Over the past several years, Netflix has made multiple game-changing moves that shook the entertainment industry. By researching the changes to the Netflix business model, you can learn how revolutionary—and occasionally unpopular—changes can affect an entire industry.
When it launched in 1997, Netflix was a service that mailed movies to clients on demand. Over the years, it has made a variety of dramatic shifts and now focuses mainly on streaming television shows and movies. Despite the occasional public outcry, Netflix has seen a great deal of success; as of January 2014, the service reported that it had 40 million users. According to a recent story from Wired magazine, the company reported $50 million in profits in the last quarter.
One of the most important lessons to learn from Netflix is simple: reinvention. The company hit a low point as customer interest in the DVD-by-mail service started to fade. Instead of folding, company executives reexamined the Netflix business model and shifted to a model that focused on streaming moves and television. In tough times, you can emulate the Netflix business strategy by assessing your company realistically and reinventing your product or service offerings.
For management professionals, it can be easy to get so embroiled in the daily grind that you lose focus on your customers' needs. If you find that you are out of touch with your customers, learn from the Netflix business model and pause to reevaluate. When Netflix realized that customers were no longer interested in DVDs, it responded quickly by offering movies online. By paying attention to your customers, you can reduce response time and keep clients happy.
In some cases, managers who have been with a company for a long time can be resistant to new developments. Often, the resistance is powered by a fear that your younger, more technologically savvy employees will show you up or make you look like a fool. If you've ever hesitated to learn about a new software, computer, or app, learn from Netflix and embrace technology. The company made dramatic shifts in the entertainment industry by offering streaming content on mobile devices, televisions, and laptops. It keeps an eye on new technology and adopts it quickly. As a result, customers can reasonably expect to enjoy the same performance and service with each new device they buy. By staying on top of technology, you can give customers what they want before they realize they want it.
If you find that your team is in a rut, learn from the Netflix business model and make an exciting change. After it established a successful role in streaming movies and television, Netflix took the unprecedented step of making its own television shows. The leap of faith paid off handsomely. When you are not afraid to try something serious, your company can create game-changing ideas.
Perhaps the most important thing you can learn from the Netflix business model is to encourage the people you manage to offer personalized service to customers. In the early days of the company, the Netflix business strategy was expanded to include individual recommendations based on a user's earlier movie choices. Now, the site predicts the movies and shows you might want to watch and displays them. By giving your team the authority to emulate this strategy, you can create customer loyalty and increase sales.
Whether you manage a small team or a large group of teams, the game-changing moves in the Netflix business model offer valuable lessons. By understanding the motivation behind each, you can incorporate similar strategies into your own workplace.
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