International Expansion Within Netflix Company

Topic: Netflix Words: 628 Pages: 2

Case: International expansion within Netflix Company
Key decision maker: Netflix CEO, Reed Hastings
Influencing actors: N/A

Symptoms

Netflix had been seeking aggressive worldwide development, mostly through organic growth efforts, across Europe, Asia-Pacific, and other parts of the world. Hastings was certain that the strategic plan’s originality and the company’s ongoing efforts to improve services would pay off in the long term. However, the market framework in many nations was frequently considerably different from that in the United States. Some of the symptoms of the company include:

Netflix is experiencing decreased revenue in some countries.
Netflix is at risk of losing some customers.
The company was experiencing a fall in DVD sales and rental volume.
Some of their content providers failed to offer a third-party license for the streaming services forcing Netflix to produce their episodes.
Strict government restrictions on operation have reduced the amount of revenue the company could make in some countries.

Problem statement

The advancement of streaming technology and the emergence of mobile devices from which viewers may access streamed material boosted the industry. Netflix’s main issue is increasingly paying to acquire new customers.

Additional problems that Netflix experiences are as described below:

Faces stiff competition

Although a limited number of corporations had previously controlled the sector, a varied range of organizations had been attempting to get into the Internet video-streaming business. Whether it was cable television networks or production studios, many companies in the Internet streaming market wanted exclusive license arrangements with content providers.

Regulatory restrictions

Netflix was still subject to regulatory constraints imposed by the US government as an American firm. The impact of these limits was seen in the January 2016 announcement of its extension, with nations like Syria missing from the list.

Local adaption problem

Another key hurdle in Netflix’s international development was adapting content to various markets. Industry commentators have criticized Netflix’s rapid expansion approach. They argued that Netflix was surpassing its capacity to supply area-specific, adjusted content to foreign users and build market penetration techniques tailored to the host country. “People are also more reluctant to pay for a monthly membership to a video service in France and Germany,” said David Sidebottom, an analyst at Future Source Consultancy.

Decision Dilemma

Netflix paid huge premiums for these worldwide license arrangements in order to compete with both global and local competitors, resulting in extremely high expenditures for its foreign business division. People also needed the films provided by Netflix to be in their languages, forcing the company to deploy a technology that will allow users to select different languages of their interest.

Possible options to bring a new product to the market

The company had three major options to bring the product to the market, and these are described in the table below:

	advantage	Disadvantage
Internal commercialization	Customers have a better choice since there is a wide range of choices to choose from the range. The company will be able to generate more revenues. Commercialization promotes efficiency in the production	Leads to an increase in the cost of a product. Encourages a high rate of consumer exploitation.
Partnering	The company will have a wide range of products for their customers. More business opportunity	Some individuals may not like what the other company is offering, thereby leaving the company to lose customers. It sometimes becomes very costly because the two companies’ technologies may be different.
Licensing	Netflix won’t have to spend money on manufacturing, marketing, packing, or selling your goods.	Netflix will almost certainly lose control of your goods, including advertising, packaging, and distribution.

My Decision

From the case study presented, I strongly believe that the Netflix company needs to seek partnerships and collaborative ventures with content producers in these areas to alleviate content availability constraints and a lack of region-specific programming, which native television consumers typically favor.

References

Wayne, M. L., & Castro, D. (2020). SVOD global expansion in cross-national comparative perspective: Netflix in Israel and Spain. Television & New Media, 22(8), 896–913. Web.