netflix product case study

Netflix Product Strategy: A 2020 Case Study

Gibson Biddle

Previous VP of Product at Netflix.

Table of Contents

Netflix was the world’s largest streaming service in 2020 with over 193 million subscribers and climbing. Software as a service (SaaS) companies took notice and wanted in on the secret sauce to Netflix’s product strategy.  

What was their secret to onboarding new users and customer success?

I’m going to share a few models to help you define your product strategy. Each of these models will be brought to life with a mock 2020 articulation of Netflix's product strategy .

But First: How Netflix Started

Netflix’s product vision began with a simple goal – to get big on DVD. When Netflix started out, they were a DVD rental company, and customers had DVDs delivered to them via postal services. Then, the company’s vision evolved to become a leader in the streaming market. Going digital enabled Netflix to expand worldwide. Having achieved all of the above, Netflix is currently placing a strong focus on original content.

What is a Product Strategy?

Product strategy is a key part of product-led growth (PLG) . It’s a plan that helps your company establish a specific product vision and how teams work together to successfully achieve it. 

Before we begin to explore Netflix’s product strategy, it’s important to understand why product strategy is so important and necessary. 

Firstly, a strategic product plan helps us to communicate an inspired vision of the future . It’s one thing to have an idea in your head, but you need the right strategies in place to help communicate that vision to others.

Secondly, combining innovation and invention is no easy task. Inventing new solutions and features can be chaotic, and it’s almost impossible to be innovative without any chaos. However, products change, and company decisions cannot happen at random. There must be discipline, and a product development strategy is effective at blending these two forces.

A product development strategy is about forming hypotheses to what I call the DHM model . In other words, you need it to delight customers and do so in a margin-enhancing way. 

Finally, you need a product strategy to help facilitate prioritization . We must prioritize some things over others, and having a strategy in place can help you to do that while also communicating a plan.

As product leaders, we can do anything, but we can’t do everything . 

3 Product Strategy Frameworks 

A product strategy framework is a guiding light for every department in your SaaS company. I want to briefly introduce three models for product strategy because I’ll be sharing (in later sections) how to put each to use in the context of Netflix’s 2020 product strategy. 

Here are three models (or frameworks ) to define your product strategy:

• Get Big, Lead, Expand (GLEe) model is a product strategy model that helps provide a longterm vision. It’s about growing the company to get big in its first 5 to 10 years and then expanding into different chapters of growth later. 
• Grow, Expand, Monetize (GEM) model helps different departments like marketing, finance, and Product teams to align with each other. How do you prioritize growth, expansion, and monetization?
• Delight, Hard to Copy, Monetize (DHM) model is about delighting your users in hard-to-copy ways.  

The purpose of these models includes: 

• Encourage people to think long-term
• Build cross-functional alignment
• Help people to form hypotheses to compete long-term 

Netflix’s Product Strategy Framework: DHM

If you’re a product leader, like Netflix in 2020, your main job is to delight customers in hard-to-copy margin-enhancing ways.

So, how did Netflix’s product leaders achieve this?

Netflix uses a DHM framework.

The company offers customers a very convenient service with a wide selection of movies and TV shows they can stream instantly anytime, anywhere. Customers can navigate Netflix’s selection very easily, and they get a lot of value for their money. Plus, Netflix offers customers a range of high-quality and entertaining original content.

How Netflix’s Product Strategy Increases Profits

A key part of Netflix’s product strategy is to increase profits so they can reinvest in making an even better product in the future. I refer to this as margin-enhancing and Netflix effectively increases profits in various ways.

Let’s take a closer look at the last point in the graphic above [– right-size original content investment. 

Since Netflix wants to offer a wide range of movies and TV shows to suit all types of tastes and preferences, the company likes to invest in original content. However, they want to pay the right amount for this content. 

To do this as accurately as possible, Netflix predicts how many people will watch a certain TV show or movie and then line up the cost of investment with their prediction.

For example, Netflix predicted that 100 million people would watch their original series Stranger Things . Therefore, they were willing to invest $500 million in that series. The series Bojack Horseman was predicted to gain 20 million viewers, so the right-size investment in that show was estimated to be $100 million.

What Made Netflix’s 2020 Product Strategy Hard to Copy

In 2020, Netflix wasn’t the world’s biggest streaming service for nothing. It was very hard for other companies and streaming services to copy what Netflix did, and that made it difficult for competitors to compete.

Netflix is a trusted brand. You can trust Netflix to keep your personal details private. Their brand promise is “movie enjoyment made easy,” and they achieve this by providing viewers with personalized service and the freedom to watch on almost any device with an internet connection.

Here’s why Netflix is hard to copy:

• Unique technology
• Network effect 
• Economies of scale

The brand promise of Netflix is movie enjoyment made easy. The company is a movie subscription service that delivers fast, easy entertainment in a friendly, straightforward way. 

Netflix Product Team’s Priorities

The product team at Netflix prioritizes monthly retention as the company’s high-level engagement metric. The team prioritizes other metrics too, including growth and monetization.

When the COVID pandemic hit in 2020, movie theaters were closed, and more people had free time at home. The company’s product team focused on key high-level product strategies (see below):

Here’s an example of the Netflix 2020 rolling roadmap, which shows how Netflix is implementing each strategy every quarter:

Netflix Case Studies

Now, let's look at some ways Netflix was able to win their users' attention by offering additional products.

Case Study 1: Netflix Party

Netflix Party (now Teleparty ) is a Chrome extension app that has become increasingly popular since COVID-19. It allows users to watch the same movie at the same time. They can even chat with each other while watching a movie or TV show. 

In an isolated time, such as a lockdown during the pandemic, many people enjoyed using this Chrome extension to watch movies with friends and family long-distance.

But is this an idea that Netflix should execute itself?

In the past, Netflix has tried a few variations of social experiments, including Friends in 2009, Xbox Party Mode in 2010, and Tell a Friend in 2018. All three were killed off because not enough people used the features.

However, Netflix Party has proven to be quite a success. In 2020, the app grew from 500 thousand to one million in just 60 days and acquired 10 million downloads. This data shows a substantial proof of concept, making it a possible worthwhile investment for Netflix. But the question remains – will this delight in hard-to-copy, margin-enhancing ways?

Well, this extension is hard to copy, and it would take competitors years to mimic something of this scale. It has the potential to enhance profits via word-of-mouth and increase retention. 

Case Study 2: Auto-Cancel Inactive Members

Should Netflix auto-cancel inactive members ?

In 2020, one-half percent of Netflix members hadn’t used the service in the last 12 months. However, those members were still paying for the service despite rarely using it.

Some might argue that a better alternative would be to send those members an email notification alerting them to the fact they’ve been inactive for so long. The email could say something like, “Would you like to cancel?” Then, the user could decide whether they wanted to continue paying for the monthly subscription or cancel their membership.

If members say no, then their service would continue as normal. If they say yes, then their membership would be canceled. However, what happens to the members who don’t respond? Should their membership be auto-canceled?

In 2020, if Netflix were to auto-cancel all of the inactive members, the company would lose $100 million. Clearly, introducing the auto-cancel option was not a great way to enhance profits, as the company would be losing millions of dollars each year. But what about the delight and hard-to-copy side of their product strategy?

Offering the auto-cancel feature for inactive users may delight customers since Netflix automatically stops payments. The user could always rejoin if they choose to do so.

Auto canceling inactive Netflix users, in my opinion, would be a worthwhile strategy for Netflix to implement and here’s why:

I think that product teams and product leaders can learn a lot from Netflix’s winning 2020 product strategy, which can help you make more strategic day-to-day decisions and implement product strategies that will help you reach your vision and goals.

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A Case Study on Netflix’s Marketing Strategies & Tactics

As the spread of COVID-19 has affected most industries and economies worldwide, people have been forced to stay contained at home to prevent the spread of coronavirus. People have also been bored to death as they have nothing to do.

In this locked-up scenario, your best partner could be your Netflix account which contains thousands of interesting movies, series, and shows. We were discussing which brand to take up for this week’s case study, and then one of our team members got an idea, let’s take the famous OTT platform Netflix which has managed to entertain a large population in no time.

Today, we are going to discuss the story of a platform that is providing us streaming services, or as we call it video-on-demand available on various platforms- personal computers, iPods, or smartphones. Netflix cut through the competitive clutter and reached out to its targeted audience by curating some interesting  brand communication strategies  over the years.

Let’s get into the success story of Netflix’s Journey.

Netflix was founded on August 29, 1997, in Scotts Valley, California when founders Marc Randolph and Reed Hastings came up with the idea of starting the service of offering online movie rentals. The company began its operations of rental stores with only 30 employees and 925 titles available, which was almost the entire catalog of DVDs in print at the time, through the pay-per-rent model with rates and due dates. Rentals were around $4 plus a $2 postage charge. After significant growth, Netflix decided to switch to a subscriber-based model.

In 2000, Netflix introduced a personalized movie recommendation system. In this system, a user-based rating helps to accurately predict choices for Netflix members. By 2005, the number of Netflix subscribers rose to 4.2 million. On October 1, 2006, Netflix offered a $1,000,000 prize to the first developer of a video-recommendation algorithm that could beat its existing algorithm Cinematch, at predicting customer ratings by more than 10%.

By 2007 the company decided to move away from its original core business model of DVDs by introducing video on demand via the internet. As a part of the internet streaming strategy, they decided to stream their content on Xbox 360, Blu-Ray disc players, and TV set-top boxes. The ventures also partnered with these companies to online streaming their content. With the introduction of the services in Canada in 2010, Netflix also made its services available on the range of Apple products, Nintendo Wii, and other internet-connected devices.

In 2013, Netflix won three Primetime Emmy Awards for its series “House of Cards. By 2014, Netflix made itself available in 6 countries in Europe and won 7 creative Emmy Awards for “House of Cards” and “Orange Is the New Black”. With blooming streaming services, Netflix gathered over 50 million members globally. By 2016, Netflix was accessible worldwide, and the company has continued to create more original content while pressing to grow its membership. From this point, Netflix was unstoppable and today it has a worldwide presence in the video-on-demand industry.

Business Model of Netflix

The platform has advanced to streaming technologies that have elevated and improved Netflix’s overall business structure and revenue. The platform gives viewers the ability to stream and watch a variety of TV shows, movies, and documentaries through its software applications. Since Netflix converted to a streaming platform, it is the world’s seventh-largest Internet company by revenue.

Now, let’s have a look at the business model of Netflix. 1. Netflix’s Key Partners:

• Netflix has built more than 35+ partners across the world. They have partnered with different types of genres for subscribers to select from and enjoy watching.
• Built alliances with Smart TV companies like LG, Sony, Samsung, Xiaomi, and other players in the market.
• Built alliances with Apple, Android, and Microsoft platforms for the purpose of converting business leads from mail-in-system to streaming.
• Built alliances with telecom networks like Airtel, Reliance Jio, and Vodafone.

2. Netflix’s Value Proposition:  Netflix aims to provide the best customer experience by deploying valuable propositions. Here is how the online streaming brand strives to do so:

• With a 24*7 streaming service, users can enjoy shows and movies in high-definition quality from anywhere whether they are at home or traveling.
• Users get access to thousands of movies and tv shows and Netflix Original movies or shows.
• New signups can avail of a 30-day free trial and have the option of canceling their subscriptions anytime.
• Receive algorithmic recommendations for new items to watch.
• At Netflix, users have the flexibility to either turn on notifications and suggestions or keep them switched off.
• Netflix’s “user profiles” give leverage for users to personalize their user accounts and preferences. The User profiles allow the “admin-user” to modify, allow or ever restrict certain users.
• Sharing account options is one of the rarest features a movie platform can provide. Sharing accounts feature on Netflix allows spouses, friends, or even groups to share an account with specific filters and preferences already set.

3. Netflix’s Key Activities

• Maintain and continue to expand its platforms on the website, mobile apps
• Curate, develop and acquire licenses for Netflix’s original content and expand its video library.
• Ensure high-quality user recommendations to retain the customer base
• Develop and maintain partnerships with studios, content production houses, and movie production houses.
• Operate according to censorship laws. Netflix always promotes and operates within the boundaries of censorship.

4. Netflix’s Customer Relationships:  Netflix has designed a customer-friendly platform that offers:

• Self-Setup:  Netflix platform was originally designed to ensure that it is simple and easy to use. Developers of the website ensured to associate elements and themes that serve, promote friendliness, and provide self-setup.
• Unbelievable Customer Experience:  Customers can solve their queries by reaching the Netflix team through the website portal, emailing inquiries, and directly reaching the representative on call or live chat.
• Social Media Channels:  Netflix also engages its audience through social media platforms such as Facebook, Instagram, and LinkedIn. It advertises and offers deals to gain high attraction customers and enhance its customer base.
• Netflix Gift Cards:  Netflix offers its customers special promotional discounts and other gift cards as a part of their subscription plan.

Netflix’s Revenue Model

Netflix gained major popularity when the platform launched online streaming services. Let’s have a look at how the platform earns.

• Subscription-Based Business Model:  Netflix offers monthly subscription fees with three different price options basic, standard, and premium plan. Today, Netflix has over 125 million paid members from over 190 countries and generates $15 billion annually.
• Important partnerships:  Built alliances with a wide range of movie producers, filmmakers, writers, and animators to receive content and legally broadcast the contents required by aligning licenses.
• Internet Service Provider:  One of the most influential tactics implemented was its ability to build alliances with a wide range of movie producers, filmmakers, writers, and animators to receive content and legally broadcast the contents required by aligning licenses.

Netflix was able to establish a well-reputed image worldwide and increased its customer base day by day. When it comes to giving competition, the brand has devised various digital marketing strategies and has gained wide popularity on digital media platforms. With the help of the best digital marketing services, they have kindled the excitement and craze in the people to travel and host.

Digital Marketing Model of Netflix

In less than 4 years, Netflix has gathered a major share of the Indian market. Today a majority of households in India subscribe to Netflix, and that number is expected to rise this year and further in the years to come. The product is designed so well, that you remain engrossed in the content they deliver. They adopted top digital marketing strategies. Consult the best brand activation agencies. Further, let’s talk about a few of the digital marketing principles that Netflix has successfully implemented to gather customers.

1. Personalised Content Marketing:  People love using Netflix because they get a broad range of things to watch. Netflix’s library of TV shows and movies from all over the world is there for consumers to choose from at any time.

The reason that Netflix won the personalization game is that its advanced algorithm continues to rearrange the programs overtime on the basis of your viewing history. Hire some of the best  performance marketing agencies  for personalized content.

2. Website Development:  Netflix has designed its website with a user-friendly interface that allows customers to rate TV shows and movies, which then goes through Netflix’s algorithm to recommend more content they might enjoy. With the onsite optimization for the website, they have optimized each and every page for enhanced customer experience.

To easily get in the minds of customers, they have optimized their website for content by title, by an actor’s name, or even by a director’s name. By leveraging the  best website development services , they added a host of personalization features to their website with clean looks no matter which platform you are using.

3. Email Marketing:  Netflix tapped on email marketing techniques as a part of its digital marketing strategy and as a key component of customer onboarding and nurturing. New Netflix customers receive a series of emails that make content recommendations and encourage new users to explore the platform. Netflix marketers invest hours in building creative email marketing campaigns designed to engage and delight recipients. With the help of the  best email marketing services , they continue to enhance the experience of the customers

4. Search Engine Optimization:  Netflix makes use of search engine optimization services for the sake of improving organic research and establishing its brand presence. The brand aimed at the  best search engine optimization services  to drive traffic organically and adopted both on-page and off-page SEO strategies. They optimized their content with potential keywords that show up high in search results. They also tapped the strategy of International SEO to gain organic leads from the worldwide stage.

5. Social Media Optimization:  Today, social media platforms have become an integral part of digital marketing strategy. If you want to connect with your audience in real time, then it is the best platform to establish your brand image. As social media plays a vital role in the lives of people, Netflix decided to leverage the  best social media optimization services  that made them earn billions. They made use of the following platforms:

Through  creative social media optimization strategies,  Netflix has garnered more than 61 million Facebook followers. In just one year, the brand added 11 million followers to its account. Netflix posts nearly 90% of videos and the rests images. Videos featured on Netflix’s

Facebook pages are typically clips from interviews with the actors from the upcoming movies, clips from the upcoming movies and TV shows, offering audiences a sneak peek into what’s in store for them. Besides videos, the OTT platforms share images, GIFs, funny memes, and simple text posts featuring questions about current movies and TV shows.

Netflix carries 19 million followers. The majority of Netflix’s posts on Instagram are images, post scenes from TV shows featuring engaging captions to get a conversation going, and behind-the-scenes clips and interviews with actors. A recent video featured a behind-the-scenes bloopers video from the set of Stranger Things, which garnered 1.2 million views and almost 3,000 comments. Netflix uses a simple approach to posting, with most posts not featuring any hashtags at all.

Netflix carries 6.8 million followers on Twitter and has tweeted over 30,000 times. Netflix is renowned for its witty replies and comebacks on Twitter, and the brand tweets an average of 14 times a day. This shows just how important engagement is for the brand and how much it values brand awareness. These are the digital marketing techniques that the famous OTT platform adopted from time to time to the subscribers’ engagement and retention. Hence it has yielded high returns for their business.

Campaigns of Netflix

1. Netflix: The Spoiler Billboard:  Netflix’s new campaign uses spoilers of its most popular shows, including Stranger Things, Money Heist and Narcos, to promote social distancing amid the COVID-19 crisis, and while the effort is getting a lot of buzzes, it’s a fake.

2. FU2016:  To launch season four of the political drama House of Cards, Netflix worked with BBH New York and built a fake presidential campaign around the show’s lead character Frank Underwood. The campaign became the top trending topic on Facebook and Twitter during the debate, and it won a Grand Prix in the Integrated category at Cannes in 2016.

3. The Censor’s Cut:  The streaming company wanted to advertise Narcos Mexico in Thailand. Netflix worked with JWT Bangkok and cut around the offending images within each scene, leaving a clear enough outline that anyone could still identify what had been removed. The campaign achieved the opposite effect of what censorship is supposed to do by reaching 34 million people.

Conclusion Netflix is a rare example of a company doing everything right. From its branding and content right down to its business model and product, the company has always excelled at making smart, strategic decisions. With its large market share and focus on numbers, Netflix has managed to develop a deep understanding of its audience that very few others have. With this knowledge, paired with a strong, affordable product, there’s no limit to what this brand can do in the future.

Reach out to  Digital Marketing Agency for the best marketing strategies among different marketing platforms.

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Case Study: Netflix

Founded in 1997 by Reed Hastings and Marc Randolph, Netflix has transformed the entertainment industry by offering a subscription-based streaming service that provides a wide range of movies, TV shows, and original content. Central to its monumental success is a sophisticated product analytics strategy that empowers the company to deliver personalized content recommendations, optimize user engagement, and continually refine its platform. This comprehensive case study dives deep into how Netflix expertly wields product analytics to shape its decisions, elevate user experience, and maintain its position as an unrivaled leader in the streaming landscape.

Business Context

Netflix’s core objectives revolve around retaining subscribers, delivering high-quality content, and expanding its global user base. To attain these aims, the company employs a multifaceted product analytics strategy that encompasses user behavior analysis, content recommendation algorithms, user engagement optimization, content investment strategies, A/B testing , and global market insights.

User Behavior Analysis

Netflix is unparalleled in its ability to dissect user behavior data to derive insights. The platform meticulously analyzes viewing patterns, search queries, and interaction data. By unraveling this trove of data, Netflix gains deep insights into user preferences, content consumption patterns, binge-watching behaviors, and even the effectiveness of its user interface. This analysis empowers Netflix to make informed decisions about content acquisition, original programming, and user experience enhancements.

Content Recommendation Algorithms

At the core of Netflix’s triumph is its cutting-edge content recommendation system. This system leverages the power of product analytics to analyze user data, encompassing viewing history, genre preferences, time spent on titles, and user ratings. Armed with this data, Netflix serves highly personalized content suggestions, enabling users to discover shows and movies catered to their unique tastes. This personalized touch bolsters user engagement and significantly contributes to subscriber retention .

Optimizing User Engagement

Netflix expertly employs product analytics to fine-tune user engagement metrics , including watch time, session duration, and content consumption behaviors. For instance, the auto-play feature that seamlessly cues the next episode aligns with user interactions and content preferences data. By optimizing these engagement-enhancing attributes, Netflix ensures users remain engrossed in the platform, thereby fostering binge-watching tendencies.

Content Investment and Creation

Product analytics plays a pivotal role in shaping Netflix’s content investment decisions. The platform assesses viewer demographics, content ratings, viewership trends, and even audience responses to specific genres. This analytical approach guides strategic content investments, enabling Netflix to acquire or produce content that resonates closely with user preferences. The company identifies genre trends and potential gaps in its content library by delving into the data, ensuring a comprehensive and appealing catalog.

A/B Testing for User Experience

Netflix embraces A/B testing as a powerful tool to enhance its user interface and overall experience. Various iterations of the user interface, navigation menus, and content presentation are rigorously tested. The resulting insights guide design decisions to create an intuitive, user-friendly interface that optimizes content discoverability and engagement, thereby enhancing the overall viewing experience.

Global Expansion Strategy

Product analytics powers Netflix’s global expansion and ensures it resonates with diverse markets. The company analyzes various regions’ viewing habits, content preferences, and cultural nuances. Armed with this data, Netflix tailors its content offerings and marketing strategies to cater to local audiences, ensuring its relevance and appeal transcend geographical boundaries.

Impact and Benefits

Netflix’s strategic utilization of product analytics leads to a multitude of impactful benefits

1. Personalized Viewing Delight Precise content recommendations based on user behavior analysis enhance user satisfaction and engagement, directly impacting subscriber retention rates.

2. Informed Content Investments Analytics-driven content acquisition and creation decisions result in a diverse content library that caters to a wide spectrum of viewer preferences.

3. Heightened User Engagement Refined user engagement features, informed by data insights, lead to increased watch time and session duration, a pivotal metric for a streaming service’s success.

4. Continuous Evolution A/B testing and user behavior analysis drive continuous improvements to the platform’s user interface, ensuring an intuitive and pleasurable viewing experience.

5. Global Relevance Product analytics empowers Netflix to customize its offerings to diverse markets, solidifying its status as a global entertainment juggernaut.

Netflix’s indomitable position as a global streaming behemoth directly results from its strategic utilization of product analytics. Netflix continually raises the bar by dissecting user behavior, refining content recommendations through data-driven insights, optimizing user engagement through meticulous A/B testing, driving content investments informed by audience preferences, and aligning offerings with global market nuances. In a landscape where streaming trends evolve and competition intensifies, Netflix’s unwavering commitment to data-driven decision-making positions it ideally to adapt, innovate, and thrive as a trailblazer in the ever-changing realm of global entertainment.

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Netflix’s Bold Disruptive Innovation

• Adam Richardson

Every now and then, the business world presents us with a lab experiment that we can observe in realtime. Netflix’s announcement that it is splitting off its DVD-by-mail business from its streaming business is just such an experiment. The DVD business will now go by the name Qwikster, and the streaming business will stay under […]

Every now and then, the business world presents us with a lab experiment that we can observe in realtime. Netflix’s announcement that it is splitting off its DVD-by-mail business from its streaming business is just such an experiment. The DVD business will now go by the name Qwikster, and the streaming business will stay under the Netflix brand. It is Clayton Christensen ‘s innovator’s dilemma incarnate, and Netflix is very publicly trying to solve it. Like its 60% price increase did earlier this year, this move is understandably causing consternation amongst some customers. It’s a bold move, one that will cost them in the near term, but Netflix I’m sure has done the calculus and is looking at the endgame 5-10 years out, not 5-10 months.

• Adam Richardson is a creative director at the global innovation firm frog design and the author of Innovation X: Why a Company’s Toughest Problems Are Its Greatest Advantage . His background combines experience in product development, product strategy, and customer research.

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Gibson Biddle shares customer-centric product strategy lessons from Netflix

Whether you binge-watched Tiger King, The Queen’s Gambit, or The Baby-Sitters Club, chances are that Netflix was a defining part of your pandemic life (and probably the Before Times, too). With 220 million members worldwide, Netflix has become a household name, (virtual) watercooler conversation fodder, and a familiar part of our daily routines.

But it didn’t start that way. In its early days, Netflix was a DVD rental site with just 2,600 movies in its catalog. 

Telling the story of Netflix involves understanding how the company prioritized personalization, says Gibson Biddle, a Product Advisor and former VP of Product at Netflix. 

Gibson recently shared his insights into customer-centricity at Netflix at the 2021 Product Excellence Summit. Find the highlights below or head here to watch the entire presentation .

Using the DHM model to drive product strategy

The product leader’s job, says Gibson, is to D elight customers in H ard to copy, M argin-enhancing ways. This approach is known as the DHM model. It essentially means that you want to help your company make more money so you can invest in building an even better product in the future.

Product leaders must walk the line between delighting customers and making a positive impact on margins. As Gibson puts it, “Netflix customers might say, ‘Just charge me half the money. That would be delightful!’ But that’s not going to support enough profit to make the product better.” 

So simply slashing prices doesn’t fit the DHM model. But what about creating a “perfect” experience?

Creating the perfect new release experience

Imagine it’s 2005. Streaming doesn’t exist and no one has even heard the term “binge-watching” yet. Netflix is sending DVDs to around 1 million members through the mail. Customers create a queue of movies they want to rent, so when their first choice isn’t available, they simply get their second, third, or fourth choice. 

When Netflix surveys customers about how to improve the service, one of the top answers is shortening the amount of time it takes to get new releases. Due to high demand, most customers have to wait several weeks (or more) to get the new releases at the top of their queues.

This seemed like a promising opportunity for delighting customers, but it was unclear whether it would enhance margins, so Netflix set up a test. They created a group of 10,000 customers who would get a “perfect new release” experience. Any new release they requested would be put in the mail to them the next day. 

The big question they were trying to answer was: Will retention improve as a result? Would the enhanced experience be a big enough change to prevent customers from canceling their subscriptions?

The answer was… yes. There was a slight dip in the number of customers who canceled. Cancels went from 4.5% in the control group to 4.45% in the test group. Netflix calculated that if they rolled this change out to all 1 million customers, it would prevent 5,000 customers from churning. “Saving” these 5,000 customers was worth $1 million to the company. They calculated this number based on the number of customers (5,000) x lifetime value of customer ($100) x word of mouth factor (2). 

But, in order to acquire the inventory that would allow them to roll out the “perfect new release” experience at scale, it would cost the company $5 million. While this enhanced experience might delight customers, it would actually be harmful to the company’s margins. Ultimately, Netflix chose not to roll out the perfect new release experience.

Putting consumer science into practice

“Consumer science is really a fancy way of saying ‘the scientific method,’” explains Gibson. You start with a hypothesis, run experiments to collect data, and then analyze the results to come up with a conclusion. 

Getting explicit data through the Star Bar and Ratings Wizard

To look at an example of how Netflix put its personalization product strategy into practice, Gibson takes us back to Netflix in 2005 again.

“We were doing a sucky job,” he says. “We put expensive new releases, which we couldn’t deliver, on the home page. Netflix First was our first experiment in original content, which failed in the DVD era, and we used the word ‘recommendations,’ which is a bad idea because it’s not human language.” 

Their product strategy when it came to personalization had four main hypotheses: they would get explicit data by asking customers to rate lots of movies, implicit data (when streaming became possible), matching algorithms, and higher quality movies. 

The first strategy, collecting explicit data, relied on asking customers to rate their recent rentals to “reveal” two movies they’d love. Their goal was to get customers to rate at least 50 movies. And it worked! 

The percentage of customers who rated at least movies steadily grew, reaching a high of 28% in 2010, only dipping in 2011 when streaming began to take off. 

Another tactic they tried out was the Ratings Wizard. When customers clicked on the “Movies You’ll ♥” tab, they’d see the following message: “The more you rate, the better we’ll do at finding movies you’ll love.” 

A case study to consider: Auto-cancel inactive members

Flash forward to the present day. Eddie Wu is a Netflix product manager focused on non-members. He noticed that 0.5% of members haven’t used the service in the last 12 months. They’re getting no value out of the service, but continuing to pay for it each month.

Eddie calculated that auto-canceling these inactive members would lead to a $100 million annual loss, but would the benefits outweigh that? They might, if they focused on the “delight” and “hard-to-copy” parts of the equation. 

What would you choose to do?

Ultimately, Netflix launched this feature, believing that the $100 million loss would be balanced out by the positive impact on their brand. And so far, the bet seems to have paid off. Netflix has gotten positive press and tapped into feelings of goodwill among the general public as a result.

Gibson says the key takeaways from this case study are that brand is a hard to copy advantage. It was worth “spending” $100 million because it wasn’t really money they had earned. And it was worth it to do the right thing. Plus, it was a low-stakes, reversible decision. They could always flip the switch the other way if necessary.

All you need is a little patience

One ingredient that’s necessary for companies that would like to apply the tactics Gibson shared? Patience. “ It takes a long time to develop all this consumer insight and learn to delight in these hard-to-copy, margin-enhancing ways,” says Gibson. Part of the key to Netflix’s success is that they’ve now had many years to collect relevant data from their customers and enhance the personalization of their product. 

If you’re looking for ways to improve your own customer-centricity, Gibson asks the following questions:

• Do you have access to existing data? Can you understand how you’re delivering customer and business value?
• Do you have access to qualitative data like usability and focus groups?
• Do you have access to survey, demographic, product quality, and NPS data?
• Are you A/B testing to measure change and keep an eye on delight vs. margin?
• Do you have a product strategy? Are you forming hypotheses?

Watch Gibson’s full presentation (and catch all the other actionable content from the Product Excellence Summit) here .

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Product management case studies - Netflix, Spotify, Slack and Airbnb

Case studies play a pivotal role in product management, serving as valuable tools to understand real-world scenarios, learn from past successes and failures, and shape future strategies. 🎯💡

The Importance of Case Studies in Product Management 🔍📚🚀 ​

In this article, we explore the significance of case studies in product management and how they provide actionable insights, inspire innovation, and drive effective decision-making. So, let's dive in and discover why case studies are an indispensable asset for product managers! 🕵️‍♂️💼💡

🧐 Gaining Insights from Real-World Scenarios ​

Case studies offer a glimpse into real-life product management experiences, showcasing the challenges faced, strategies implemented, and outcomes achieved. They provide an opportunity to learn from industry leaders and understand how they tackled complex problems, made critical decisions, and achieved success. 💡🎓📊

💡 Inspiring Innovation and Creativity ​

By analyzing case studies, product managers can uncover innovative approaches and creative solutions implemented by successful companies. These success stories can serve as a catalyst for fresh ideas, spark creativity, and inspire new ways of thinking. 🚀💡💭

🚦 Avoiding Costly Mistakes ​

Case studies not only highlight success stories but also shed light on failures and pitfalls encountered by organizations. By studying these failures, product managers can identify common pitfalls, avoid costly mistakes, and make informed decisions based on lessons learned from others' experiences. 🚫💸🚧

🔄 Adapting Strategies to Different Contexts ​

Each case study presents a unique context, market dynamics, and customer segments. By examining a range of case studies, product managers can gain insights into how strategies and approaches differ based on industry, company size, target audience, and other factors. This adaptability is crucial in developing customized strategies for their own products and markets. 📊🌍🔀

🌟 Validating and Communicating Product Decisions ​

Case studies serve as concrete evidence to validate product decisions and gain stakeholder buy-in. By referencing successful case studies, product managers can showcase the effectiveness of their strategies and build confidence in their decision-making process. This can be particularly valuable when navigating complex organizational structures or addressing skeptics. 💪✅🗣️

📈 Driving Continuous Improvement ​

Through case studies, product managers can identify areas of improvement, spot trends, and drive continuous innovation. By analyzing successful case studies, they can identify best practices to emulate and incorporate into their own product management processes. This constant quest for improvement ensures staying ahead in an ever-evolving market. 🔄📈💡

So, whether you are a seasoned product manager or just starting your journey, embracing case studies as a valuable resource can unlock invaluable insights, inspire innovation, and guide your product management decisions. 🎓🔍🚀

Now, let's delve into some captivating case studies and extract the pearls of wisdom they offer! 💎📚✨

Case Study 1: Netflix - Personalization and Content Recommendation ​

Netflix is a global streaming service that offers a wide range of movies, TV shows, and original content. One of the key challenges for Netflix's product management team was to enhance personalization and content recommendation to improve user engagement and retention.

Challenges Faced: ​

• Content Diversity: With a vast library of titles across different genres and categories, Netflix needed to cater to diverse user preferences and ensure that each user discovered content tailored to their tastes.
• User Retention: Keeping users engaged and subscribed to the platform was essential for Netflix's long-term success in the highly competitive streaming market.
• Discoverability: With an ever-growing library, it was crucial for Netflix to help users navigate and find relevant content easily.

Product Management Strategies Implemented: ​

• Recommendation Algorithms: Netflix developed sophisticated recommendation algorithms that analyzed user viewing history, ratings, and behavior patterns to generate personalized recommendations. These algorithms leveraged machine learning and AI techniques to provide users with suggestions based on their individual tastes.
• Content Tagging and Metadata: Netflix invested in tagging and categorizing its content with rich metadata, including genre, subgenre, themes, cast, and more. This enabled the platform to create personalized content collections and improve search and discovery functionalities. Personalized Thumbnails: Netflix tested and implemented personalized thumbnails that displayed images relevant to individual users' preferences and viewing habits. This approach aimed to capture user attention and increase the likelihood of content selection.
• A/B Testing and Experimentation: Netflix conducted extensive A/B testing and experimentation to optimize the user interface, recommendation algorithms, and user experience. This iterative approach allowed them to continuously improve the platform based on data-driven insights.

Results and Lessons Learned: ​

• Improved User Engagement: Netflix's personalized recommendations and content discovery features significantly increased user engagement and the amount of time users spent on the platform.
• Enhanced User Retention: By consistently delivering content that aligned with individual user preferences, Netflix successfully retained users and reduced churn rates.
• Differentiation in the Market: The focus on personalization and recommendation algorithms helped Netflix differentiate itself from competitors and establish its position as a leading streaming service.

Case study 2: Spotify - Personalization and Discoverability ​

Spotify is a leading music streaming platform with millions of users worldwide. One of the key challenges for Spotify's product management team was to improve personalization and discoverability to enhance the user experience and increase user engagement.

• Content Overload: With a vast library of songs, playlists, and podcasts, Spotify users faced difficulties in discovering new content that aligned with their tastes and preferences.
• User Retention: Ensuring users stayed engaged and retained on the platform was crucial for Spotify's long-term success in a highly competitive market. Catering to Diverse Tastes: Spotify needed to cater to a wide range of musical genres and user preferences to provide a personalized experience for each individual user.
• Recommendation Algorithms: Spotify leveraged advanced recommendation algorithms to analyze user listening patterns, preferences, and behaviors. These algorithms provided personalized recommendations for songs, playlists, and podcasts based on individual user profiles.
• Discover Weekly and Release Radar: Spotify introduced personalized playlists like Discover Weekly and Release Radar, which curated a selection of new and relevant content for each user on a weekly basis. These playlists helped users explore new music and stay up-to-date with their favorite artists.
• User-Curated Playlists: Spotify empowered users to create and share their own playlists, fostering a sense of community and allowing users to discover music based on the recommendations of others with similar tastes.
• Collaborations and Exclusive Content: Spotify forged partnerships with artists, influencers, and podcast creators to offer exclusive content and collaborations. This enhanced the platform's discoverability and provided unique experiences for users.
• Enhanced Discoverability: Spotify's personalized recommendations and curated playlists significantly improved the discoverability of content for users, leading to increased engagement and satisfaction.
• Improved User Retention: By tailoring the user experience to individual preferences and providing fresh and relevant content, Spotify was able to retain users for longer periods, reducing churn rates.
• Differentiation in the Market: The focus on personalization and discoverability helped Spotify differentiate itself from competitors and solidify its position as a leading music streaming platform.

Case Study 3: Airbnb - Scaling Trust and Safety Measures ​

Airbnb is a global online marketplace that connects travelers with hosts offering unique accommodations. As the platform grew in popularity, ensuring trust and safety became a critical focus for Airbnb's product management team.

• Trust Concerns: Trust and safety were paramount for Airbnb's success. Instances of fraudulent listings, host-guest conflicts, and safety incidents posed a challenge in building trust among users.
• Regulatory Compliance: Airbnb had to navigate various legal and regulatory frameworks worldwide, ensuring compliance and addressing concerns related to housing regulations, taxation, and guest safety.
• User Experience: Balancing trust and safety measures without compromising the user experience was essential to maintain the platform's user-friendly nature.
• Verified Hosts and Guests: Airbnb implemented a verification process, encouraging hosts and guests to provide identity verification, social media profiles, and reviews from previous stays to establish trustworthiness.
• Ratings and Reviews: The product management team enhanced the ratings and reviews system, allowing users to share their experiences and provide feedback on hosts and guests. This helped establish accountability and transparency.
• Safety Measures: Airbnb introduced safety features such as secure messaging, 24/7 customer support, and a dedicated Trust and Safety team to address concerns promptly. They also implemented safety guidelines for hosts and guests.
• Regulatory Compliance: Airbnb collaborated with governments and local authorities to ensure compliance with regulations, providing transparency and addressing concerns related to housing regulations and taxation.
• Improved Trust: The implementation of verification processes, ratings, and reviews contributed to increased trust among Airbnb users, fostering a safer and more reliable community.
• Enhanced Safety: The introduction of safety measures and guidelines improved the overall safety of stays, addressing user concerns and reducing incidents.
• Regulatory Partnerships: Collaborating with governments and local authorities helped Airbnb navigate regulatory challenges and establish a legal framework for operating in various jurisdictions.

Case Study 4: Slack - Improving User Onboarding and Adoption ​

Slack is a widely popular collaboration and communication platform used by teams worldwide. As it gained traction in the market, Slack faced challenges in user onboarding and adoption.

• Low User Activation: Many new users signed up for Slack but struggled to fully activate and integrate the platform into their workflow.
• Lack of Engagement: Some users found the platform overwhelming or faced difficulty in navigating its various features, leading to low engagement levels.
• Competition and Alternatives: Slack faced increasing competition from similar collaboration tools, which prompted the need to differentiate and continuously improve its product.
• Enhanced Onboarding Experience: Slack's product management team revamped the onboarding process to provide a more guided and intuitive experience for new users. They introduced interactive tutorials, tooltips, and contextual help to help users understand key features and get started quickly.
• Simplified User Interface: The product management team identified and addressed pain points in the user interface, simplifying navigation and reducing clutter. They focused on improving the overall user experience and making it more intuitive for users to find and utilize the platform's functionalities.
• Integration with Third-Party Tools: Recognizing the importance of seamless integration, Slack's product management team worked on enhancing the platform's capabilities to integrate with popular third-party tools and services. This allowed users to connect their favorite apps and streamline their workflow within Slack.
• Improved User Activation: By implementing a more intuitive onboarding experience, Slack witnessed an increase in user activation rates. New users were able to grasp the platform's key features more efficiently, leading to higher adoption.
• Increased Engagement: The simplified user interface and improved navigation contributed to higher user engagement, as users found it easier to discover and use Slack's features.
• Competitive Edge: By prioritizing user needs and continuously enhancing the product, Slack maintained a competitive edge over alternative collaboration tools in the market.

Conclusion ​

In product management, case studies serve as valuable resources for gaining insights, inspiring innovation, and driving effective decision-making. By analyzing real-world scenarios, product managers can learn from successes and failures, adapt strategies to different contexts, and validate and communicate product decisions. Case studies provide actionable insights, guide product management practices, and ultimately contribute to the success of products and businesses.

So, whether you're a seasoned product manager or aspiring to be one, embracing case studies as a source of inspiration and learning will help you navigate the dynamic landscape of product management and drive impactful outcomes.

Remember, each case study provides a unique perspective and set of lessons, so explore a diverse range of case studies to expand your knowledge and sharpen your product management skills.

• 🧐 Gaining Insights from Real-World Scenarios
• 💡 Inspiring Innovation and Creativity
• 🚦 Avoiding Costly Mistakes
• 🔄 Adapting Strategies to Different Contexts
• 🌟 Validating and Communicating Product Decisions
• 📈 Driving Continuous Improvement
• Challenges Faced:
• Product Management Strategies Implemented:
• Results and Lessons Learned:

Table of Contents

Netflix target audience , what are the key principles of netflix marketing, marketing strategy of netflix, digital marketing strategy of netflix, 5 key takeaways from netflix marketing approach, conclusion , a case study on netflix marketing strategy.

Netflix was founded in 1997, offering online movie rentals with less than 1000 titles. Soon, it switched to the subscriber-based model, and in 2000 Netflix introduced a personalized movie recommendation system. By 2005 Netflix had over 4.2 million subscribers and started work on a video recommendation algorithm. And finally, in 2007, Netflix began its streaming services and original content creation. By 2016 Netflix had over 50 million subscribers; the story continues today as it is a worldwide presence in the video-on-demand industry. 

Become a Certified Marketing Expert in 8 Months

Netflix marketing strategy is undoubtedly a guide for digital marketers worldwide. It is a learning experience to know how this digital media streaming company outperformed all others in the market. 

Netflix's target market is young, tech-savvy users and anyone with digital connectivity. The audience of Netflix is from diverse age groups and demographics. 

However, most of the audience are teenagers, college-goers, entrepreneurs, working professionals, etc. Netflix aggressively works on content expansion and personalization to expand the user base. They separate the kids' and adults' audiences based on their maturity levels. 

Netflix is a fantastic example of an integrating marketing strategy . It is integrated, agile, and customer-driven to make the maximum impact. Netflix follows a customer-centric model to deliver a seamless experience. The platform follows integrated marketing for effective targeting and makes the best use of content marketing for data analytics. 

• Customer-centricity: Netflix focuses on creating a solid connection with its customers by engaging them personally and personalizing their viewing experience. They also use clever marketing tactics to get people to watch their shows.
• Integrated viewing experience: Multi-device and up-to-date no matter where you view it from, makes the experience combined.
• Innovation: Modern marketers must use data analytics to create experiences that delight consumers. Netflix uses customer data analytics to get content recommendations because it knows which movies its customers like to watch. For example, if a Netflix user likes Rocky, it will also offer them sports documentaries. As you manage your business, you, too, need to use data analytics for effective marketing and website optimization.  

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's marketing strategy is a surefire example of innovation and modern-day technology growth. The platform has been eager to bring the changes per market need or user demand. The evolution of the marketing tactics from time to time is one of the core reasons behind its success. 

Netflix proves that a brand can connect with customers easily through regular analysis and optimization. Simply put, Netflix's advertising strategy is full of agility, data-collection, user-centricity, personalization, and dedication. Major and minor brands can follow such a strategy and boost brand exposure and market value. 

Let's walk through 5 effective strategies of Netflix's advertising strategy that led them to the most disruptive business model. 

1. Use Personalized Content

Netflix is an excellent example of how personalized content can improve user satisfaction. Netflix knows what TV shows and movies its users like to watch. It uses this information to create customized recommendations for them. This allows them to find the content they enjoy without searching through many lists. It also ensures that users are always getting the latest and greatest content. This level of personalization is critical for online users because it enhances their experience and makes them more likely to return to a site in the future. 

2. Ensure Multi-mode Experience

Starting with a DVD service, Netflix's journey has been successful because of its multi-device strategy. You can open Netflix on TV, computer, smartphone, and tablet with seamless content continuity being watched. The company shows zero restriction in meeting the customers wherever required. Netflix follows both online and offline promotion strategies to boost user engagement. Be it any medium; their marketing strategy remains aligned wherever it can work. 

3. Blend Technology With Marketing Tactic

You wouldn't find two Netflix accounts with the same interface or suggestions. The recommendation shows order is as per user activity and ever-changing. They change the artwork frequently to add a sense of newness. Netflix puts modern-day technology to good use. The platform keeps on having new features to gain maximum engagement. Machine learning is a proven technology trend to transform marketing research to the next level. The blend of ML into advertising is what helps Netflix Marketing Strategy. 

4. Target Emails Like Any Other Marketing Channel

It is wrong to say or consider that email marketing is dead. Netflix is one solid example of a company making the most out of email marketing. They are one step ahead and pairing the email campaigns with machine learning systems. It helps gather more user data and preferences—further, the data segments into multiple user groups for precise and effective customer targeting. So, email marketing can introduce Netflix to new users and show relevant recommendations to the old users. One essential tip from Netflix email marketing is to be creative and take risks. Those old boring emails wouldn't help get such an impact as Netflix today. 

5. Create a Buzz With Better Interactions

Netflix has used the best content marketing strategy in the last decade. The company thinks of an out-of-the-box way to grab quick attention from users. They are bringing standalone products and unmatched experiences. On top of everything, the platform has a seamless communication channel to boost momentary awareness and recognition. The platform allows the audience to be involved in the story and make decisions. This unpredictable move is a proven game-changer for revolutionizing future television. The incomparable buzz in the platform keeps the user stuck to binge-watching. The users feel high engagement in the hopes of finding a happy ending. 

Hence, Netflix happens to be a unique example and inspiration for many fellow companies. They have done a commendable job in content, branding, business model, and product. Netflix marketing strategy has a lot to offer to market enthusiasts and students.

Learn about such integrated marketing strategies with Simplilearn's PGP Digital Marketing Certification Program . You will be taught by Facebook and Purdue University experts, providing a holistic learning experience. Sign-up now and make yourself - job ready! 

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Netflix vs Blockbuster – 3 Key Takeaways

It’s the ultimate example of technology disrupting a marketplace…

Or is it really the story of a leadership shakeup that toppled an empire?

Or is it a story about the extreme hatred people have for late fees?

The Netflix vs. Blockbuster saga has been told a dozen different ways, with a dozen different lenses applied.

And what I’ve come to realize (and this likely won’t come as a huge surprise)is that there’s no single explanation for why Netflix succeeded where Blockbuster failed.

As is the case with most things in life, it was a nuanced situation. There was a perfect storm of poor decisions and technological advances and other contributing factors that led to Netflix’s staggering growth…and Blockbuster’s equally staggering decline (when Blockbuster filed for bankruptcy in 2010, Netflix’s annual net income was $161 million .)

My goal with this post is to distill everything I’ve learned about these two companies down into a few actionable takeaways for marketers – sort of like this post on Zoom’s success story .

But first, for those who aren’t familiar with how the Blockbuster vs. Netflix story unfolded, here’s a short summary:

The Rise of Netflix (and the Fall of Blockbuster)

When Netflix launched in 1997, Blockbuster was the undisputed champion of the video rental industry.

Between 1985 and 1992, the brick-and-mortar rental chain grew from its first location (in Dallas, Texas) to more than 2,800 locations around the world.

Two years later, Viacom paid $8.4 billion to acquire Blockbuster .

So by the time Netflix showed up on the scene with its video rental-by-mail service, it appeared to be a classic case of David vs. Goliath.

In fact, in the year 2000 –perhaps realizing that it’d be easier to fight alongside Blockbuster than against them – Netflix co-founder and CEO Reed Hastings approached Blockbuster’s then CEO, John Antioco, with a merger proposal:

Hastings wanted $50 million for Netflix. And as part of the deal, the Netflix team would run Blockbuster’s online brand.

Of course, that deal never materialized. Partly because Blockbuster laughed in Netflix’s face when they met to discuss the deal.

“It was tiny, involuntary, and vanished almost immediately. But as soon as I saw it, I knew what was happening: John Antioco was struggling not to laugh,” Netflix’s Marc Randolph remembers of the encounter.

At the time, Antioco considered Netflix to be small potatoes, and would come to realize only too late that having an online platform would be the way of the future.

In 1999, Netflix received backing from Groupe Arnault, giving them a $30 million cash injection that helped launch its subscription-based service.

In 2004, Blockbuster did launch a Netflix-like online DVD rental platform , and even abandoned their unpopular (but lucrative) late fees for overdue rentals.

By 2006, subscribers for Blockbuster’s online services had grown to more than 2 million. (Meanwhile, in that same year, the number of Netflix subscribers reached 6.3 million.)

Then in 2007, Antioco left Blockbuster, late fees were reinstated, and Blockbuster’s online efforts were put on the back burner.

In 2008, Netflix signed a deal with Starz to stream around 1,000 blockbuster movies and shows on its service.

Blockbuster’s fate was all but sealed.

In 2010, Netflix was signing deals with names like Sony, Paramount, Lionsgate, and Disney to help them grab a 20% market share of North American viewing traffic. On July 1st of the same year, Blockbuster was de-listed from the New York Stock Exchange and filed for bankruptcy having incurred nearly $1 billion in losses.

Image Source

Netflix’s valuation at the time?

$24 million.

For comparison, today, Netflix is valued at around $203 billion – a 4,060% increase from its valuation back in 2000.

3 Takeaways from the Netflix vs. Blockbuster Battle

1. never forget what you’re really selling..

For years, Blockbuster dominated the video rental space. But at some point, they lost sight of what business they were really in.

Instead of focusing on delivering incredible (and affordable) entertainment to their customers – something Netflix definitely has down – Blockbuster put more stock in the model they were comfortable using.

And hey, who can blame them? Back before the internet became integrated into nearly every facet of our lives, it was hard to imagine brick-and-mortar Blockbuster stores disappearing.

Blockbuster initially succeeded because they did one core job better than anyone else: delivering entertainment to people’s homes.

But as we all know, technologies change. And instead of investing all of their efforts into finding a new way to deliver on their true purpose (more on that in the next section), Blockbuster’s innovation stagnated. That reality hit Netflix founder Marc Randolph when the business was pivoting from a Mail-order DVD service to online streaming.

He wrote in his book, That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea :

“We’d finally figured out a way to make our original idea of DVDs by mail work, and here we were, looking ahead to a future without either DVDs or mail.”

The way Netflix overcame its challenges? Keep reading 👇

2. You need to be willing to adapt. (And half measures won’t cut it.)

1997 era Netflix–before the company embraced streaming

When you dig into the Netflix vs. Blockbuster story, it becomes clear that Blockbuster did (eventually) realize that the Netflix model was the future. And they did make changes to address it.

But in the end, it was too little, too late.

Blockbuster could never fully evolve into the modern business it needed to be in order to compete with Netflix. Once owning 9,000 stores in the US, Blockbuster now has a single brick-and-mortar presence – a lone store in Bend, Oregon .

Sandi Harding, the owner of the single remaining Blockbuster store in the world. Source .

As Forbes reported:

“The irony is that Blockbuster failed because its leadership had built a well-oiled operational machine. It was a very tight network that could execute with extreme efficiency, but poorly suited to let in new information.”

Technologies improve. Industries change. In order to grow, you need to keep a pulse on the ever-evolving needs and preferences of your customers so you can make changes to your model accordingly.

London-based Video Producer Andy Ash says this was Blockbuster’s downfall. The company was too busy making money in their video stores to imagine a time when people would no longer want or need them.

“In a bid to rescue their business, their answer at the time was to fight fire with fire. At one point they even opened up rental kiosks, a little bit like a vending machine, but all of these attempts were based on either outdated technology or outdated business models, whereas Netflix at the time, they did the opposite; they streamlined, they were able to see the future of video rentals and then innovate for that future.”

This applies to products and services as well as to marketing strategies. Believe it or not, marketing channels have a shelf life.

So even if you learn how to dominate a specific channel , you need to remember that all channels, no matter how popular they are today, could someday fade into oblivion…just like brick-and-mortar Blockbuster locations did.

The key to surviving, and thriving?

Embrace change.

Blockbuster didn’t. Even in 2008, the company’s CEO, Jim Keyes , was perplexed by (or refused to accept) Netflix’s appeal to customers:

“I’ve been frankly confused by this fascination that everybody has with Netflix…Netflix doesn’t really have or do anything that we can’t or don’t already do ourselves.”

As Square2Marketing’s Mike Lieberman explains :

“Blockbuster didn’t believe a month-to-month subscription service would ever actually work. And it certainly wasn’t planning on going digital. Even when the company was offered a buyout deal early on, it declined, believing that its previous business revenue model would work just as well in the new wave of movie watching as it had in the past.”

3. The customer-driven approach always wins.

Customer-driven sales & marketing from drift.

As we’ve already established, there were several factors that contributed to the company’s downfall, including not understanding what business they were really in – entertainment, not retail – and not being flexible enough to adapt.

But another key piece of the puzzle was Blockbuster’s unwillingness to put their customers first. The company’s revenue relied (massively) on charging late fees. As David Reiss explains:

“Blockbuster’s profit had to be sufficient to sustain their worldwide stores and staffing levels. As well as their pricing structure reflecting this, their profit also relied on something their customers hated – late fees. A significant portion of the revenue that Blockbuster needed to stay in business was a revenue stream that Netflix didn’t even charge for, as you could keep their movies as long as you wanted. Whereas Netflix developed a business model that simplified the video-renting process, making it more enjoyable for customers, Blockbuster only thought about maximizing their own returns.”

Forbes described Blockbuster’s reliance on penalizing its patrons in the form of a late fee as the company’s “Achilles heel.” When Blockbuster did finally address the issue, the cost of dropping late fees from their model amounted to a loss of $200 million.

“Any time you can get rid of the No. 1 customer dissatisfaction factor and in the process generate higher customer traffic, for me, as a retailer, that spells a good answer,” CEO John Antioco said of the move at the time.

Narrator: it didn’t work.

At the same time, the company cut its late-fee revenue stream, it was building out its online platform cost another $200 million. If you add up these two costs, Blockbuster paid $400 million in an effort to modernize and remain competitive with Netflix.

We’ll never know if this plan would have succeeded. Shortly after this modernization effort, Antioco was ousted by the board after the changes were made.

Blockbuster then returned to their company-driven ways…and went bankrupt a few years later.

Final Thought: Change Is Inevitable

When I was a kid, getting to pick my own movie at Blockbuster was a rite of passage.

Every weekend, my siblings and I would pile into my dad’s car and make two stops. First, we marched into Blockbuster. Then it was over to the supermarket next door for snacks, soda, and frozen pizza. It was our little ritual.

But these days, the idea of going to a brick-and-mortar store to rent a video seems kind of crazy.

With the rise of Netflix, home entertainment became just a few clicks away. It’s become its own kind of ritual – for over 182 million paying members .

So the next time you think to yourself, “The way we do things now will never change,” remember the Netflix vs. Blockbuster saga and how an entire industry can become upended in just a few years.

Editor’s Note: This article was published in July 2017 and has been updated to reflect new information.

Want to drive Netflix-level growth for your business? Start here .

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How Netflix Became A Master of DevOps? An Exclusive Case Study

Find out how Netflix excelled at DevOps without even thinking about it and became a gold standard in the DevOps world.

Table of Contents

• Netflix's move to the cloud

Netflix’s Chaos Monkey and the Simian Army

Netflix’s container journey, netflix’s “operate what you build” culture, lessons we can learn from netflix’s devops strategy, how simform can help.

Even though Netflix is an entertainment company, it has left many top tech companies behind in terms of tech innovation. With its single video-streaming application, Netflix has significantly influenced the technology world with its world-class engineering efforts, culture, and product development over the years.

One such practice that Netflix is a fantastic example of is DevOps. Their DevOps culture has enabled them to innovate faster, leading to many business benefits. It also helped them achieve near-perfect uptime, push new features faster to the users, and increase their subscribers and streaming hours.

With nearly 214 million subscribers worldwide and streaming in over 190 countries , Netflix is globally the most used streaming service today. And much of this success is owed to its ability to adopt newer technologies and its DevOps culture that allows them to innovate quickly to meet consumer demands and enhance user experiences. But Netflix doesn’t think DevOps.

So how did they become the poster child of DevOps? In this case study, you’ll learn about how Netflix organically developed a DevOps culture with out-of-the-box ideas and how it benefited them.

Simform is a leading DevOps consulting and implementation company , helping businesses build innovative products that meet dynamic user demands efficiently. To grow your business with DevOps, contact us today!

Netflix’s move to the cloud

It all began with the worst outage in Netflix’s history when they faced a major database corruption in 2008 and couldn’t ship DVDs to their members for three days. At the time, Netflix had roughly 8.4 million customers and one-third of them were affected by the outage. It prompted Netflix to move to the cloud and give their infrastructure a complete makeover. Netflix chose AWS as its cloud partner and took nearly seven years to complete its cloud migration.

Netflix didn’t just forklift the systems and dump them into AWS. Instead, it chose to rewrite the entire application in the cloud to become truly cloud-native, which fundamentally changed the way the company operated. In the words of Yury Izrailevsky, Vice President, Cloud and Platform Engineering at Netflix:

“We realized that we had to move away from vertically scaled single points of failure, like relational databases in our datacenter, towards highly reliable, horizontally scalable, distributed systems in the cloud.”

As a significant part of their transformation, Netflix converted its monolithic, data center-based Java application into cloud-based Java microservices architecture. It brought about the following changes:

• Denormalized data model using NoSQL databases
• Enabled teams at Netflix to be loosely coupled
• Allowed teams to build and push changes at the speed that they were comfortable with
• Centralized release coordination
• Multi-week hardware provisioning cycles led to continuous delivery
• Engineering teams made independent decisions using self-service tools

As a result, it helped Netflix accelerate innovation and stumble upon the DevOps culture. Netflix also gained eight times as many subscribers as it had in 2008. And Netflix’s monthly streaming hours also grew a thousand times from Dec 2007 to Dec 2015.

After completing their cloud migration to AWS by 2016, Netflix had:

And it handled all of the above with 0 Network Ops Centers and some 70 operations engineers, who were all software engineers focusing on writing tools that enabled other software developers to focus on things they were good at.

Migrating to the cloud made Netflix resilient to the kind of outages it faced in 2008. But they wanted to be prepared for any unseen errors that could cause them equivalent or worse damage in the future.

Engineers at Netflix perceived that the best way to avoid failure was to fail constantly. And so they set out to make their cloud infrastructure more safe, secure, and available the DevOps way – by automating failure and continuous testing.

Chaos Monkey

Netflix created Chaos Monkey, a tool to constantly test its ability to survive unexpected outages without impacting the consumers. Chaos Monkey is a script that runs continuously in all Netflix environments, randomly killing production instances and services in the architecture. It helped developers:

• Identify weaknesses in the system
• Build automatic recovery mechanisms to deal with the weaknesses
• Test their code in unexpected failure conditions
• Build fault-tolerant systems on day to day basis

The Simian Army

After their success with Chaos Monkey, Netflix engineers wanted to test their resilience to all sorts of inevitable failures, detect abnormal conditions. So, they built the Simian Army , a virtual army of tools discussed below.

• Latency Monkey

It creates false delays in the RESTful client-server communication layers, simulating service degradation and checking if the upstream services respond correctly. Moreover, creating very large delays can simulate an entire service downtime without physically bringing it down and testing the ability to survive. The tool was particularly useful to test new services by simulating the failure of dependencies without affecting the rest of the system.

• Conformity Monkey

It looks for instances that do not adhere to the best practices and shuts them down, giving the service owner a chance to re-launch them properly.

• Doctor Monkey

It detects unhealthy instances by tapping into health checks running on each instance and also monitors other external health signs (such as CPU load). The unhealthy instances are removed from service and terminated after service owners identify the root cause of the problem.

• Janitor Monkey

It ensures the cloud environment runs without clutter and waste. It also searches for unused resources and discards them.

• Security Monkey

An extension of Conformity Monkey, it identifies security violations or vulnerabilities (e.g., improperly configured AWS security groups) and eliminates the offending instances. It also ensures the SSL (Secure Sockets Layer) and DRM (Digital Rights Management) certificates were valid and not due for renewal.

• 10-18 Monkey

Short for Localization-Internationalization, it identifies configuration and runtime issues in instances serving users in multiple geographic locations with different languages and character sets.

• Chaos Gorilla

Like Chaos Monkey, the Gorilla simulates an outage of a whole Amazon availability zone to verify if the services automatically re-balance to the functional availability zones without manual intervention or any visible impact on users.

Today, Netflix still uses Chaos Engineering and has a dedicated team for chaos experiments called the Resilience Engineering team (earlier called the Chaos team).

In a way, Simian Army incorporated DevOps principles of automation, quality assurance, and business needs prioritization. As a result, it helped Netflix develop the ability to deal with unexpected failures and minimize their impact on users. 

On 21st April 2011 , AWS experienced a large outage in the US East region, but Netflix’s streaming ran without any interruption. And on 24th December 2012 , AWS faced problems in Elastic Load Balancer(ELB) services, but Netflix didn’t experience an immediate blackout. Netflix’s website was up throughout the outage, supporting most of their services and streaming, although with higher latency on some devices.

Netflix had a cloud-native, microservices-driven VM architecture that was amazingly resilient, CI/CD enabled, and elastically scalable. It was more reliable, with no SPoFs (single points of failure) and small manageable software components. So why did they adopt container technology? The major factors that prompted Netflix’s investment in containers are:

• Container images used in local development are very similar to those run in production. This end-to-end packaging allows developers to build and test applications easily in production-like environments, reducing development overhead.
• Container images help build application-specific images easily.
• Containers are lightweight, allowing building and deploying them faster than VM infrastructure.
• Containers only have what a single application needs, are smaller and densely packed, which reduces overall infrastructure cost and footprint.
• Containers improve developer productivity, allowing them to develop, deploy, and innovate faster.

Moreover, Netflix teams had already started using containers and seen tangible benefits. But they faced some challenges such as migrating to containers without refactoring, ensuring seamless connectivity between VMs and containers, and more. As a result, Netflix designed a container management platform called Titus to meet its unique requirements.

Titus provided a scalable and reliable container execution solution to Netflix and seamlessly integrated with AWS. In addition, it enabled easy deployment of containerized batches and service applications.

Titus served as a standard deployment unit and a generic batch job scheduling system. It helped Netflix expand support to growing batch use cases. 

• Batch users could also put together sophisticated infrastructure quickly and pack larger instances across many workloads efficiently. Batch users could immediately schedule locally developed code for scaled execution on Titus.
• Beyond batch, service users benefited from Titus with simpler resource management and local test environments consistent with production deployment.
• Developers could also push new versions of applications faster than before.

Overall, Titus deployments were done in one or two minutes which took tens of minutes earlier. As a result, both batch and service users could experiment locally, test quickly and deploy with greater confidence than before.

“The theme that underlies all these improvements is developer innovation velocity.” 

-Netflix tech blog

This velocity enabled Netflix to deliver fast features to the customers, making containers extremely important for their business.

Netflix invests and experiments significantly in improving development and operations for the engineering teams. But before Netflix adopted the “Operate what you build” model, it had siloed teams. The Ops teams focused on deploy, operate and support parts of the software life cycle. And Developers handed off the code to the ops team for deployment and operation. So each stage in the SDLC was owned by a different person and looked like this:

The specialized roles created efficiencies within each segment but created inefficiencies across the entire SDLC. The issues that they faced were:

• Individual silos that slowed down end-to-end progress
• Added communication overhead, bottlenecks and hampered effectiveness of feedback loops
• Knowledge transfers between developers and ops/SREs were lossy
• Higher time-to-detect and time-to-resolve for deployment problems
• Longer gaps between code complete and deployment, with releases taking weeks

Operate what you build

To deal with the above challenges and drawing inspiration from DevOps principles, Netflix encouraged shared ownership of the full SDLC and broke down silos. The teams developing a system were responsible for operating and supporting it. Each team owned its own deployment issues, performance bugs, alerting gaps, capacity planning, partner support, and so on.

Moreover, they also introduced centralized tooling to simplify and automate dealing with common development problems of the teams. When additional tooling needs arise, the central team assesses if the needs are common across multiple development teams and built tools. In case of too team-specific problems, the development team decides if their need is important enough to solve on their own.

Full Cycle Developers

Combining the above ideas, Netflix built an even better model where dev teams are equipped with amazing productivity tools and are responsible for the entire SDLC, as shown below.

Netflix provided ongoing training and support in different forms (e.g., dev boot camps) to help new developers build up these skills. Easy-to-use tools for deployment pipelines also helped the developers, e.g., Spinnaker. It is a Continuous Delivery platform for releasing software changes with high velocity and confidence.

However, such models require a significant shift in the mindsets of teams/developers. To apply this model outside Netflix, you can start with evaluating what you need, count costs, and be mindful of bringing in the least amount of complexities necessary. And then attempt a mindset shift.

Netflix practices are unique to their work environment and needs and might not suit all organizations. But here are a few lessons to learn from their DevOps strategy and apply:

• Don’t build systems that say no to your developers

Netflix has no push schedules, push windows, or crucibles that developers must go through to push their code into production. Instead, every engineer at Netflix has full access to the production environment. And there are neither strict policies nor procedures that prevent them from accessing the production environment.

• Focus on giving freedom and responsibility to the engineers

Netflix aims to hire intelligent people and provide them with the freedom to solve problems in their own way that they see as best. So it doesn’t have to create artificial constraints and guardrails to predict what their developers need to do. But instead, hire people who can develop a balance of freedom and responsibility.

• Don’t think about uptime at all costs

Netflix servers their millions of users with a near-perfect uptime. But it didn’t think about uptime when they started chaos testing their environment to deal with unexpected failure.

• Prize the velocity of innovation

Netflix wants its engineers to do fun, exciting things and develop new features to delight its customers with reduced time-to-market.

• Eliminate a lot of processes and procedures

They limit an organization from moving fast. So instead, Netflix focuses on hiring people they can trust and have independent decision-making capabilities.

• Practice context over control

Netflix doesn’t control and contain too much. What they do focus on is context. Managers at Netflix ensure that their teams have a quality and constant flow of context of the business, rather than controlling them.

• Don’t do a lot of required standards, but focus on enablement

Teams at Netflix can work with their choice of programming languages, libraries, frameworks, or IDEs as they see best. In addition, they don’t have to go through any research or approval processes to rewrite a portion of the system.

• Don’t do silos, walls, and fences

Netflix teams know where they fit in the ecosystem, their workings with other teams, dependents, and dependencies. There are no operational fences over which developers can throw the code for production.

• Adopt “you build it, you run it” culture

Netflix focuses on making ownership easy. So it has the “operate what you build” culture but with the enablement idea that we learned about earlier.

• Focus on data

Netflix is a data-driven, decision-driven company. It doesn’t do guesses or fall victim to gut instincts and traditional thinking. It invests in algorithms and systems that combs enormous amounts of data quickly and notify when there’s an issue.

• Always put customer satisfaction first

The end goal of DevOps is to make customer-driven and focus on enhancing the user experience with every release.

• Don’t do DevOps, but focus on the culture

At Netflix, DevOps emerged as the wonderful result of their healthy culture, thinking and practices.

Get in Touch

Netflix has been a gold standard in the DevOps world for years, but copy-pasting their culture might not work for every organization. DevOps is a mindset that requires molding your processes and organizational structure to continuously improve the software quality and increase your business value. DevOps can be approached through many practices such as automation, continuous integration, delivery, deployment, continuous testing, monitoring, and more.

At Simform, our engineering teams will help you streamline the delivery and deployment pipelines with the right DevOps toolchain and skills. Our DevOps managed services will help accelerate the product life cycle, innovate faster and achieve maximum business efficiency by delivering high-quality software with reduced time-to-market.

Hiren Dhaduk

Hiren is CTO at Simform with an extensive experience in helping enterprises and startups streamline their business performance through data-driven innovation.

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50 Product Management Case Studies

We often wonder what kind of process other product teams have created, planned, and most importantly, how they have implemented it. That is why we at Producter have compiled 50 different case studies for you.

a year ago   •   4 min read

We often wonder what kind of process other product teams have created, planned, and most importantly, how they have implemented it.

That is why we at Producter have compiled 50 different case studies for you.

Brought to you by Roadmape

1- Rules of Flow for Product Management: an AirBnB Case Study

“Engagement” is a term that is so overused in product management that it has almost lost its meaning. So often I’ve heard from teams, “We’ll measure the success of this test with engagement,” which could mean anything from feature click-through to bounce to we-aren’t-really-sure-this-will-drive-conversion-so-we’re-hedging-our-bet. Underneath, the reason this term has been co-opted and jargonized is that genuine, productive engagement can be ramped toward long-term customer loyalty. And loyalty pays off: a loyalty increase of 7% can boost lifetime profits per customer by as much as 85%, and a loyalty increase of 3% can correlate to a 10% cost reduction ( Brand Keys ).

2- The Psychology of Clubhouse’s User Retention (...and churn)

3- Netflix Q1 ’21 Subscriber Growth Miss: Can We Avoid Another One?

As a data analyst supporting a mobile subscription business , Netflix’s Q1 ’21 subscriber growth miss is a classic example of when I would get called for recommendations to prevent a miss in the future. I thought this would make an interesting case study to discuss my approach to finding insights to drive subscriber growth. Sadly I’m not a Netflix employee and will be limited to publicly available data but the wealth of information on the Internet about Netflix is sufficient to generate insights for this case study.

4- Amazon Go Green

As part of the Design Challenge from productdesign.tips, our team came together to find ways for Amazon to encourage more sustainability on their e-commerce platform. As with any unsolicited design project, the challenge comes with a lack of access to application analytics and technical feasibilities. Nonetheless, the question remains: How might we design checkout screens for an e-commerce app to help people recycle the goods they buy?

5- Quora Case Study – The Wonderful World of Quora

Quora has become a substantive resource for millions of entrepreneurs and one of the best sources for Business to Business market. Majorly used by writers, scholars, bloggers, investors, consultants, students this Q/A site has much to offer in terms of knowledge sharing, connection building and information gathering.

6- Building a product without any full-time product managers

Jambb is an emerging social platform where creators grow their communities by recognizing and rewarding fans for their support. Currently, creators monetize fan engagement through advertisements, merchandise, and subscriptions, to name a few. However, this only represents 1% of fans, leaving the other 99% (who contribute in non-monetary ways) without the same content, access, and recognition that they deserve.

8- What if you can create Listening Sessions on Spotify

Summary: The project was done as a part of a user experience design challenge given to me by a company. I was given the brief by them to work on a feature of Spotify and I spent around 25–30 hours on the challenge in which I went through the entire process, from the research to testing.

9- Redesigned Apple Maps and replicated an Apple product launch for it

Quick-fire question; what is the single most important and widely used feature in a phone — asides from texting and instant messaging friends, coworkers and family? Maybe you guessed right, perhaps this feature is so integrated into your life that you didn’t even think about it — either way, it is your phone’s GPS. It is reasonable to say that GPS technology has changed society’s lives in ways we never could’ve imagined. Gone are the days of using physically printed maps and almanacks, when we now have smartphones with navigation apps. Since the launch of the iPhone and the App Store, consumers have been able to use different apps for their personal navigation needs. Everyone has a preference, and apps have come out to try and address every need.

10- Intuitive design and product-led growth

In 2018, Miro was hardly a blip on the radar in the Design world. Fast forward two years, and suddenly Miro is solidly the number one tool for brainstorming and ideation.

Click below to see the complete list 👇

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Netflix’s Operations Management, 10 Critical Decisions, Productivity

Netflix’s operations management maximizes productivity and efficiency in entertainment content production and streaming services. For the 10 critical decisions of operations management, the company’s strategies and tactics are mainly for its streaming services and entertainment content production, although the operations of regional and local offices are also considered. The fulfillment of the goals of Netflix’s mission statement and vision statement depends on the effectiveness of the company’s operations management in ensuring reliable and satisfactory services. High productivity and effective operations enable the company to offer competitive prices for high-quality content, while ensuring profitability for investors. Netflix continues improving its business performance with support from productive operations using best practices in operations management.

Competition influences the impact of operations management on Netflix’s business success. The company’s competitors include the entertainment businesses of Sony , Walt Disney , and NBCUniversal, as well as the streaming services of YouTube ( Google (Alphabet) ), Apple TV Plus, Facebook (Meta) , Amazon Prime Video, and Microsoft Movies & TV (Films & TV). These competitors’ operations management ensure business competitiveness and the challenging market described in the Five Forces analysis of Netflix . As a result, the standards and operational targets used for the 10 critical decisions of Netflix’s operations management must consider the company’s performance relative to competitors and their respective operations management strategies.

10 Critical Decisions of Netflix’s Operations Management

1. Goods and Services . Netflix’s business objectives for this critical decision are to produce satisfactory entertainment content that matches market demand, and to provide high-quality, reliable, and affordable streaming services. The company’s operations managers decide on cost limits, quality specifications, productivity targets, and resource allocations to support these objectives in the entertainment and streaming business. Netflix’s generic competitive strategy and intensive growth strategies ensure cost-effective operations and competitive product development, in support of this decision area of operations management.

2. Quality Management . This critical decision focuses on satisfying Netflix’s quality standards and targets for its various processes and operational outputs. For example, the speed and video quality used for the company’s streaming service are included in quality management decisions in this area of operations management. Also, Netflix’s work culture (organizational culture) maintains human resources that aim for high quality and business competitiveness. These characteristics ensure the satisfaction of this critical decision area of operations management, in terms of quality standards and targets for movies, series, games, and the streaming service.

3. Process and Capacity Design . Netflix’s operations management aims to maintain high efficiency and productivity in all business processes, while keeping sufficient capacity for streaming content. For the company’s movie and series production operations, high productivity and efficiency are achieved in processes with effective talent (human resources) and using the right equipment and facilities. For example, Albuquerque Studios have the right process and capacity design, involving the right equipment and facilities, which professionals use to produce Netflix Originals. On the other hand, for the company’s streaming operations, the focus of operations management is on information technology and related processes. In this regard, Netflix’s streaming process performance and capacity levels depend on effective management of servers and related network technologies. The competencies and competitive advantages in the SWOT analysis of Netflix allow for efficient operations based on economies of scale, and for high productivity based on the company’s content production capability.

4. Location . The goal of this critical decision of operations management is to maximize business efficiency and productivity in the movement of resources and in reaching Netflix’s target customers. Considering that the company’s operations involve digital services and content, most location decisions are for content production processes, content storage, IT assets, offices, and marketing activity. For example, the locations of the company’s facilities for animation and movie production are based on accessibility for people and on access to resources needed for production processes. In terms of marketing activity, Netflix’s marketing mix (4P) involves location decisions for some marketing campaigns. This decision area also deals with operations management for the optimal productivity of offices in various locations, including Netflix offices in North America, Europe, and Asia.

5. Layout Design and Strategy . Netflix’s operations management aims for optimal movement of people, materials, and information for this critical decision area. For example, the company’s studio layouts are based on industry standards, conventions, and best practices for high productivity in filming and production. Netflix’s offices have layouts that suit the movement of people and materials based on the processes involved, such as the Legal department’s document processing and marketing teams’ meetings for promoting the streaming service.

6. Human Resources and Job Design . Netflix’s strategic objective in this critical decision area of operations management is to develop its human resources for current operations and for business growth. A highly productive workforce can maximize the company’s entertainment content production and strategic implementations. The limits, communication channels, team structure, and resource allocations in Netflix’s business structure (company structure) affect the achievement of targets for this critical decision of operations management.

7. Supply Chain Management . Netflix’s operations managers streamline the supply chain to ensure its stability, reliability, and sufficiency for this critical decision area. Effective supply chain management supports productive studio operations and high-quality streaming services. The external factors in the PESTLE/PESTEL analysis of Netflix can affect the results of decisions in this area of operations management. The company’s strategies address these external factors to mitigate any negative effects on its supply chain and streaming services.

8. Inventory . Netflix’s inventory management aims to maintain an adequate inventory level while minimizing costs. In content storage and streaming services, the company optimizes server resource allocations for this critical decision of operations management. In content production, inventory management focuses on maintaining supplies and stocks for Netflix’s studio operations, including props and equipment. Inventory adequacy and consistency support the company’s productive studio operations to satisfy cost limits and the competitive strategy of cost leadership.

9. Scheduling . The strategic objective of this critical decision is to operate Netflix’s business in a timely manner, with consideration for resource availability, maintenance requirements, supply chain operations, market demand, and other internal and external variables. Effective operations management ensures that Netflix’s activities are scheduled to maximize the achievement of strategic goals, including goals for productivity, revenues, and profits.

10. Maintenance . Netflix’s operations management aims for the stability and reliability of the company’s processes and resources, including human resources. The streaming business involves maintaining content production facilities, equipment, and talent. The company also maintains resources, people, and processes of offices to support operations, like marketing and partnerships with internet service providers in various countries. Effectiveness in this critical decision area of operations management leads to operating efficiency and high productivity that contribute to the achievement of goals for Netflix’s sustainability, ESG, CSR, and stakeholder management .

Productivity at Netflix

Productivity goals in Netflix’s operations management are set to optimize business competitiveness and performance, while satisfying market demand and taking opportunities for business expansion. The company achieves its productivity targets using strategies for human resource development and other aspects of the entertainment and streaming business. The following are some of the productivity metrics applicable to the 10 critical decision areas of Netflix’s operations management:

• Episodes completed per year (Netflix original series production productivity)
• App iterations per year (Netflix mobile app development productivity)
• Game iterations per year (game development productivity)
• About Netflix .
• Cannas, V. G., Ciano, M. P., Saltalamacchia, M., & Secchi, R. (2023). Artificial intelligence in supply chain and operations management: A multiple case study research. International Journal of Production Research , 1-28.
• Netflix, Inc. – Form 10-K .
• Netflix, Inc. – Jobs – Locations .
• Netflix, Inc. – Top Investor Questions .
• Reid, R. D., & Sanders, N. R. (2023). Operations Management: An Integrated Approach . John Wiley & Sons.
• van Es, K. (2023). Netflix & big data: The strategic ambivalence of an entertainment company. Television & New Media, 24 (6), 656-672.
• Wayne, M. L., & Uribe Sandoval, A. C. (2023). Netflix original series, global audiences and discourses of streaming success. Critical Studies in Television, 18 (1), 81-100.
• Copyright by Panmore Institute - All rights reserved.
• This article may not be reproduced, distributed, or mirrored without written permission from Panmore Institute and its author/s.
• Educators, Researchers, and Students: You are permitted to quote or paraphrase parts of this article (not the entire article) for educational or research purposes, as long as the article is properly cited and referenced together with its URL/link.

What would be a key metric to track for Netflix's "My List" feature?

Product case study, define feature:.

"My List" allows Netflix users to save shows and movies they want to watch later. It’s a curated list of content based on a user's personal interest.

Goal of Feature: ‍

To enhance user engagement by making it easier for users to keep track of the content they want to watch and thereby increase the time they spend on the platform.

User Journey: ‍

User browses content -> User adds shows/movies to "My List" -> User watches the saved content from "My List" at a later time.

• Number of users who use "My List" feature: This will indicate how many users are actually aware of and find value in this feature.
• Number of items added to "My List": Frequent use of the feature indicates its effectiveness in helping users save content for later.
• Percentage of "My List" content that is eventually watched: This shows how effectively the feature is leading to increased content consumption.
• Average time between a show being added to "My List" and it being watched: This will indicate the utility of "My List" in reminding users of their saved content.

Monetisation

• Increased session length due to content from "My List": If users who use "My List" have longer viewing sessions, it may result in more perceived value of their Netflix subscription, and by extension, higher subscription retention.
• Repeat usage of "My List" feature: If users frequently add to and watch content from "My List", it suggests they find the feature useful, which can contribute to overall platform retention.

Browse Related Product Case Studies

Come for the content ‍ stay for the community.

The state of AI in early 2024: Gen AI adoption spikes and starts to generate value

If 2023 was the year the world discovered generative AI (gen AI) , 2024 is the year organizations truly began using—and deriving business value from—this new technology. In the latest McKinsey Global Survey  on AI, 65 percent of respondents report that their organizations are regularly using gen AI, nearly double the percentage from our previous survey just ten months ago. Respondents’ expectations for gen AI’s impact remain as high as they were last year , with three-quarters predicting that gen AI will lead to significant or disruptive change in their industries in the years ahead.

About the authors

This article is a collaborative effort by Alex Singla , Alexander Sukharevsky , Lareina Yee , and Michael Chui , with Bryce Hall , representing views from QuantumBlack, AI by McKinsey, and McKinsey Digital.

Organizations are already seeing material benefits from gen AI use, reporting both cost decreases and revenue jumps in the business units deploying the technology. The survey also provides insights into the kinds of risks presented by gen AI—most notably, inaccuracy—as well as the emerging practices of top performers to mitigate those challenges and capture value.

AI adoption surges

Interest in generative AI has also brightened the spotlight on a broader set of AI capabilities. For the past six years, AI adoption by respondents’ organizations has hovered at about 50 percent. This year, the survey finds that adoption has jumped to 72 percent (Exhibit 1). And the interest is truly global in scope. Our 2023 survey found that AI adoption did not reach 66 percent in any region; however, this year more than two-thirds of respondents in nearly every region say their organizations are using AI. 1 Organizations based in Central and South America are the exception, with 58 percent of respondents working for organizations based in Central and South America reporting AI adoption. Looking by industry, the biggest increase in adoption can be found in professional services. 2 Includes respondents working for organizations focused on human resources, legal services, management consulting, market research, R&D, tax preparation, and training.

Also, responses suggest that companies are now using AI in more parts of the business. Half of respondents say their organizations have adopted AI in two or more business functions, up from less than a third of respondents in 2023 (Exhibit 2).

Gen AI adoption is most common in the functions where it can create the most value

Most respondents now report that their organizations—and they as individuals—are using gen AI. Sixty-five percent of respondents say their organizations are regularly using gen AI in at least one business function, up from one-third last year. The average organization using gen AI is doing so in two functions, most often in marketing and sales and in product and service development—two functions in which previous research  determined that gen AI adoption could generate the most value 3 “ The economic potential of generative AI: The next productivity frontier ,” McKinsey, June 14, 2023. —as well as in IT (Exhibit 3). The biggest increase from 2023 is found in marketing and sales, where reported adoption has more than doubled. Yet across functions, only two use cases, both within marketing and sales, are reported by 15 percent or more of respondents.

Gen AI also is weaving its way into respondents’ personal lives. Compared with 2023, respondents are much more likely to be using gen AI at work and even more likely to be using gen AI both at work and in their personal lives (Exhibit 4). The survey finds upticks in gen AI use across all regions, with the largest increases in Asia–Pacific and Greater China. Respondents at the highest seniority levels, meanwhile, show larger jumps in the use of gen Al tools for work and outside of work compared with their midlevel-management peers. Looking at specific industries, respondents working in energy and materials and in professional services report the largest increase in gen AI use.

Investments in gen AI and analytical AI are beginning to create value

The latest survey also shows how different industries are budgeting for gen AI. Responses suggest that, in many industries, organizations are about equally as likely to be investing more than 5 percent of their digital budgets in gen AI as they are in nongenerative, analytical-AI solutions (Exhibit 5). Yet in most industries, larger shares of respondents report that their organizations spend more than 20 percent on analytical AI than on gen AI. Looking ahead, most respondents—67 percent—expect their organizations to invest more in AI over the next three years.

Where are those investments paying off? For the first time, our latest survey explored the value created by gen AI use by business function. The function in which the largest share of respondents report seeing cost decreases is human resources. Respondents most commonly report meaningful revenue increases (of more than 5 percent) in supply chain and inventory management (Exhibit 6). For analytical AI, respondents most often report seeing cost benefits in service operations—in line with what we found last year —as well as meaningful revenue increases from AI use in marketing and sales.

Inaccuracy: The most recognized and experienced risk of gen AI use

As businesses begin to see the benefits of gen AI, they’re also recognizing the diverse risks associated with the technology. These can range from data management risks such as data privacy, bias, or intellectual property (IP) infringement to model management risks, which tend to focus on inaccurate output or lack of explainability. A third big risk category is security and incorrect use.

Respondents to the latest survey are more likely than they were last year to say their organizations consider inaccuracy and IP infringement to be relevant to their use of gen AI, and about half continue to view cybersecurity as a risk (Exhibit 7).

Conversely, respondents are less likely than they were last year to say their organizations consider workforce and labor displacement to be relevant risks and are not increasing efforts to mitigate them.

In fact, inaccuracy— which can affect use cases across the gen AI value chain , ranging from customer journeys and summarization to coding and creative content—is the only risk that respondents are significantly more likely than last year to say their organizations are actively working to mitigate.

Some organizations have already experienced negative consequences from the use of gen AI, with 44 percent of respondents saying their organizations have experienced at least one consequence (Exhibit 8). Respondents most often report inaccuracy as a risk that has affected their organizations, followed by cybersecurity and explainability.

Our previous research has found that there are several elements of governance that can help in scaling gen AI use responsibly, yet few respondents report having these risk-related practices in place. 4 “ Implementing generative AI with speed and safety ,” McKinsey Quarterly , March 13, 2024. For example, just 18 percent say their organizations have an enterprise-wide council or board with the authority to make decisions involving responsible AI governance, and only one-third say gen AI risk awareness and risk mitigation controls are required skill sets for technical talent.

Bringing gen AI capabilities to bear

The latest survey also sought to understand how, and how quickly, organizations are deploying these new gen AI tools. We have found three archetypes for implementing gen AI solutions : takers use off-the-shelf, publicly available solutions; shapers customize those tools with proprietary data and systems; and makers develop their own foundation models from scratch. 5 “ Technology’s generational moment with generative AI: A CIO and CTO guide ,” McKinsey, July 11, 2023. Across most industries, the survey results suggest that organizations are finding off-the-shelf offerings applicable to their business needs—though many are pursuing opportunities to customize models or even develop their own (Exhibit 9). About half of reported gen AI uses within respondents’ business functions are utilizing off-the-shelf, publicly available models or tools, with little or no customization. Respondents in energy and materials, technology, and media and telecommunications are more likely to report significant customization or tuning of publicly available models or developing their own proprietary models to address specific business needs.

Respondents most often report that their organizations required one to four months from the start of a project to put gen AI into production, though the time it takes varies by business function (Exhibit 10). It also depends upon the approach for acquiring those capabilities. Not surprisingly, reported uses of highly customized or proprietary models are 1.5 times more likely than off-the-shelf, publicly available models to take five months or more to implement.

Gen AI high performers are excelling despite facing challenges

Gen AI is a new technology, and organizations are still early in the journey of pursuing its opportunities and scaling it across functions. So it’s little surprise that only a small subset of respondents (46 out of 876) report that a meaningful share of their organizations’ EBIT can be attributed to their deployment of gen AI. Still, these gen AI leaders are worth examining closely. These, after all, are the early movers, who already attribute more than 10 percent of their organizations’ EBIT to their use of gen AI. Forty-two percent of these high performers say more than 20 percent of their EBIT is attributable to their use of nongenerative, analytical AI, and they span industries and regions—though most are at organizations with less than $1 billion in annual revenue. The AI-related practices at these organizations can offer guidance to those looking to create value from gen AI adoption at their own organizations.

To start, gen AI high performers are using gen AI in more business functions—an average of three functions, while others average two. They, like other organizations, are most likely to use gen AI in marketing and sales and product or service development, but they’re much more likely than others to use gen AI solutions in risk, legal, and compliance; in strategy and corporate finance; and in supply chain and inventory management. They’re more than three times as likely as others to be using gen AI in activities ranging from processing of accounting documents and risk assessment to R&D testing and pricing and promotions. While, overall, about half of reported gen AI applications within business functions are utilizing publicly available models or tools, gen AI high performers are less likely to use those off-the-shelf options than to either implement significantly customized versions of those tools or to develop their own proprietary foundation models.

What else are these high performers doing differently? For one thing, they are paying more attention to gen-AI-related risks. Perhaps because they are further along on their journeys, they are more likely than others to say their organizations have experienced every negative consequence from gen AI we asked about, from cybersecurity and personal privacy to explainability and IP infringement. Given that, they are more likely than others to report that their organizations consider those risks, as well as regulatory compliance, environmental impacts, and political stability, to be relevant to their gen AI use, and they say they take steps to mitigate more risks than others do.

Gen AI high performers are also much more likely to say their organizations follow a set of risk-related best practices (Exhibit 11). For example, they are nearly twice as likely as others to involve the legal function and embed risk reviews early on in the development of gen AI solutions—that is, to “ shift left .” They’re also much more likely than others to employ a wide range of other best practices, from strategy-related practices to those related to scaling.

In addition to experiencing the risks of gen AI adoption, high performers have encountered other challenges that can serve as warnings to others (Exhibit 12). Seventy percent say they have experienced difficulties with data, including defining processes for data governance, developing the ability to quickly integrate data into AI models, and an insufficient amount of training data, highlighting the essential role that data play in capturing value. High performers are also more likely than others to report experiencing challenges with their operating models, such as implementing agile ways of working and effective sprint performance management.

About the research

The online survey was in the field from February 22 to March 5, 2024, and garnered responses from 1,363 participants representing the full range of regions, industries, company sizes, functional specialties, and tenures. Of those respondents, 981 said their organizations had adopted AI in at least one business function, and 878 said their organizations were regularly using gen AI in at least one function. To adjust for differences in response rates, the data are weighted by the contribution of each respondent’s nation to global GDP.

Alex Singla and Alexander Sukharevsky  are global coleaders of QuantumBlack, AI by McKinsey, and senior partners in McKinsey’s Chicago and London offices, respectively; Lareina Yee  is a senior partner in the Bay Area office, where Michael Chui , a McKinsey Global Institute partner, is a partner; and Bryce Hall  is an associate partner in the Washington, DC, office.

They wish to thank Kaitlin Noe, Larry Kanter, Mallika Jhamb, and Shinjini Srivastava for their contributions to this work.

This article was edited by Heather Hanselman, a senior editor in McKinsey’s Atlanta office.

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Inmate ‘Eastside’ from Netflix prison docuseries has died aged 29

John 'eastside' mcallister featured heavily on netflix's unlocked: a jail experiment.

Callum Jones

An inmate who appeared on Netflix's Unlocked: A Jail Experiment has died.

John McAllister - known as 'Eastside' on the experimental prison programme - was just 29.

The inmate was found unresponsive in his bunk on Sunday morning (2 June), with authorities later confirming to local Arkansas TV station KATV of the sad news.

KATV reports McAllister was transported to Jefferson Regional Medical Centre in Pine Bluff, Arkansas.

He was pronounced dead at the health care centre at 8.50am. No foul play or suicide is suspected.

The inmate was certainly a main player in the Netflix series after being incarcerated at Williams Correctional Facility in Pine Bluff.

He was given a three-year prison sentence last year after being convicted of ten felony counts related to drugs, breaking and entering, theft of property, and firearms possession.

It wasn't McAllister's first offence, as he had previously been incarcerated 14 times.

Offences stretched back to when he was 19 years old.

At Williams Correctional Facility, the inmate had been working as the prison tattoo artist and would regularly ink his fellow prisoners.

But McAllister certainly became a recognised face across the globe as he featured on Unlocked: A Jail Experiment .

The eight-part series, which premiered back in April, followed the lives of several inmates at the Pulaski County Regional Detention facility.

More interestingly, it explored whether or not prisoners could be trusted to govern themselves without guards.

Deputies were removed from the unit and a tier-based structure was put in place where prisoners who were on their best behavior would be rewarded.

And those who took part in the experiment were left baffled when the rules seemed to be suddenly relaxed.

McAllister was interviewed as part of the Netflix docuseries, as he reflected on his criminal past.

He spoke about how breaking the law had given him an 'adrenaline' rush.

"All I've been around is criminals… I love that adrenaline rush high, knowing you could get caught," he said.

Arkansas sheriff Eric Higgins spoke to Netflix's Tudum ahead of the release as he shared his bold vision for the series.

"We thought, ‘What can we do to create some ownership for those detainees in that unit? How do we make the facility safer, and what can we do to still hold them accountable but empower them at the same time?’'" he told the outlet.

LADbible Group has reached out to Netflix for comment.

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