Netflix Product Strategy Frameworks: Building The World's Largest Streaming Service
PLUS: Former ByteDance Advisor building a new fintech startup
Behind The Scenes
In 2020, Netflix was recognized as the world's preeminent streaming service, boasting over 193 million, a figure that’s continued to grow. The meteoric rise and sustained success of this entertainment juggernaut didn't go unnoticed. Many software as a service (SaaS) companies, always on the lookout for innovative strategies and business models, turned their gaze towards Netflix, eager to understand the inner workings and secrets behind its phenomenal product strategy.
Let’s explore the core elements of Netflix's success. Especially when it came to attracting new users and keeping them engaged. What were the cornerstones of their approach that ensured not just a one-time sign-up, but everlasting customer loyalty?
The 3 Product Strategy Frameworks
The Get Big, Lead, Expand (GLEe) Model:
Purpose: Focuses on long-term growth, usually over a decade.
Strategy: Initially, the focus is on rapid scaling—essentially getting big in the market. This initial stage typically spans 5 to 10 years. Once a considerable market share is achieved, the company then takes on a leadership role, steering the industry's direction. Following this leadership phase, the strategy shifts to diversification and expansion, exploring new arenas of growth and branching into varied sectors or product lines.
The Grow, Expand, Monetize (GEM) Model:
Purpose: Aims to align key departments within a company, like marketing, finance, and product teams.
Strategy: Starts with user base and market expansion. After achieving substantial growth, the company moves to expand its product or services. The final phase is monetization, where the focus turns to maximizing revenue, often by leveraging the previously established expansion.
The Delight, Hard to Copy, Monetize (DHM) Model:
Purpose: Centers on exceptional user experience.
Strategy: Initially, the goal is to delight users with an unparalleled product or service experience. But delight alone isn't enough. The offering should also possess unique attributes, making it challenging for competitors to replicate. Once these two aspects are firmly in place, the company then looks towards effective monetization strategies, ensuring that the delightful and unique product also generates sustainable revenue.
Unraveling the Complexity Behind Netflix's Inimitable Product Strategy
Netflix, at first glance, might seem like just another streaming platform, but its strategic, technological, and customer-focused decisions reveal a complex and nearly inimitable strategy.
1. The Power of the Network Effect: With each new subscriber, Netflix's value proposition grew stronger. As more people joined the platform, it spurred discussions, debates, and social media trends around its content. This virality meant that Netflix wasn't just a service but a cultural phenomenon. The network effect ensured that as the user base grew, the platform's appeal and influence expanded exponentially.
2. Economies of Scale at Play: With its vast global subscriber base, Netflix could leverage economies of scale like no other. This allowed the company to invest heavily in original content, infrastructure, and technology, further widening the gap between itself and competitors. The more Netflix grew, the more resources it had at its disposal to innovate and lead the industry.
3. The Brand Promise: Netflix's mission, "movie enjoyment made easy," is reflected in its user-focused experience. This wasn't just a catchy slogan; it was the essence of the Netflix experience. By continuously fine-tuning its user interface, enhancing content recommendations, and ensuring accessibility across a myriad of devices, Netflix made sure that every subscriber had a tailor-made cinematic journey. This level of personalized entertainment service was unmatched in the industry.
4. Data-Driven Content Creation: Beyond its vast content library, Netflix uses machine-learning algorithms predicting content recommendations and cloud infrastructure ensuring seamless streaming, Netflix's personal technology and original content set it miles apart from competitors.
5. Economies of Content Scale: Netflix's economies of scale enable not only investment in a broad range of original content but also experimentation in different genres and formats, like interactive shows (e.g., "Black Mirror: Bandersnatch"). This approach allows Netflix to explore new storytelling methods and cater to unique viewer interests around the world.
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