Today, Netflix is an industry giant and a case study in innovation, synonymous with growing business opportunities and utilizing cutting-edge technology for a razor-sharp objective: increasing the number of subscriptions and slashing user churn. Learn more about how innovations play an essential role in making a company the market leader.
So what are the priorities and innovations Netflix continues implementing to stabilize its model and let it grow through countless challenges that have rocked others?
Personalization: Staying responsive to viewers’ needs
In this era of leveraging the power of AI, Netflix is emphasizing personal content delivery in its strategy. The platform wants its suggestions to be more reliable than one’s close friend, based on tracking the user’s unique preferences and viewing habits. Addressing the churn is a daily commitment for Netflix’s AI technologies: that’s how often the algorithm updates the stream of releases and personalized suggestions. Personalization doesn’t just affect the kind of content that is suggested or its order, but also the presentation, down to the style of movie posters that are adjusted to the individual’s tastes.
Netflix Originals: Assembling a reliable library of content
Since 2019, the company has been growing its production capabilities and heavily investing in original shows and movies that respond to trends and preferences across different regions. Over time, the scale of Netflix’s landscape has become increasingly global, with their productions expanding and appealing internationally. The subscriber growth is driven organically, through the popularity of both local and international titles. Releasing whole original seasons at once allows Netflix to leverage and capitalize on the viewers’ binge-watching habits that the company may have fostered and popularized in the first place.
Data analytics: Leveraging the power of big data
Data science is a factor in a few of Netflix’s priorities we’ve discussed. Netflix naturally suggests content based on the large datasets it’s able to track and collect from user activity, such as watch time or engagement. Another key metric is the drop-off points: the moments in a show or movie when viewers tend to switch it off. Optimization for viewers’ preferences is also possible through more direct experimentation and A/B testing, which are widely used at Netflix for scientific insights that set new features up for success across the funnel, from sign-up to content promotion tactics. Besides tracking and studying viewing habits, Netflix also analyzes market trends and makes its license acquisition decisions based on data. The ultimate goal is to optimize investment in TV shows, movies, and series that will strengthen the Netflix content library and thus achieve subscriber retention.
Global expansion: The goal driving the solution
Since its first strategic forays into other English-language markets in 2010, Netflix has become available worldwide, reaching viewers in 190 countries and counting. Its approach to diverse markets has been to broaden original programming selections in more and more markets and invest in localization for more access to diverse and targeted media. Localization on the platform means that the content library is available in multiple languages through dubbing, subtitling, and closed captioning. Netflix’s global expansion reflects its leadership role in the streaming and entertainment industry, ensuring its lasting position as a key player.
Ad-supported subscriptions: Growing the range of tier options
The video streaming market was experiencing tremendous challenges through the COVID-19 pandemic uncertainties and growing expenses, in the first two quarters of 2022. As a result, Netflix amplified its range by offering an ad-supported subscription, which attracted millions of new and past subscribers. Since then, a share of existing users have also switched to an ad-supported tier: having this option has potentially prevented a significant user churn from clients who couldn’t afford the ad-free subscription. The Advertising Video On Demand (AVOD) model may continue its expansion throughout Netflix’s markets. The co-CEO Ted Sarandos recently announced that varied AVOD tiers will be made available over time, in response to a market that’s hungry for hybrid delivery models. Options around subscription sharing outside one’s household, for instance, have also been adjusted in some markets to meet the demand. As Netflix remains committed to refining its pricing to engage audiences, these tiered options are used in service of engagement and churn rate mitigation.
Community Engagement and Social Impact
Netflix is actively involved in the social issues and cultural discourses that are relevant for their audiences. Their social justice gains were documented and analyzed in a 2021 partnership with the USC Annenberg Inclusion Initiative. According to the researchers, Netflix had made strides by growing the number of female leads and co-leads, compared to their own average 3 years prior and to the top industry flicks. Netflix initiatives such as their sub-companies like Strong Black Lead or the Netflix Fund for Creative Equity are on a mission to amplify authentic, diverse, and inclusive storytelling through cross-industry and multi-level partnerships that contribute to social change.
Strategic Partnerships and Collaborations: Seizing active leadership
The licensure acquisitions as well as co-productions rely on active partnerships that Netflix forges across the industry. Bringing networks onboard allows Netflix to seamlessly engage new viewers, for instance in the case of European streaming agreements with Deutsche Telekom or licensing some of the “rivaling” HBO titles through a deal with Warner Bros. Discovery. Other collaborations with studios and production companies have allowed Netflix as a distributor to maintain subscriber loyalty in an ecosystem that’s oversaturated with options.
Experimentation: Continuous innovation and learning by trying
Netflix has awed viewers with newsworthy and unique experiments in distribution and media formats, promoting risk-taking as part of its DNA. Consider the interactive storytelling that was employed in Black Mirror: Bandersnatch, allowing the viewer to make choices in the plot and reach completely different endings of the film. In original shows, Netflix has even moved away from the episode plot structure and most basic formatting, which had been developed decades ago with the traditional TV ad schedule in mind. All these innovations and more are rapidly changing the way viewers experience entertainment and what they expect from releases in this generative era.
Flexibility: Adapting to the market
From the closure of its DVD division to the adaptations in the 2022 market challenges that ensured Netflix’s position as the market leader – the way the company reacts to challenges is often one for the business history books. Whether it’s changing the subscription options, partnering with competition, or involving world-class scientists in assessing the steps the company is taking for progress, Netflix leads the way for the media and distribution industry by attempting to predict and plan for challenges that topple some companies that are less adaptable.
Content localization: Globalizing the media supply
Adapting content across cultural and linguistic divides is a major opportunity and challenge for a global media company like Netflix. The 2024 success of Parasyte: The Grey hinged on strategic localization for diverse markets. In its first week of release, this Korean adaptation of a Japanese manga became the most-viewed non-English language show in 68 countries. Netflix makes localized video accessible by offering a range of translation options, from dubbing to subtitles in multiple languages and closed captioning of the original. This allows users to select their preferred method and lets even the most niche content reach its audience across language and cultural barriers.
End-to-end AI Localization
When discussing localization as a key tool for viewer acquisition and retention, it’s essential to consider AI-powered solutions that make video content available to global audiences.
Dubformer’s solution stands out for offering dubbing with an AI-generated and human-curated approach. This collaboration ensures accurate professional translation that maintains cultural and linguistic nuances, as well as careful mixing with broadcast-quality sound. The AI solution also generates natural-sounding voices that resemble the original speakers’ voice.
Dubformer leverages its in-house stack in end-to-end solutions, meaning that the partner sets the requirements for localization and receives a complete, quality-controlled result. The two solutions, depending on the customer’s needs, are:
- AI-powered dubbing into 70+ languages with over 1000 diverse voices
- AI subtitles and closed captions
The AI dubbing solution’s futuristic reach in video localization has allowed businesses to unlock new monetization opportunities, dramatically cut costs, and optimize the speeds. Speak with the team about the objectives that AI-driven solutions could help achieve! And if you represent an LSP or post-production studio that wants to be an early AI adopter, make sure to explore Dubformer’s current partnership offer.
