Netflix’s meteoric ascent – here’s what we know:
- Quick rise through an adaptable business model, capitalizing on emerging technology and crushing an industry stalwart
- Transcended one industry by adding a manufacturing/production element to their service
- Poised to trigger the rift that brings about a sea change in the way their industry operates
How they’ve done this is a fascinating case study and has been explored in depth. What we should be doing (aside from enjoying some of the compelling original programming they are offering) is looking at the “how” of it all. How did they identify key opportunities, how did they seize them, and what can we learn from their rise?
What did they see?
Tried and true problem solving and entrepreneurial opportunity
Netflix CEO Reed Hastings identified a clunky and outmoded model used by Blockbuster and envisioned a way to improve on their service, while revolutionizing the ‘convenience factor’ for customers. It was the idealistic entrepreneurial formula of identifying a product or service that can be improved upon, then implementing a more effective strategy.
Look at your industry. List the three biggest players or earners in it. Take a few hours, go somewhere you can focus and feel refreshed, and write a list of anything these companies could improve. Even the smallest features or deficiencies could lead you down a path to identifying a big breakthrough. Most of us are too consumed with our own business improvements that we don’t stop and take stock of what our biggest competitors are doing. Through this examination, you could find the inspiration to improve your business and your industry as a whole.
How did they plan their attack?
Risk-taking mindset combined with good timing. In almost any venture – timing is everything.
Hastings wasn’t the only one who foresaw online streaming capabilities on the horizon. He simply saw the technology coming, then planned the perfect time to capitalize. Hastings committed to taking the risk, then waited just long enough until streaming capabilities were advanced enough to implement – not a minute longer. Diving into the streaming model before functionality caught up would have frustrated viewers experiencing glitches or waiting for ‘loading times.’ Waiting until it was a proven commodity would have given competitors ample time to swallow the market.
Do your homework. The data is usually readily available on upcoming trends. Having good timing is as much a skill as it is luck – being prepared and diligent rather than cautious and reactionary is the best formula.
What can we learn?
- Rather than promote your business, focus on content marketing – sell your product/service and its features/results.
Your originality and unique selling points are ultimately what separates you. Once Netflix reached a certain threshold of notoriety (where this ‘tipping point’ of notoriety is, one can’t be sure – but our assumption is that the more compelling your content/product is, the less exact it tends to be), they abandoned simply championing their service/model/pricing and focused solely on their content, pumping all the attention to their original programming – their ultimate separator – like House of Cards, Orange Is The New Black, Bloodline, Narcos, etc.
- Cover your bases to retain customers
Not resting on their laurels, Netflix supplemented their homegrown “binge-watching” or “watch-at-your-leisure”model with more traditional weekly programming. Their new Chelsea show releases new content several times per week, incentivizing users to “tune in” multiple times weekly. This diversification is the newest step toward retaining frequent users. If your customers/users are coming to you for one area, then going elsewhere for another aspect of the business – strategize the best way to capture their business in ALL areas of your industry.
- Keep evolving and improving the customer experience
This is an important add-on to the last point. Some brands, in an attempt to innovate, will end up abandoning part of what made their model successful and will in turn alienate their customer base. Netflix is constantly innovating and taking advantage of emerging technology, but it is always with the customer experience in mind. Once your customers trust that you’ve got their satisfaction at the top of the priority list, they’ll put their faith in you and stay on board through changes to the model.
- If you can own it – do it
In the past few years, Netflix has been producing its own content in a variety of genres (mostly met with excellent reviews). With their distribution platform in place to deliver the content direct to customers, Netflix owns all the rights and keeps all the revenues. Obviously, this is an ideal scenario. Most businesses will need the leverage of one (if not several) sources to be profitable. This however should be viewed as a stepping stone, not a final destination. If Netflix shows us anything, it’s that this ‘freedom of ownership’ is attainable, you just have to be savvy enough to navigate your way upstream and never lose sight of it as a business milestone.
Netflix viewership is already surpassing networks like A&E and AMC, and will soon sprint by major networks like ABC, NBC, FOX, and CBS. You can (and probably already are) watching…but you can also learn. Take notes.