Inspiring digital business innovation: How Netflix has used technology to change the market | Westminster Business School Blog (2024)

FAQs

How did Netflix use innovation in its business strategy? ›

The biggest radical innovation of Netflix is when Netflix transformed from a DVD rental service into an online streaming platform. This means that customers no longer had to wait for their DVD to be delivered, as they were now able to watch Netflix content through its online streaming platform.

In 2006 Netflix launched an open innovation challenge to the public called Netflix Prize. This aimed to find a filtering algorithm that improved user movie and series suggestions by 10% compared with its platform at the time.

As users browse through the company's thousands of movies, Netflix employs AI and ML to determine which visuals are most likely to captivate each viewer. In the year 2022, it is one of the greatest ways that Netflix efficiently uses artificial intelligence.

It all began in April 1998, when Netflix started renting out DVD's by mail. Only a year later Netflix changed its pay-for-use model into a subscription model. Nearly a decade later, Netflix changed their proposition to a streaming service, which changed the way millions of people spend their free time.

Netflix Business Model Short Description Netflix is a subscription-based business model making money with three simple plans: basic, standard, and premium, giving access to stream series, movies, and shows. Leveraging on a streaming platform, Netflix generated over $31.6 billion in 2022.

Netflix uses data-driven and customer-centric marketing strategies that work in the digital age. Netflix's success relies on constant analysis and optimization, so you can use these tools for marketing your business online.

Netflix started as a DVD start-up where the idea was to make the process of renting movies more convenient to the consumers. The concept was that consumers would order a DVD to rent through the internet and get it delivered to their doorstep. This was a product/radical innovation as this service did not exist before.

We at Netflix have to embed certain guiding principles into our innovative culture. One of those principles is always to be curious. Curiosity, curiosity, curiosity!

Netflix leverages AI to create a unique experience for each viewer based on that customer's viewing habits but when thinking about innovation and reinvention, human empathy has always been the secret sauce of their success.

Netflix's focus on content creation is a key aspect of its digital transformation. The company has shifted its strategy from acquiring content to producing original content, which has helped it to differentiate itself from its competitors and provide a unique viewing experience for its customers.

How did Netflix influence the world? ›

1 By creating compelling original programming, analyzing its user data to serve subscribers better, and above all by letting people consume content in the ways they prefer, Netflix disrupted the television industry and forced cable companies to change the way they do business.

At first, Netflix was just shipping DVDs through the mail and later they eliminated late fees that greatly lead to Blockbuster's crush. With the passage of time, they moved up from mailing the content to streaming movies and TV shows in good quality.

Netflix's corporate strategy can be summarised in its mission and vision statements: We promise our customers stellar service, our suppliers a valuable partner, our investors the prospects of sustained profitable growth, and our employees the allure of huge impact.

Netflix values the most employees who are self-aware, honest and don't act from their ego but for the good of company. You must hire leaders and employees who are honest with themselves first, and then with others if you want to establish a really collaborative workplace and a performance-driven team.

Netflix is a classic example of disruptive innovation that used a new business model and technology to disrupt an existing market. It initially offered a DVD-by-mail rental service and later launched its online, subscription-based movie streaming service.

Business Model Innovation Example: The Video Game Industry

When video games were first created, the consoles that housed them were expensive and bulky, which put them out of reach of most consumers. This gave rise to arcades, which would charge customers to essentially purchase credits needed to play the games.

Under Netflix's new rules, people who do not live in the same household cannot share a Netflix account (this was always the case, but now Netflix is really cracking down). The big change coming is device verification, which will prompt users outside of a household to verify the device they are using to watch Netflix.

Netflix is a classic example of disruptive innovation that used a new business model and technology to disrupt an existing market. It initially offered a DVD-by-mail rental service and later launched its online, subscription-based movie streaming service.

The company got into video streaming services, but video rental service providing giants like Blockbuster were slow to respond. Subsequently, streaming services took over both rental and mailing services, and the market tipped, making Netflix disruptive innovation poster child.

Specifically, the Netflix innovation strategy focuses on: Hiring and keeping only the best workers—at any cost. Promoting candor through constant feedback at all levels as well as organizational transparency. Removing controls, such as allotted vacation time and approval processes.

What was the most significant strategy did Netflix do to attain its success? ›

Netflix made its way into the world of streaming by buying licenses to material from other producers. While they were the first to do it – and enjoyed an enormous amount of success during the early streaming days – other companies soon began to get in on the act.