3-2 Final Project Milestone One_SWOT Analysis
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3-2 final Project Milestone One: SWOT Analysis
QSO-489 Capstone in Operations Management
June 1, 2024
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Introduction
Netflix
is an on-demand subscription-based streaming service that offers various movies and television shows. The company was founded in 1997 by Reed Hastings and Marc Randolph and began as a mail-order DVD delivery service (Jain, 2024). Netflix.com was created in 1998, and in 1999, the subscription-based model was established, which allowed Netflix to offer its massive catalog of DVDs online to subscribers for postal delivery. Since Netflix chose to provide
a web-based catalog of DVDs, they were not limited to storefront locations, allowing for greater user access to the online catalog across the country. The subscription business model helped gain subscribers and company growth as customers had unlimited access to DVDs for a flat monthly rate (Jain, 2024). In 2007, Netflix implemented an add-on of online streaming services with video on demand, which allowed subscribers access to specific titles for unlimited video streaming (Centuro, 2024). Their introduction of streaming services created a revelation in the entertainment and media communities. Since its inception, Netflix has expanded globally, created original content, and has adapted various technologies to assist with company growth. This paper will evaluate Netflix's strengths, weaknesses, opportunities, and threats to assess its ability to remain relevant in this changing industry.
Strengths
In planned development, a company’s strength is an asset. It is an essential element when developing a SWOT. Netflix has numerous advantages, making it the largest streaming service provider, household name, and global market leader. In comparison to its competitors, Netflix has been available globally longer. They have 269.6 million paid memberships allocated as follows: Canada and the United States at 82.66M, EMEA (Europe, Middle East, and Africa) at 91.73M, Mexico and Latin America at 47.72M and Asia-Pacific region at 47.5M subscribers
3
(Netflix, 2024). A review of quarterly summary results shows a 3.2% increase from the last quarter and an 11.1% increase from the previous year. This significant global customer base gives them mighty bargaining power to secure exclusive content with the studios. Netflix’s commitment to content innovation and its member-centric brand of equity are key factors that set it apart from its competitors. Recognizing that its performance is directly linked to subscribers, Netflix has been focused on delivering diverse, high-quality, and original content (Netflix, 2024). Leveraging its global reach, Netflix is dedicated to content excellence, which enables it to cater to diverse audiences. Moreover, with technology innovations like language dubbing or subtitles, Netflix can provide cross-views of foreign and domestic content, thereby driving subscriber retention and growth. Weaknesses
Businesses need weaknesses, and Netflix is no exception. Each business should implement design strategies to correct identified weaknesses. Although Netflix is profitable, it has weaknesses that can prevent further expansion. Netflix is reliable on subscriber growth, dependent on market saturation and seasonal steadiness. Although subscription costs differ per nation and can fluctuate based on economic factors, market competition, licensing for content, and currency variations, Netflix subscription costs are increasing. For instance, in the U.S., for a monthly subscription, the standard plan went from $9.99 to $11.99, and the premium plan went from $19.99 to $22.99 (Netflix, 2023). Increases can deter renewals or sign-ups, and with the increased number of competitors also offering streaming services, members can cancel for many different reasons, such as economic and financial conditions (inflation), not using the service enough, cutting back on expenses, or being dissatisfied with the services. This risk was included
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