Netflix SWOT & PESTLE Analysis

Strength

1. World’s leading video streaming network: Netflix, the World’s leading internet television network with over 93 million viewers as of 2017. The company offers 7,500 HD videos which is twice as many as rival Amazon Prime. Currently Netflix service is available in over 190 countries with targeted content depending on the taste and preference of the country. Netflix’s ecosystem for internet-connected screens with increasing amounts of content that enable its consumers access to TV shows and movies directly is its major strength. The ecosystem is supported by rich technologies such as big data which help in facilitating the company’s algorithms and analytics which lends it a great competitive advantage and helps in delivering an exceptional customer experience.

2. Increasing paid membership aiding business growth: Netflix has continued to grow its streaming service both domestically and internationally. For the third quarter in 2017 there was a 33% year-on-year growth in the total global subscriber revenue with the operating income doubling year-over-year to $209 million. In 2017, unique audiences visiting the Netflix increased by 48% compared to 2016. The total paid memberships at end of Q3-FY17 stood at 104.02 million compared to 83.28 million a year ago. The company is on track to achieve $11 billion in revenue in 2017 while delivering growth across markets globally. The company further aims to achieve improvement in international profitability with growth in operating margins which will enable it to further invest in potential growth markets.

3. Strong focus on innovation in technology and development: To provide best user experience Netflix heavily invested on Network Servers, Internet connection with different ISB around the World and codex (Incredible picture quality for least MB used) and to get best user experience on both mobile and desktop/laptop platforms. The company also strongly focuses on content and availability on each screen size. In an interview with Mobile World, Netflix CEO Reed Hasting indicated that the focus of the company remains on collecting stories and sharing it around the World and not on the screen size. They want to be as flexible as possible in screen size and needed to be available on all possible screen size.

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Weakness

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Opportunity

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Threat

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Political

1. US has restrictions on countries like Crimea, North Korea and Syria thus leaving a potential market untapped: Netflix has made it clear that it won’t be available in Crimea, North Korea and Syria due to U.S. government restrictions on American companies

2. Netflix is still not present in the most populated country i.e. China due to permission issues from Chinese Government: China which is the most populated country in the world is still untapped by Netflix as it needs to get permission from their government, which has stringent rules when it comes to online censorship.

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Economic

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Social

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Technological

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Legal

1. Need to fight battles against Geoblocks and copyright infringements: Law is unclear on whether getting around Geoblocks to access restricted content actually constitutes copyright infringement. Netflix should try to be more proactive about blocking VPNs. Also many countries have much smaller content libraries than what is available to viewers in the U.S., due to licensing arrangements. Thus it’s important for Netflix to either remove content restrictions or take some measures to block VPN to prevent unauthorized access to streaming.

2. Video piracy is the reason of huge loss to the streaming and cinema industry thus punishments to the offenders should be severe: Video piracy costs billions of dollars every year and is a major concern for streaming and cinema industry. Thus stricter regulations on a global scale are required and punishment of copyright infringement should be severe.

3. Streaming on multiple devices should be checked as users are sharing their credentials to reduce cable bills: Netflix offer customers subscriptions that can stream on multiple devices at a time. Although the intent was to make it easier to go from one room to the next and continue watching a show, some customers have taken advantage of the multiple device options by sharing login information with friends and family at different locations thus reducing subscription revenue. Recently laws are made to curb this situation.

Environmental

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