- Dominant streamer Netflix is rewriting the playbook for global entertainment.
- The company drove other major media conglomerates to launch streaming services of their own.
- As it faces headwinds, Netflix has launched an ad tier and entered the video game market.
Since Netflix began its worldwide expansion in 2016, the streaming service has rewritten the playbook for global entertainment — from TV to film, and, more recently, video games.
Hollywood used to export most global hit series and movies. Now, thanks to Netflix's investments in international TV and film, programming like South Korea's "Squid Game," Spain's "Money Heist," and France's "Lupin" are finding massive audiences around the world. And its English-language original series, such as Shonda Rhimes' "Bridgerton," Ryan Murphy's "Dahmer" and Tim Burton's "Wednesday," have continued to break Netflix's internal streaming viewership records.
But the streamer is in the midst of a reality check, epitomized by its first quarterly subscriber loss in a decade, hundreds in layoffs in 2022, a halved stock price and the sense among employees that Netflix's famed corporate culture has soured somewhat. The squeeze has led the company to look more closely at new avenues for revenue and subscriber gains, such as an ad-supported version of the platform — which it had long dismissed — and a pending crackdown on password sharing.
Still, Netflix's impact on the global TV industry is undeniable.
How Netflix disrupted the global TV industry
The streamer figured out that to thrive on an international stage it needed both US mass-market programming like "Stranger Things" as well as local content that could win over viewers in specific markets (and produce breakout hits).
The strategy helped the streaming service grow its customer base to 214 million global paid subscribers, as of September.
Its momentum also reinvigorated production in places like Germany, Mexico, and India, as companies like Amazon, Disney, WarnerMedia, and Apple follow Netflix's lead.
More on Netflix's effect on global TV:
- Netflix's 'Squid Game' is part of a robust international TV strategy that's far ahead of rivals
- 10 reasons 'Squid Game' became a global phenomenon, according to a Netflix marketing exec
- International TV producers describe how streaming competition is changing their markets
- Netflix's Mark Millar plans to build a streaming superhero universe starting with 'Jupiter's Legacy'
- Data shows Netflix is leaning into international TV shows in its upcoming projects
- How to sell a show to Netflix with the help of an easily digestible pitch document
- A Netflix slide deck shows how it's trying to fix lofty problems in personalization
The streamer's executive team was rebuilt with a global focus
In recent years, Netflix reoriented its leadership around its new global model.
The streaming company, cofounded by tech entrepreneur Reed Hastings, promoted content chief Ted Sarandos to co-CEO in 2020, which cemented the status of content within the organization.
Meanwhile, Bela Bajaria, who had been in charge of international non-English TV, took the reins of the overall TV business, and product chief Greg Peters took on additional duties as COO, including streamlining how global teams work together. Peters also hired a new talent chief with international experience, former PepsiCo executive Sergio Ezama, to lead Netflix's global workforce.
The company also formed an elite team of 23 interdisciplinary execs to help make its biggest decisions. Known internally as the "Lstaff" — the "L" stands for leadership — the group sits between the company's officers and its larger executive corps of vice presidents and above, who are called the "Estaff."
After announcing in the spring that it would explore introducing a cheaper ad-supporter tier to help combat slowing subscriber growth, Netflix in August brought on board Snap executives Jeremi Gorman and Peter Naylor to lead its new ad sales business.
The pivot in focus to the ads space has meant a higher profile for Peters, who keeps a low profile but has been speculated to be a contender for CEO, should Hastings and Sarandos consider a succession plan.
More on Netflix's corporate structure:
- Meet the Netflix exec who's leading its disruptive new ads business strategy — and could be CEO one day
- Netflix org chart: The 71 most powerful people at the streamer and who they report to
- The top HR execs at Hollywood companies like Netflix and NBCU
- The top data science execs at Netflix, Disney, WarnerMedia, and more Hollywood companies
- Netflix salaries revealed: How much engineers, marketers, content execs, and others get paid
Netflix has seen its first wide layoffs, though it continues to grow
The corporate restructuring hasn't been without obstacles. The company in April laid off 25 full-time staffers in its marketing department, which included the dismissal of some writers at recently launched fan site Tudum, followed by another 150 cuts in May and the elimination of 30 animation jobs in September. Layoffs for the year have impacted at least 450 full-time Netflix staffers and dozens of contractors as the broader media and entertainment space grapples with a bear market.
Still, the company's growth has generally made it a desirable place to work in recent years, despite some tests its corporate culture has faced. Public US work-visa data shows that Netflix, which says its pays staffers "market value," has offered six-figure annual base salaries for lots of roles in engineering, content, marketing, finance, and more.
More on Netflix's business model and corporate culture:
- Netflix insiders describe a culture shift to 'fear-based' decision making, execs stretched thin, and belt tightening amid layoffs and subscriber losses
- Netflix insiders reveal 'contentious' debates over how data drives creative decisions, and why beloved series don't always get renewed
- Netflix says password sharing is hurting growth as it loses subscribers for the first time in a decade
- What Netflix's sudden embrace of ads could mean for its brand deals
- Netflix spending cuts fuel fears that its golden creative age is over
- Netflix lays off Tudum writers months after 'aggressively' recruiting them for new fan site
Netflix's next frontiers include advertising and gaming
Netflix is facing more competition than ever from an influx of rivals that are learning to play its game.
Nearly every major media company, from Disney to Apple to Warner Bros. Discovery, now runs a streaming service. Their platforms are stockpiled with tentpole movies and TV shows that used to only be found in theaters or on linear TV, and their libraries now rival Netflix's, particularly as they claw back programming that had been previously licensed to Netflix.
The competition is pushing the streaming giant to keep evolving.
Netflix has expanded into podcasting and started peddling merchandise for series like "Squid Game" and "The Witcher."
The streamer's new ad tier launched in the U.S. in November for $6.99 a month, a steep discount to its ad-free standard tier that costs $15.49 a month.
Some TV writers were disappointed by the move into ads, with creators worrying that Netflix will take fewer risks on programming in order to please advertisers.
The company is also bringing video games into its mobile streaming app.
It hired in July 2021 Facebook's former head of Reality Labs, Mike Verdu, as its vice president of game development, and has been hiring for other video-game-related jobs.
The streamer plans to approach gaming like it did movies and TV shows. It's starting slowly by commissioning and licensing mobile games, some of which are based on existing franchises like "Stranger Things." It plans to experiment with other kinds of video-game storytelling, as it did with its original series.
In May, it plans to release both a game and animated series based off the same franchise, the "Exploding Kittens" card game, which will be a first for the platform.
"Maybe someday we'll see a game that spawns a film or a series," Peters, the operating and product chief, told investors in July. "That would be an amazing place to get to and really see the rich interplay between these sort of different forms of entertainment."
More on Netflix's advertising and gaming ambitions:
- Netflix is entering a new era with ads. Here's how marketers and brands could influence the programming you see on the streamer.
- Netflix has launched its ad-supported tier — here's everything we know about how the streaming giant is pitching advertisers
- Why Netflix could still win at advertising despite missing campaign viewer targets
- I tried Netflix's new mobile video games. They're a work in progress, but lay the groundwork for bigger ambitions.
- Why Netflix's new video-game strategy will live or die by how well it can create mega movie and TV franchises
- Netflix is doubling down on gaming, with dozens of new hires and a dedicated studio, as it chases younger audiences and battles to turn back subscriber losses
FAQs
How Netflix is changing the global entertainment industry? ›
1 By creating compelling original programming, analyzing its user data to serve subscribers better, and above all by letting people consume content in the ways they prefer, Netflix disrupted the television industry and forced cable companies to change the way they do business.
How has streaming changed the entertainment industry? ›Streaming services like Netflix, Amazon Prime Video, and Hulu have revolutionized the entertainment industry by offering viewers the ability to watch their favorite movies and TV shows whenever and wherever they want.
Has Netflix made television watching more global? ›Netflix today offers streaming services in more than a hundred and ninety countries. According to one study, in the third quarter of 2022 alone it released more than a thousand episodes of original streaming television globally—at least five times the number of any other streaming service.
How does the Netflix change the entertainment preferences of the people? ›Netflix's AI-powered algorithm creates personalized recommendations for each user based on their preferences, watch history, ratings and demographics. The recommendations are usually incredibly accurate.
What are the positive effects of Netflix? ›First, it offers an affordable monthly subscription that gives users access to a large library of TV shows and movies. Second, it's convenient. Users can watch whenever they want, and on any device with an internet connection. Third, it's personalized.
How Netflix transformed the industry? ›Netflix's focus on content creation is a key aspect of its digital transformation. The company has shifted its strategy from acquiring content to producing original content, which has helped it to differentiate itself from its competitors and provide a unique viewing experience for its customers.
Why Netflix become popular? ›Flexibility. The biggest advantage Netflix is giving to its customers that they can watch any content with convenience. They can watch content on-demand and on any screen they want. Netflix is making sure to give smooth experiences with personalized tastes.
What are the positive effects of streaming services? ›It takes less storage space than downloading content. You can catch up on old favorite shows on your own schedule. You can explore new shows with no commitment. You can watch on Android or Apple devices, or smart TVs, gaming consoles, etc.
How has Netflix expanded globally? ›The platform started in the United States and expanded for the first time in 2010, to Canada. This marked the beginning of a long expansion process. By 2015, Netflix was operating in 50 countries. Today, Netflix is in over 190 countries, and has drastically increased their rate of expansion in the last five years.
Why was Netflix successful in its global expansion? ›Ultimately, by understanding the needs and preferences of its target market, Netflix was able to create a service that people loved. And by making their content accessible to as many people as possible, they were able to rapidly conquer foreign markets.
Why is Netflix better than other streaming services? ›
Editor's note, Dec. 1: Due to its features, user-friendliness, and robust, variety-filled catalog, Netflix has earned an Editors' Choice Award for 2022. With the addition of an ad-based subscription, the platform is on equal footing compared to competitors like Disney Plus and HBO Max when it comes to pricing.
Is Netflix still the biggest streaming service? ›...
Most Subscribed Streaming Services in 2023.
The Netflix Effect refers to a surge in popularity as it relates to certain products, brands, and even celebrities because of their feature in Netflix television shows and movies. Try to think of any television show or movie that you have seen Penn Badgley in. Gossip Girl and You coming to mind?
How does Netflix keep people watching? ›Manual tagging: Netflix taggers screen programs and put tags to their key features. Proprietary algorithms crunch and refine the manually collected data to find proper recommendations based on the viewing habits of 100 million users worldwide.
How does Netflix contribute to the community? ›Through the fund, Netflix will support external organizations committed to creating equitable opportunities in the TV and film industries, as well as bespoke Netflix programs that help us to identify, train and provide job placement for up-and-coming talent globally.
How successful is Netflix? ›There are no two ways about it: Netflix has had a tough year but is still absolutely dominating the streaming video market. According to the Q2 2022 figures, Netflix now has approximately 220 million global paid memberships, and remains the largest premium video on-demand service in the world.
What problem does Netflix solve? ›Netflix founders Reed Hastings and Marc Randolph wanted to bring customer-centricity to the video rental market. At the time, renting videos was inconvenient and costly, with customers often plagued by expensive late fees. They created an entirely new way to watch movies and consume content.
Was Netflix change successful? ›In 2011, the company made a drastic change to its business model that upset many of its customers. However, thanks to careful planning and execution, the change was ultimately successful and resulted in increased profits for the company.
Which of the 3 global strategies is Netflix implementing? ›Taken together, the elements of Netflix's expansion strategy constitute a new approach that might be called “exponential globalization.” It's a carefully orchestrated cycle of expansion, executed at high speed, to an ever-increasing number of countries and customers.
Why is Netflix attractive to customers? ›Product: Netflix's product is its streaming service, which offers a vast library of TV shows, movies, and documentaries. In addition to licensing content from other studios, Netflix has also invested heavily in producing original content, which has become a major draw for its users.
Why are Netflix so good in social media? ›
Besides tracking their brand mentions, Netflix also uses social listening to stay up-to-date with the latest trends and conversations in the entertainment industry. By staying current and in tune with their audience, they're able to create content that ultimately drives engagement.
What are the achievements of Netflix? ›Netflix won 1 award in 2021 and 2 awards in 2020. In 2021, Netflix won for Best Company Culture 2021. In 2020, Netflix won for Best Company Compensation and Best Leadership Teams 2020. Based on 3,594 ratings and 439 participants, employees at Netflix are very satisfied with their work experience.
What are the 3 most important things you want from video streaming services? ›As major platforms like Netflix and Disney+ roll out cheaper subscription tiers and crack down on password sharing, a new NPR/Ipsos poll reveals that consumers are focused on three important criteria when they make decisions about TV streaming services: cost, content and ease of use.
What are the advantages and disadvantages of streaming? ›- Clear Sound and Picture. Unlike pirated sites, the video and audio quality of the movies are usually high. ...
- Instant Viewing. ...
- No Download Time. ...
- No Need for Memory Space. ...
- Instant Playback. ...
- Many Streaming Options. ...
- Can Only be Done Online. ...
- Internet Connection.
Top Streaming Services
Total video streaming time by users increased by 18% from 2021 to 2022. The United State's appetite for video streaming is unquenchable, with Americans spending a total of 169.4 billion minutes of video streaming per year.
Studios enforce copyright by country, as different markets have different demands for specific content. For example, a movie that was very popular in the United States might be uninteresting in Brazil, and a hit British comedy might not be so funny to American audiences.
How is Netflix an example of globalization? ›Netflix is now working on producing global original content which can be distributed around the world by constantly adapting it to the local environment. They cannot rely on a large library of proprietary content to feed its 204 million paid members in over 190 countries.
How has Netflix been innovative? ›The biggest radical innovation of Netflix is when Netflix transformed from a DVD rental service into an online streaming platform. This means that customers no longer had to wait for their DVD to be delivered, as they were now able to watch Netflix content through its online streaming platform.
What is Netflix's competitive advantage How has it been so successful? ›Why is Netflix so successful? Netflix's competitive advantage is its ability to provide an expansive library of on-demand content that is easy to access and convenient to use. Netflix has a large library of content with a wide variety of genres and formats, making it attractive to a large audience.
What challenges does Netflix face in its push to expand globally? ›Yet Netflix and its efforts to expand overseas are facing a series of challenges that could hamper future growth, including patchwork regulatory restrictions worldwide and stiff competition in individual countries from services that are attracting viewers like Mr. Díez Ferreira.
What is one of the benefits of Netflix moving internationally? ›
One of the benefits of Netflix move internationally is that any title licensed from the United States also comes with the right to stream the title worldwide, regardless of customer geography. _____ refers to removing an organization from a firm's distribution channel.
Why Netflix is biggest? ›The more content Netflix produced, the more subscribers it attracted. This, in turn, resulted in higher revenues, which meant more funding for original content in a virtuous cycle of constant growth.
Does Netflix have better quality? ›Subscribers with the Standard plan can watch content in a 1080p resolution, which means HD and Full HD. Premium subscribers get it all; the only limitations imposed on the top resolution levels come from the content itself. With the Premium plan, you can watch Ultra HD (4K) and HDR content.
What type of good is Netflix economics? ›Comfort good – a good which isn't a necessity, but gives enjoyment/utility, e.g. subscription to netflix or take-away food. A comfort good may become a luxury.
What replaced Netflix as #1 streaming service? ›Prime Video Replaces Netflix As No. 1 Streaming Service In U.S., According To Longtime Industry Tracker Parks Associates – Deadline.
What is the biggest loss Netflix? ›After a decade of incredible growth, Netflix has reached what is likely its lowest point. The company's stock was already down more than 40% and now, the streaming platform's shares have declined an additional 35%, which resulted in a $50 billion loss in market capitalization, the biggest loss for Netflix to date.
How streaming services have changed the entertainment industry? ›With more and more people choosing to view films and television shows online, the number of people going to movie theaters has dropped, leading to a decline in box office sales. Television networks are also losing audience numbers as more consumers get entertainment via streaming services.
How does Netflix affect culture? ›Since the adoption of its streaming media service, Netflix has had a huge impact on culture and the way in which people view television today. On the positive side, it has allowed consumers to become more empowered. People now have a choice in what they watch and when they watch it.
How streaming services changed the television industry? ›Streaming services like Netflix, Amazon Prime Video, and Hulu have revolutionized the entertainment industry by offering viewers the ability to watch their favorite movies and TV shows whenever and wherever they want.
How is Netflix changing? ›Under Netflix's new rules, people who do not live in the same household cannot share a Netflix account (this was always the case, but now Netflix is really cracking down). The big change coming is device verification, which will prompt users outside of a household to verify the device they are using to watch Netflix.
How will Netflix stop sharing? ›
When Netflix detects that someone outside of the household is sharing the password, it will block the device and give them the option to add their own account. Netflix hasn't confirmed this method will be used globally, but it looks likely it will be similar when password sharing ends across the world.
Is Netflix pop culture? ›It's now the world's largest streaming platform, putting it front and centre in the pop culture universe. Despite a dip in popularity in 2022, the platform has managed to accrue 220 million users and more than 5,000 titles to date.
How does Netflix change the entertainment preference of the people? ›Netflix's AI-powered algorithm creates personalized recommendations for each user based on their preferences, watch history, ratings and demographics. The recommendations are usually incredibly accurate.
What technology does Netflix use? ›As users browse through the company's thousands of movies, Netflix employs AI and ML to determine which visuals are most likely to captivate each viewer.
How loyal are Netflix users? ›How loyal are the users of Netflix? Around 53% of video-on-demand users in the United States say they are likely to use Netflix again. Set in relation to the 59% usage share of the brand, this means that 90% of their users show loyalty to the brand.
How has Netflix disrupted the film industry? ›The entry of Netflix disrupted the entire movie industry leaving many entertainment companies unable to catch up with them. The company managed to marry content delivery for the home market and deliver seamless entertainment options to their clients on a daily basis.
How has Netflix overcome cultural differences to create a global brand? ›First, Netflix developed local programming to appeal to specific international markets. To maximize efficiency, Netflix ensured these programs appeal to markets outside their home country. Netflix also invested in increasing local language options for its interface, subtitles, and dubbing.
How is Netflix affecting society? ›The Netflix Effect exemplifies the change in consumer behaviour. Traditional advertising on linear television is no longer enough to reach the next generation of potential customers. Young people in particular are increasingly influenced by social media platforms such as Pinterest and Instagram.
How does Netflix impact culture? ›Since the adoption of its streaming media service, Netflix has had a huge impact on culture and the way in which people view television today. On the positive side, it has allowed consumers to become more empowered. People now have a choice in what they watch and when they watch it.
What are the biggest threats to Netflix? ›- Competitive Pressure – Netflix is not the only one which provides digital streaming around the world. ...
- Government Regulations – Strict governmental rules and regulations regarding service providers like Netflix in many countries can be a big threat for them.
What is Netflix main strategy? ›
Marketing Strategy of Netflix
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.
According to the article “Netflix Faces Challengers in Its Push to Expand Globally” by Mark Scott and Elian Peltier the local media, language and pricing are the biggest the challenges the video streaming service faces in the international markets.
Which was the biggest innovation made by Netflix? ›The biggest radical innovation of Netflix is when Netflix transformed from a DVD rental service into an online streaming platform. This means that customers no longer had to wait for their DVD to be delivered, as they were now able to watch Netflix content through its online streaming platform.
How is Netflix related to globalization? ›Netflix is now working on producing global original content which can be distributed around the world by constantly adapting it to the local environment. They cannot rely on a large library of proprietary content to feed its 204 million paid members in over 190 countries.
What is the global communication strategy of Netflix? ›Netflix's communication strategy involves engaging customers on social media by creating a discussion on social media. Moreover, the company's accounts are used to promote media content, which is essential for the streaming service, producing its own content.