Netflix may have put competitors out of business — but it’s also created a blueprint for others to follow.
Netflix’s success has been incredible to watch. From its early strategies that edged out traditional forms of movie rentals to its introduction of streaming (and, therefore, binge-watching), the company has changed the way viewers engage with content. Even Netflix’s corporate policies have gone viral, with a company PowerPoint accruing more than 18 million views on SlideShare.
Despite its popularity, investors have questioned the sustainability of the company’s spending. Netflix spent more than $10 billion developing content over a 12-month period across 2017 and 2018.
A study by InMyArea, in conjunction with Netflix, documents the correlation between Netflix’s increase in spending on original content and the content’s popularity. In 2013, when Netflix produced its first original show, “House of Cards,” only 19.6 percent of states had a Netflix original in the top viewing slot. But by 2018, a total of 48 states (96.1 percent) had a Netflix original in the most-viewed slot.
Netflix’s monetary bet on original content development has begun to pay off. And despite the fact that the platform’s own content accounts for a mere 8 percent of its available viewing options, Netflix’s own shows and movies dominate the most-watched list.
What Your Business Can Learn From Netflix’s Success
Netflix’s success isn’t notable just for other streaming networks; the platform’s success can offer lessons transferable to any business. Here’s how you can incorporate some of Netflix’s savvy moves in your own business sector:
1. Spend money to make money.
Netflix’s shift toward producing more original content wasn’t just a haphazard guess that turned out to be lucky. The streaming platform pays a premium to host a wide variety of shows that first premiered on traditional television networks. And as those networks begin to undergo plans to develop their own streaming platforms, there have been some questions as to whether Netflix will be allowed to continue to offer crowd-pleasing content like “Friends.”
But it’s this gamble of investing in its own content that might just pay off for Netflix. The cost of producing a show doesn’t change based on the number of viewers, so if Netflix can continue to acquire new viewers, the shows will start to pay for themselves (and the rest of the company’s bills) over time.
The company’s increase in spending is a big bet on its own success. This kind of growth is possible, even if your business doesn’t have a budget equivalent to that of the streaming platforms. It’s easy to focus on all the ways a strategy might go wrong (and it’s important to consider these risks, too), but sometimes, measured risks can pay off. Take stock of your company’s current and future plans, and don’t be afraid to shift some resources to give your big ideas the attention they deserve.
2. Respond to your consumer’s social concerns.
While the rise of the strong female lead is becoming apparent across networks, Netflix has been particularly adept at featuring women leads across a wide variety of genres. In fact, the two most-searched-for actors on the site are women: Krysten Ritter and Winona Ryder. The strong female lead has outpaced more traditional roles for women — like housewife or assistant — in popularity, and it’s in response to the complaints regarding the limitations of those roles.
Now the platform offers myriad shows featuring women (a good portion of which are originals); even more notably, it offers shows featuring women of color and women of all ages. Netflix has broadened its horizons to highlight characters that are more like their viewers — featuring a wider range of races, ages, and sexual orientations.
Don’t allow your own audience to be dictated by what’s been done in the past. Ensure you’re taking steps to reach a broader swath of your consumers, and make sure your language and marketing support messages that will be relatable to a more diversified audience.
3. Keep your business strategy flexible.
Netflix’s business strategy has significantly changed since the platform’s inception. Starting in 1997, the company initially targeted traditional movie rental chains like Blockbuster by providing easy DVD delivery straight to users’ doorstep. But that strategy changed alongside the industry, and the platform shifted into the online streaming space in 2007. Now, Netflix is available in nearly 200 countries and has started to shift its focus toward showcasing its own original content.
It’s this ability to shift direction and form that’s allowed the platform to grow into the behemoth it is today. Your company’s business strategy should be similarly elastic and adaptable. Be aware of how your own market is changing, as well as any shifts in consumer preferences. Take steps to ensure your big-picture strategy isn’t committing you to an indefinite and immovable trajectory.
Netflix’s smart bets have paid off for the platform, but the ideas that informed the company’s decisions can be applied to any business. Netflix may have put competitors out of business — but it’s also created a blueprint for others to follow.
Originally posted on Inc.
Rhett Power is Best-Selling Author, Executive Coach, Columnist at Forbes, Inc. & Success. Rhett Power co-founded Wild Creations in 2007 and quickly built the startup toy company into the 2010 Fastest Growing Business in South Carolina. Wild Creations was named a Blue Ribbon Top 75 US Company by the US Chamber of Commerce and named as one of Inc. Magazine’s 500 Fastest Growing US Companies two years in a row. He and his team have won over 40 national awards for their innovative toys. He served in the US Peace Corps and is a graduate of the University of South Carolina. He now has a rapidly growing coaching and consulting practice based in Washington DC.