Question

Define Netflix's competitive advantage.Why is Netflix so successful?

Answer 1

Netflix has emerged as one of the leading internet entertainment companies in the past few years. During the last 3-4 years, Netflix has experienced sharp growth in terms of customer base and revenue. This is the outcome of its fast global expansion and sustained competitve advantage. The sources of Netflix's competitve advantage include:

(i) Original content

The focus of Netflix has always remained on consistently differentiating its services from its competitors. One of the central attractions of Netflix among its customers is the volume of original content. Apart from licensing content of others, Netflix is investing huge sums each year in order to create its own original content for the customers. It also helps differentiate Netflix from its competitors and beat the competitive pressure. Producing original content may be a bit expensive but in the long time run, it is going to prove a major source of competitive advantage for Netflix. Moreover, its original programs are quite admired by the users and are seeing a very high degree of success.

(ii) Global presence

Netflix delivers its services globally. Its shows and movies are accessible in more than 190 countries on any internet enabled screen. The wide technology of the internet has also supported the growth and expansion of Netflix. A larger number of customers around the world are using large screen smartphones and tablets to stream movies and shows from Netflix anywhere around the world.

(iii) Intuitive user interface

Netflix is an innovative company and its focuses on delivering superior customer experience. Its easy to use, excellent and intuitive user interface is also a major reason that the company is enjoying higher popularity and competitve advantage. The user interface looks attractive and offers regular suggestions based upon the choice of users. Customers can set their own preferences and access preferred content quite easily.

(iv) Customer experience

Any company that wishes to become the favorite of its users must offer a differentiated and superior customer experience from the competitor. This is the reason why brands focus exclusively on quality of services and customer experience. Netflix has focused on providing a user experience that can't be matched easily.

Reasons for success of Netflix:

1. Disrupting the industry

The first time Netflix started innovatinb was when they were shipping DVDs by mail and thereafter Netflix abolished late fees which lead to Blockbuster’s crush & burn demise. After that they transitioned from mailing content to streaming TV shows and movies digitally and then finally, Netflix began producing its own original content.

2. Flexibility

With Netflix, users can watch content on demand, on any screen and from anywhere, and the experience is personalized to individual tastes.

3. Unlimited options

Subscribed users can find a wide range of movies, tv series, performances, shows, documentaries licensed from distribution partners with new options entering the offer on a regular basis which makes Netflix's offer practically unlimited.

4. No ads

Netflix is well aware that people wish to watch movies with no interruptions like annoying or irrelevant ads which is why they provide an ad-free experience to its user base.

5. Excellent user experience

Some of the excellent user experience that Netflix provides includes:

• Custom-created preview videos that play automatically when a user scrolls over a title card;
• A download-and-go feature for its subscribers that allows them to watch shows offline;
• The ability to share the Netflix account with friends and family;
• One month free subscription.