netflix was its transition from a DVD rental service to a streaming platform. This shift was propelled by the growing demand for online streaming content and the declining popularity of physical media. By investing in streaming technology and acquiring digital content licenses, Netflix successfully repositioned itself as a leading provider of on-demand streaming services.

Emphasis on Original Content

Recognizing the importance of exclusive content in attracting and retaining subscribers, Netflix made a strategic decision to invest heavily in original programming. By producing hit shows like “House of Cards,” “Stranger Things,” and “The Crown,” Netflix aimed to differentiate itself from competitors and create a compelling value proposition for subscribers. This organizational change required significant investment in content production capabilities and talent acquisition.

Global Expansion

Another key organizational change for Netflix was its aggressive international expansion strategy. Realizing the potential for growth in untapped markets, Netflix launched its streaming service in numerous countries worldwide. To support its global expansion efforts, Netflix localized its content offerings, established regional offices, and formed partnerships with local content creators. This expansion into new territories diversified Netflix’s revenue streams and solidified its position as a global entertainment powerhouse.

Data-Driven Decision-Making

Netflix leverages data analytics and machine learning algorithms to inform decision-making across various aspects of its business. By analyzing user behavior, viewing patterns, and content preferences, Netflix can personalize the user experience, optimize content recommendations, and inform content acquisition strategies. This data-driven approach has enabled Netflix to stay agile and responsive to changing market dynamics, driving innovation and growth.

Organizational Culture

Netflix fosters a unique organizational culture characterized by freedom and responsibility. The company operates with a flat organizational structure, empowering employees to make autonomous decisions and take ownership of their projects. Netflix values innovation, creativity, and risk-taking, creating a dynamic and entrepreneurial work environment. This culture of experimentation and continuous learning enables Netflix to adapt quickly to market changes and drive innovation across its business.

In conclusion, Netflix’s organizational changes reflect its commitment to staying at the forefront of the entertainment industry by embracing technological innovation, investing in original content, expanding globally, and fostering a culture of creativity and experimentation. These organizational changes have been instrumental in Netflix’s success and its ongoing evolution as a leader in the streaming entertainment landscape.

Netflix History Timeline

Netflix has become one of the most famous American production companies worldwide. It was established in 1997 by Reed Hastings and Marc Randolph in California. However, Marc Randolph left Netflix in 2002. In 1998, Netflix introduced its official website with 925 items. These items were available to rent for a pay-per-month approach. It started its journey with only 35 employees.

Netflix launched its operation with the first and largest online DVD rental store. Since 2012, Netflix has produced and distributed its original content, including film and television series entertaining many viewers. This variety of content has been stored in the online library for viewing by subscribers. Since 2016, it has been providing services in around 190 countries. This company has established its office globally, including in Brazil, the Netherlands, France, the United Kingdom, Japan, India, and South Korea. In 2023, Netflix owned more than 231 million subscribers globally involved in a pay-per-month payment.

However, Netflix is available worldwide except in China, Syria, and North Korea. According to a report in 2020, Netflix earned $1.2 billion in operating income for its excellent performance with updated tools.

Netflix Organizational Structure

Netflix has a flat organizational structure that provides ample freedom for employees. It is also known as a decentralized organizational structure that allows the respective person to make quick decisions. Netflix maintains the unitary organizational structure, also known as the U-form organizational structure. It reduces organizational noise in communication and influences the employees to be more responsive to their duties. Netflix’s organizational structure avoids top-down decision-making strategies to create a conducive working environment for employees. It also focuses on creating a favorable environment to promote employee performance. Netflix has a labor division that works to improve performance. The authority reviews the performance regularly. They opt for a multi-rater feedback system that is also known as a 360-degree review method.

Netflix’s management team always focuses on practicing and maintaining the principles of total quality management tools. The TQM helped to become the most popular company worldwide.

According to McGraw Hill, Netflix wanted someone as HR director who prioritizes business first, clients second, and talent third. It also did not require Competencies For HR Professionals in SHRM certificate, change agent, or organization development practitioner. The authority considers three core issues such as who is good for the company, how we communicate with that employee, and ensure high performance.

Netflix Organizational Structure 2023-2024

Netflix CEO in 2023

Netflix Founder Reed Hastings stepped down from his CEO role and joined as the company chairman in 2023.  Ted Sarandos is the current CEO of Netflix. In 2020, Ted Sarandos joined Netflix as co-CEO. Initially, Reed Hastings and Marc Randolph were the co-chief executive officers of Netflix. Marc Randolph left Netflix in 2002.

Netflix Organizational Transformation

First-change in 1999, (pay-for-use model into a subscription model).

Netflix has made two significant changes since its launch. First, it began the subscription option in 1999 to store DVD rentals. This change allows clients to rent unlimited DVD rental without late fees. It was the first change in the business model in the history of Netflix.

Second-Change in 2007

(streaming service).

Later, in 2007, Netflix made its second change by launching an online video streaming service. Consumers have accepted this change. It is believed that it has become the prime business pillar of income.

Purpose of Netflix Organizational Change

Netflix is becoming famous daily for its ease of access, quality, and updated tools. After all, new technology adoption is necessary to exceed customer demand. The technology adoption models and theories , including TAM, ETAM, UTAUT, and DOI, have described why and how people accept the changes. In the 21st century, people do not want to spend extra time in the cinema hall.

People used to go to the cinema hall to watch new movies before watching movies at home on Netflix. New technology, including computers, laptops, and smartphones, easily entertain people through internet service. In addition, the social media revolution changed the way we communicate with each other. It has become an excellent site for sharing user-generated content, including photos and videos.

Most people globally use social media in many perspectives, such as in education, entertainment, and marketing. Netflix’s authority had perceived the upcoming market demand. Therefore, they have changed the business model to watch movies and television series on computers and smartphones. The management of Netflix realized that consumers do not like to store video, so they changed the business model.

Additionally, Netflix is always aware of the approaches of competitors. Blockbuster is a crucial Netflix competitor; hence, they added a new feature to distinguish it from competitors. The reason for changing the business model of Netflix was appropriate and effective to bring success.

How Netflix Handles the Organizational Change Forces

Organizational change refers to the adjustment and transformation of a company’s operations. The company brings a minor or significant change to improve productivity and cope with the new context. There are two types of forces of change in a company: external forces and internal forces. External forces include technological change, social and political change, and managing ethical behaviors.

For example, technological change is the primary external force that compelled Netflix to change the feature.

New technology changes people’s expectations and behaviors, changing the company product or service’s features, tools, and patterns. Netflix handled the forces of change effectively to bring success and prosperity to the company. Internal forces influence the organization to change management, such as changing managerial personnel, work climate, effectiveness, employee expectations, and crisis.

For example, Netflix realized that watching movies at home would reduce the entertainment budget and transportation crisis. Therefore, Netflix accepted the organizational change.

Netflix started its journey as an ordinary company. Now it has achieved a competitive advantage by changing its business model to fulfill customer demand. The authority of the company changed it’s features to cope with new technology. It made two changes in 1999 and 2007. However, the video streaming service brought immense fame and income to the company in 2007.

The author mentions some critical points for other companies that want to change business. Firstly, changing the business tools is significant to exceed customers’ demands. Additionally, digital technology must be accepted by employees and customers. Finally, the company must add updated tools for better function, such as Netflix starting its online video streaming in 2007. “The measure of intelligence is the ability to change” -Albert Einstein.

Netflix has followed the blue ocean strategy to achieve its business goals. The Blue Ocean strategy refers to creating a new business market. The red ocean strategy refers to competing with other companies in the same market. Blue Ocean’s strategy creates a unique market context. It also designs a new feature to attract new customers.

Hence, Netflix accepted the blue ocean strategy and has become one of the most successful companies worldwide.

Citation For This Article(APA 7th Edition)

Author: M M Kobiruzzaman

M M Kobiruzzaman, Content Writer View all posts by M M Kobiruzzaman

3 thoughts on “Netflix Organizational Change & Organizational Structure 2024”

Almost everything about Netflix…. Nice .

Do you what are the skills and competencies of Netflix’s change manager during the change implementation?

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Terror to trust: Jennifer Lopez’s Netflix movie Atlas sparks fresh AI debate

N etflix recently released Atlas , starring Jennifer Lopez in the leading role, where she plays a cynical analyst who must team up with an artificial intelligence named Smith to save humanity from the rogue robot Harlan.

Along with humor, action, and a dose of cleverness, the film also explores themes of trust.

The movie is directed by Brad Peyton’s and also features Sterling K. Brown and Simu Liu in mech suits.

Atlas Shepherd has spent years hunting the artificial intelligence known as Harlan. Harlan was engineered to improve humanity, but he changed his mind and now wants to destroy humanity.

The crew’s search for Harlan leads them to planet GR-39 in the Andromeda galaxy. Here, Atlas shows a great deal of distrust towards artificial intelligence. However, as she is forced to collaborate with Smith, trust begins to develop.

This evolving trust is central to the sci-fi drama , which underscores its message: while one AI bot threatens humanity, another helps save it.

As Jennifer Lopez mentioned, Atlas and Smith go on this journey. “They teach each other to be just a little bit more human,” said Lopez.

The lack of empathy when it comes to artificial intelligence in this case leads to better understanding. Smith understands Atlas and does not respond to her cynicism like a human would. He does not withdraw from her when she shows her less pleasant traits.

The film is like a lesson on the relationships that exist among people, where distrust and lack of understanding are the main problems. During the pandemic, she read the script and liked the relationship that Atlas and Smith developed.

The good and bad sides of AI

The film presents both the good and bad sides of AI . For example, Harlan is the first AI terrorist. “He was created by a brilliant scientist to be the protector of humanity. Unfortunately, you know how some things go,” Liu told Netflix.

While on the other side, Smith and Atlas are trying to save humanity. “It’s a story of friendship and a love story, in a way,” said Lopez. For her, this is a different kind of love between two beings who teach each other how to be more human.

William Bibbiani in his review for The Wrap , wrote, “Hidden somewhere beneath all the generic dialogue, embarrassing plot, mediocre action, and oddly ineffective performances, there’s a good idea in Brad Peyton’s Atlas. It’s a shame the filmmakers never found it.”

According to him, the film comes dangerously close to being interesting, but it never steps over that very important line. “It’s a pity because there was a great story to be told with this very same concept. Maybe someone else will tell it someday,” he concluded.

To whom can we trust?

According to the Ipsos Consumer Tracker , people are concerned about the misuse of AI. However, they also tend to trust AI more than humans. Currently, about one in three people regularly use some form of AI tool, and most (57%) expect to increase their usage in the future. 

A 2022 study found that people who distrust humans are more likely to trust artificial intelligence to moderate online content.

“One reason some may hesitate to trust content moderation technology is that we are accustomed to freely expressing our opinions online, and we fear content moderation might restrict that,” explained Maria D. Molina.

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News The Case Study of Vanitas Manga Takes 2-Month Break

The manga went on hiatus in June 2022, and resumed in May 2023.

Yen Press has been publishing the manga simultaneously in English since its debut, and it describes the first volume:

Rumors revolving around The Book of Vanitas, a clockwork grimoire of dubious reputation, draw Noé, a young vampire in search of a friend's salvation, to Paris. What awaits him in the City of Flowers, however, is not long hours treading the pavement or rifling through dusty bookshops in search of the tome. Instead, his quarry comes to him...in the arms of a man claiming to be a vampire doctor! Thrust into a conflict that threatens the peace between humans and vampires, will Noé cast in his lot with the curious and slightly unbalanced Vanitas and his quest to save vampirekind?

Mochizuki ( Pandora Hearts , Crimson-Shell ) launched the manga in Gangan Joker in December 2015. Square Enix published the 11th volume on April 22.

BONES ' television anime of the manga premiered in July 2021. The anime's second part premiered in January 2022. Funimation streamed the first part, and it also streamed an English dub. Both Funimation and Crunchyroll streamed the second part as it aired, and Crunchyroll also added the first part.

Source: Gangan Joker 's X/Twitter account

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