Netflix Focuses on Global Growth to Hold Its Top Spot in Streaming | July 2021
Netflix continues to be the streaming industry leader as it creates international shows and movies to keep users hooked in any region.
Netflix, the world’s largest streaming service with more than 208 million paying subscribers, continues to grow steadily thanks to its international markets. The vast majority of new Netflix subscribers are outside of the U.S. and Canada, with most coming from Europe, the Middle East, and Africa.
Looking Beyond Mature Markets
The United States and Canada are both mature markets for Netflix compared to international regions and are saturated by competition. Disney+, Amazon Prime Video, HBO Max, Hulu, Discovery+, Apple TV+, and Peacock are just a few of the major streaming providers in the United States.
Netflix was founded in the United States in 1997 and expanded to Canada in 2010. While it took more than 10 years to make a move into Canada, the company rapidly expanded afterward. By 2015, Netflix had a presence in 50 countries. Now, Netflix streams in more than 190 countries.
When the company first began expanding outside of the United States, Netflix looked for countries that were geographically close and culturally similar. This strategy allowed Netflix to grow its internationalization capabilities before making its foray into culturally foreign markets. Now, Netflix looks for mobile-focused countries with high broadband penetration.
Building an International Library of Content
Netflix’s library of original, local content—such as “Barbarians” (Germany), “Sweet Home” (South Korea), and “Elite” (Spain)—has not only driven consumers to the streaming giant but has kept them hooked. In Europe, Netflix has become the largest commissioner of European scripted content, surpassing local television broadcasters such as ZDF (Germany) and BBC (the United Kingdom).
Many of its international shows have even translated into hits outside of their local markets, such as “Lupin” (France) which has become a success in the United States. This suggests that Netflix’s global growth strategy is helping to attract customers in new markets and keep viewers in established markets entertained. Its original shows and movies are one of its competitive advantages over other streaming services.
Beyond producing local movies and shows with local actors, Netflix also has different software interfaces, payment methods, and translation partners based on location. This helps customize the platform to the local culture and present the platform in a way that makes sense for local markets. For example, Netflix partners with local vendors to translate its content to capture the subtleties of different languages.
The company continues to add additional languages, improve personalization algorithms for global content, adopt global partnerships, expand its device support, and invest in mobile to capture subscribers in emerging economies. Mobile is important because it is the main way people access the internet in many countries.
The Streaming Wars Rage On
Netflix offers subscription-based pricing, attracting new users with a freemium pricing model by offering a 30-day free trial. One indicator of success is that Netflix has been able to increase prices without losing a significant number of customers. In fact, Netflix has a much lower churn rate than other streaming providers. With competitors attempting to replicate Netflix’s tried and true formula for success, Netflix must work to stay a step ahead. As the COVID-19 pandemic subsides and people return to out-of-home entertainment, the pressure is on more than ever for streaming providers to retain customers and attract new subscribers.
In the Classroom
This article can be used to explore some of the factors that influence international business, discussed in Chapter 3: Business in a Borderless World.
Discussion Questions
- Why is Netflix focusing on international expansion?
- Why does Netflix work with local vendors to translate its content?
- How did the pandemic affect Netflix’s growth?
This article was developed with the support of Kelsey Reddick for and under the direction of O.C. Ferrell and Linda Ferrell.
Sources:
Brian Withers and Brian Stoffel, "How Netflix Will Power Global Growth," The Motley Fool, April 16, 2021, https://www.fool.com/investing/2021/04/16/how-netflix-will-power-global-growth/
Chris Dziadul, "Netflix Takes Lead in European Scripted Content," Broadband TV News, July 1, 2021, https://www.broadbandtvnews.com/2021/07/01/netflix-takes-lead-in-european-scripted-content/
Daniel Howley, "How Netflix’s Overseas Expansion Fueled Its Explosive Growth in Subscribers," Yahoo Finance, January 20, 2021, https://finance.yahoo.com/news/netflix-international-expansion-fueled-subscriber-growth-225708669.html
Julia Alexander, "Netflix Already Won the Us; Now It Needs the World," The Verge, February 20, 2020, https://www.theverge.com/2020/2/20/21142065/netflix-streaming-wars-subscriber-growth-disney-international
Linda Ferrell is the Roth Family Professor of Marketing and Business Ethics in the Raymond J. Harbert College of Business, Auburn University. She was formerly Distinguished Professor of Leadership and Business Ethics at Belmont University. She completed her Ph.D. in business administration, with a concentration in management, at the University of Memphis. She has taught at the University of Tampa, Colorado State University, University of Northern Colorado, University of Memphis, University of Wyoming, and the University of New Mexico. She has also team-taught classes at Thammasat University in Bangkok, Thailand.
