With the ever-improving technology, everything has to keep up. The development has to cater to all industries, and they have to strive to keep up for them to remain relevant. For example, many people enjoy binge-watching to take a break from work. Netflix has been the greatest provider of professional entertainment content and has worked to remain relevant over the years.
Netflix has successfully seen its business models shift over the years to embrace new developments in internet connectivity, video quality, data transfer, streaming and other factors to improve content delivery. Having created such a trustworthy platform, it has successfully promoted content creation and marketed it, gaining millions of loyal viewers.
With a simple subscription, you access the endless movies and shows accessible on Netflix. There are many genres for all categories of viewers, and thus, Netflix is a haven for everyone. With the overflowing content on the platform, using secret Netflix codes aids viewers to get to their favorite genres and various recommendations easily.
Netflix has the largest influence on what we watch, and we are curious about how they have managed to get out attention and have such great influence over many people. To answer this, we have to go back and review how Netflix evolved to the leading content binge-watching platform it is today.
The Founding Business Model of Netflix
Originally, the two cofounders of Netflix intended it to be a rental service, where they incorporated the use of DVDs which were new in the market. They were to rent or sell DVDs of shows through mail to their clients. But unfortunately, they had only 925 titles to sell and a team of 30 employees. So, they sent the compact discs through the mail.
Although the business had started well, plans didn’t go as expected, and after having shifted to flat-fee unlimited rental service, the company suffered losses. However, this was not until the end of 2001 when their content was on demand, and they officially launched Netflix as a public company, even selling 5.5 million shares.
Netflix continued to expand its services and grow the company until a major test in the market came. Their largest competitor then, Blockbuster, launched a DVD rental service with extras like allowing viewers to choose titles from online platforms and return rented DVDs to their dispersed stores. Of course, traditional, physical DVD rental services (like Cinema Paradiso) are still popular even today, but the market has certainly changed over time.
Netflix counter-attacked by lowering their charges and some psychological marketing skills that drew them back the attention despite getting sued in the run. They used patent rights to take over the market from the rising competitor who had openly benefited from their idea. With technology improving, Netflix had to step up soon and thus, incorporated the following trends to improve.
Trends Netflix adopted to change how viewers use their free time
1. Technology
Netflix adopted technology to facilitate the shift from renting DVDs to availing the movie titles online for streaming. Movies can now be accessed through downloading or streaming. This is achievable to date because of the high internet speeds being reached and the large number of viewers who can access content online.
Through technological developments, Netflix can market movie titles, announce releases, market their application and website, and create online jobs through marketing advances reached. Successful marketing adds more traffic to their content, making more revenue for the company.
2. Comfort
With people in modern days normalizing binge-watching over going to theatres, availing personalized content all in one place comes at an advantage for viewers. This business strategy presents itself as a gain for both parties involved.
On incorporating comfort with technology, preferred devices that enhance the quality and accessibility of content have been a major trend. Movies can be accessed from any smart device, which has changed how we use our free time. One could watch new episodes of their favorite shows even when traveling or over breaks at work.
Users can easily access the Netflix app or website from a wide variety of devices. From phones to laptops, smart TVs to other third-party devices and even game consoles, one can log in to a Netflix account and stream content of their preferred quality from anywhere.
3. Subscriptions
Billing entertainment into an affordable bundle customized specifically for the viewer is a trend that provides gains for Netflix. With subscriptions, users can get cheap structured packages to enjoy their favorite content at affordable bills that users could acquire annually or monthly.
Having shifted from a tedious business model into a digitalized platform, Netflix has continued to create ways that draw viewers back to their platform every time. They have evidently changed how people use their free time by providing an alternative way to relax. Viewers can access new content they prefer through the new building block – Netflix’s algorithm.
Netflix’s Recommendation Algorithm
This is among the distinct business model plays for Netflix that many companies have incorporated into their relative systems. For Netflix to recommend content for each user, they have to collect data from many ends. Ratings from customers on Netflix’s platforms or IMDb are the main source of information that gets recommended for every user.
The magnitude of views and similar or differing opinions guide Netflix on producing the type of content. Whether the videos were watched to the end by the people providing the ratings is also a consideration factor. The algorithm can filter over 3000 titles at a time and base their results on the recommendation clusters collected through feedback.
The Netflix recommendation engine is so accurate that 80% of the content watched by viewers individually is from the recommended content. This engine, therefore, saves Netflix costs that would have otherwise been directed to marketing the movies or shows individually. They only have to market the best of every genre and leave the rest to the recommendation engine.
Netflix also ventured into creating original content thanks to the recommendation engine. It enables Netflix to analyze customers’ feedback and preference and thus create content that they are sure will please the viewers. Their original shows have performed well enough to show how successful the recommendation engine is.
Conclusion
From a DVD rental company to the billion-dollar company it is today, Netflix has successfully changed how viewers spend their free time. They have content to suit every situation and that viewers cannot take their eyes from. Netflix is also a good example of how having an adaptive business model or having room for change can help build a good business.
