Netflix Inc.’s growth and success are attributable to business strengths and competitive advantages that enable global expansion and market dominance. The net competitive advantages are among the net outcomes of the company’s SWOT factors. In the SWOT analysis framework, the strengths, weaknesses, opportunities, and threats are a reflection of the movie streaming organization’s internal situation (internal analysis) and external environment (external analysis). In this SWOT analysis of Netflix Inc., the business continues to grow and exploit opportunities, despite the adverse effects of the company’s weaknesses and the threats in the market. This condition compels the online enterprise to develop innovative solutions to strengthen its multinational operations against competitors, especially Amazon, Walmart, Apple, Disney, and Google, as well as HBO and other content producers and related networks. These competitors hinder business development and the achievement of strategic goals in Netflix’s corporate vision and mission statements. Addressing the business factors examined in this SWOT analysis can ensure the on-demand media streaming company’s continuous improvement.
The strategic management issues described in this SWOT analysis indicate that Netflix Inc. needs to continue growing while developing capabilities to protect the business against competition and other threats in the media and entertainment industry. While the online entertainment corporation keeps improving its finances, this SWOT analysis enumerates internal strategic factors and external strategic factors that challenge long-term business growth. In this regard, the identified strengths, weaknesses, opportunities, and threats provide a snapshot of Netflix and its industry position and helps guide strategic decisions.
Netflix’s Strengths and Weaknesses (Internal Analysis)
| Strengths (Core Competencies/Competitive Advantages): |
| 1. High brand equity of Netflix |
| 2. Large platform of content producers and consumers |
| 3. Capacity for original content creation |
| Weaknesses: |
| 1. Imitable business model |
| 2. Dependence on content producers |
| 3. Dependence on Internet service providers |
- This SWOT analysis table is best viewed in HTML5-compatible browsers.
Strengths. One of Netflix Inc.’s major strengths is its high brand equity, which is the business benefit and value associated with the company’s brand, relative to competitors. In this SWOT analysis case, the brand enables the movie streaming company to maintain its popularity and ability to penetrate its current markets. In addition, its large platform of content producers and consumers is a strength that allows Netflix to maximize its operational effectiveness, service attractiveness, and business growth. For example, as the platform’s entertainment content creators increase, the service attracts a larger population of consumers, which in turn attract more producers. This kind of business strength is also seen in other platform-type businesses, such as Spotify Technology and its on-demand music streaming operations. Another of Netflix’s strengths is its capacity for original content creation. This means that the company earns from its original movies and shows, in addition to earnings from streaming operations. The strengths assessed in this SWOT analysis are among the core competencies identifiable through a VRIO/VRIN analysis and value chain analysis of Netflix Inc. The company’s value proposition is achieved by using these strengths in the online streaming value chain. Netflix’s corporate culture also affects how these internal factors influence business performance in content creation and technological innovation, via human resource capabilities.
Weaknesses. Netflix Inc. has an imitable business model, which is an internal strategic factor that weakens the business. For example, competitors can copy the same business model to create a platform for on-demand online media streaming. Dependence on content producers is another weakness examined in this SWOT analysis of Netflix Inc. This internal factor makes the company vulnerable to the effects of producers’ strategies. Moreover, the business depends on Internet service providers (ISPs) that determine customers’ connectivity speed, which is a critical factor influencing customer satisfaction in Netflix’s service. With these internal strategic factors, this SWOT analysis reflects the strategic challenge of making the company less vulnerable, given these weaknesses.
Netflix’s Opportunities and Threats (External Analysis)
| Opportunities: |
| 1. Growth through expansion of product mix |
| 2. Penetration in new markets |
| 3. Business diversification into other industries or markets |
| Threats: |
| 1. Competition and imitation |
| 2. Entertainment media/content piracy |
| 3. Cybercrime |
- This SWOT analysis table is best viewed in HTML5-compatible browsers.
Opportunities. Netflix’s opportunities include growth through product mix expansion. For example, the company can develop new types of entertainment content that can be accessed through its website or mobile apps. Considering the other factors in this SWOT analysis, such an external strategic factor is directly related to Netflix Inc.’s generic strategy for competitive advantage, intensive strategies for growth, and business model. Penetration of new markets is another opportunity in this SWOT analysis, especially because of the on-demand streaming company’s lack of significant presence in countries like China. Netflix’s marketing mix or 4P affects how such market penetration is achieved. Furthermore, the online business has the opportunity to diversity, such as by acquiring a complementary firm that could improve overall strategic positioning and success. In the SWOT analysis framework, this external factor is based on market conditions as well as organizational capacity to diversify, thereby requiring Netflix’s corporate structure’s adequacy and support.
Threats. Competitors and related business imitation are a strong threat, as can be determined through a Porter’s Five Forces analysis of Netflix Inc. Competition is an external strategic factor that, in this SWOT analysis, is an obstacle toward maximizing the company’s revenues and profitability in the online streaming industry. In addition, piracy threatens Netflix by allowing customers to consume pirated content instead of the ones available through the company’s service. In the SWOT analysis model, this external factor intensifies competition for customers’ viewing time. Moreover, considering the resource-based view, cybercrime is a threat based on the information technologies that Netflix uses. Proprietary and sensitive customer information may be compromised as a result of this external strategic factor in the online streaming industry environment. This SWOT framework application highlights cybercrime, which is a technological trend that shapes the industry, as can be assessed through a PESTEL analysis of Netflix Inc.
Key Points – SWOT Analysis of Netflix Inc.
The internal factors in this SWOT analysis of Netflix Inc. indicate that the company is capable of growing in spite of its weaknesses. However, the corporation’s weaknesses present barriers to global success, considering that many firms, including content producers, have the capacity to imitate the company’s movie streaming business model. Still, the Netflix’s brand and other strengths and competitive advantages empower the business to keep growing despite strategic challenges.
On the other hand, the external factors provide a glimpse of Netflix’s business environment and how on-demand digital content distribution companies, customers, and other variables influence each other. The global industry’s dependence on online technologies makes these firms experience the threat of cybercrime and related issues. This SWOT analysis describes an industry environment where Netflix’s strategic management continually seeks new solutions to bring the business to higher performance levels, despite competition and other threats. The company’s strategic plans aim to exploit growth opportunities in this industry, where entertainment producers and movie streaming companies aggressively innovate to capture more market share.
References
- Gürel, E., & Tat, M. (2017). SWOT analysis: A theoretical review. Journal of International Social Research, 10(51), 994-1006.
- International Trade Administration of the U.S. Department of Commerce – The Media and Entertainment Industry in the United States.
- International Trade Administration of the U.S. Department of Commerce – The Software and Information Technology Services Industry in the United States.
- Namada, J. M. (2018). Organizational learning and competitive advantage. In Handbook of Research on Knowledge Management for Contemporary Business Environments (pp. 86-104). IGI Global.
- Netflix Inc. – Investors – Long-Term View.
- Netflix Inc.’s Annual Report to the U.S. Securities and Exchange Commission (Form 10-K).
- Netflix Inc.’s Website.
- Phadermrod, B., Crowder, R. M., & Wills, G. B. (2019). Importance-performance analysis based SWOT analysis. International Journal of Information Management, 44, 194-203.
