If you were asked to name a few big companies in today’s world, you could probably state Netflix along with Google, Apple, Amazon, and Microsoft. What is surprising about the addition of Netflix in this list is that it was not even a contender a decade ago! Netflix has become a household name today and it is not expected to slow down anytime in the near future. In 2020, Netflix added about 37 million new subscribers out of which 80% came from outside the US. In contrast, Netflix‘s closest competitor Hulu has an overall user base of 36.6 million subscribers!
Netflix is the most pronounced demonstrator of the on-demand entertainment revolution taking over the video streaming space. The success of Netflix has prompted a lot of ambitious entrepreneurs to think about launching their own video streaming OTT platforms specific to a location or to a broad genre of videos. If you are one of those entrepreneurs who would like to replicate the success of Netflix, you will need to know more about the magnitude of the success of the On-Demand Video Streaming App Like Netflix and the factors that contributed to its humongous growth.
The supremacy in numbers
We have already seen how Netflix added about 37 million users in a single year. In spite of facing heavy competition in both local and global markets, Netflix has managed to retain its supremacy as the numero uno OTT platform. Netflix has about 200 million global subscribers and that is about 50 million more than Amazon prime.
In the United States alone, Netflix has about 74 million subscribers and that is around 35% of all the adults in the United States. If we were to look beyond subscription because of the dubious attribute of account sharing, the number is even more surprising because 41% of Netflix users watch without paying and 14% of them use shared passwords.
Headstart… And evolve!
It would be surprising for many people to note that Netflix is older than Google. It was founded in the year 1997 and it initially functioned as a DVD rental company. Netflix received a mere $2 million in venture-capital funding in its Series A fundraising round. However, in its fifth round of funding, it was able to raise $50 million with just three investors. In contrast, Uber raised an investment of $2.8 billion in its fifth round!
When we talk about evolution, we need to talk about how Netflix works proactively when it comes to embracing technology. It was the first company to make streaming available in 2007 while still holding its DVD-by-mail option. In line with their commitment to keeping up with technology, they introduced the first streaming service available for multiple platforms across numerous geographies. Netflix was available to stream on PlayStation 3, smart televisions, Nintendo Wii, and Apple’s range of products like the iPhone, the iPad, and the iPod touch.
Netflix also made its presence felt in Canada, Latin America, and Europe. As of 2016, Netflix is available in almost every country on the planet except for a select few. The “select few” has prompted people to use the best vpn for chrome and other proxy connections, something that Netflix has constantly been cracking down on.
Revolutionizing the streaming industry
YouTube existed as a streaming service even before Netflix started streaming. However, the focus of Netflix was on content. It would not be an exaggeration to say that Netflix was the company that sparked what is known today as the streaming wars. Netflix started the trend of the original series with House of Cards and Orange is the New Black.
This eventually propelled the entry of Netflix into the highly competitive television field and broke the dominance that HBO had over Emmy nominations. Netflix has received over 225 Emmy award nominations and has 143 awards. It is surprising to know that in 2020 alone, Netflix received 160 Emmy nominations and it ended the 17-year streak of HBO.
Netflix won its first Oscar award in 2017 in the best documentary short subject category for the show “The White Helmets”. Although there have been 24 Oscar nominations, Netflix has won only two awards.
In pursuit of good content, Netflix paid $300 million to have exclusive rights to stream Disney content before Disney launched its own OTT platform named Disney+. Even to this day, Netflix maintains rights of broadcasting for certain Disney material.
Netflix has over 15,000 titles but the size is shrinking because Netflix is beginning to focus on quality over quantity, and is also focused on developing original content. It has produced 1500 original titles ever since it started coming up with “Netflix original” in 2013.
The Technology
Netflix is not just about watching shows and streaming content. Netflix also has invested a lot in terms of research and development (R&D), making the platform better in terms of its suggestions, content grading, and personalized recommendations. Netflix spent about $1.5 billion on research and development which is almost double the $852 billion that was spent on R&D in 2016.
Netflix started to work on artificial intelligence for something as trivial as watching videos even before the term was considered cool. It can be noted that on 1 October 2006, Netflix offered a $1 million coding prize for the first developer who developed the video recommendation algorithm that was better than its existing algorithm.
The algorithm is so powerful that 80% of Netflix users make use of the recommendations provided by the algorithm. The recommendation engine of Netflix alone is worth $1 billion every year and Netflix can make a huge profit by just licensing this algorithm!
The commercials
Netflix spends about $20 million on original content. In spite of earning billions of dollars every year, Netflix has a negative free cash flow of $3.3 billion which is spent on creating original content. The company has a market capitalization of $231.66 billion and its stock grew from a measly $101 in 2016 to $509 right now. It reached a peak of $550 in 2020 July, showing that the company greatly benefited because of the pandemic. It was shown in a letter to the board members that Netflix had got 15.77 million additional subscribers in the first three months of 2020 alone.
The growing acceptance and profitability of Netflix have resulted in the company being listed with the best-performing tech giants, collectively known as FAANG, an acronym for Facebook, Amazon, Apple, Netflix, and Google. The fact that Netflix is mentioned parallel to these companies is a massive achievement in terms of profit and culture.
Netflix reported revenue of $25 billion in 2020 which is a humongous 2400% increase in its revenue figures in 2007. What is interesting to note here is that Netflix still runs its DVD rental service, which accounted for about $297 million in revenue in 2019.
The cultural impact
The biggest transformation and recognition a company can get is when its impact becomes barely recognizable in our daily conversation! For example, nobody sees “let me search for some information on the Internet!” but they only say “let me Google it!” In the same way, although the term might have a slightly NSFW connotation, Netflix and chill has become a millennial lingo.
A lot of video streaming on-demand Businesses have their name ending with “Flix” because of the impact of Netflix. Blockbuster, the arch-rival of Netflix in the space of DVD rental has disappeared into oblivion. A lot of content producers are hoping to get their release on Netflix. The equation has flipped in its order now. Instead of Netflix counting on content producers for its brand popularity, content producers are depending on Netflix to capitalize on the brand’s popularity.
Conclusion
If we were to look at the success of Netflix in an isolated fashion, it might seem as if venturing into the space of video on-demand and OTT video content is close to impossible. If we were to look at things with a holistic perspective, it can be understood that the market is quite wide and open. The Internet speeds have considerably increased and people have gotten familiar with the idea and concept of video on-demand. The resolution of phone cameras and the openness of creativity and collaborative ecosystems has increased leading to the emergence of good quality content.
All these go on to prove that the aspiring entrepreneur in you can look at a Netflix alternative as a lucrative space for your business. If you can identify specific geography or a niche, you are all set to venture into this highly profitable space.
You might have questions on how to develop the necessary robust technology. The challenge that you might face with respect to the technology is adequately taken care of by the Netflix clone app. A Netflix clone script is easy to customize and you can alter it in a way according to your business needs. A white label Netflix solution will also be completely free from technical bugs.
Once you have figured out everything with respect to your content production, marketing, and operations, all that is left for you to do is to get in touch with an experienced company that specializes in Netflix clone app development. They will take care to understand your business requirements and present you with a perfect on-demand entertainment solution for you to jump into the profitable bandwagon of entrepreneurs who are looking forward to capitalizing on the lucrative field of instant video streaming.
