Problem /Solution Statement
In the long run, India is critical for Netflix because it is amongst the most established Internet markets in the world. Upon Netflix’s entry into India in 2016, the industry raised questions about the company’s decision. The difficulties that required the firm’s attention were whether Netflix could endure and overcome obstacles to meet the needs of the Indian market.
Then, the Indian market was willing to embrace a more complicated subscription model. One issue that urgently needed Netflix’s attention was how well they would capture a substantial share of the Indian value chain, considering that the country was still grappling with fundamental infrastructure issues, such as poor Internet connectivity (Kumar et al., 2020). This paper seeks to analyze the challenges Netflix in India faced in 2016 during its entrance into the Indian market.
As a remedy, particular actions must be taken for Netflix to establish itself in India successfully. They must put market penetration tactics since the Indian market already has established competitors. For Netflix to stand out, it needs to provide the most excellent services while lowering its pricing to gain a competitive edge. Netflix India has to maintain its competitive advantage by developing its content rather than depending on licensed and rented content.
Situational Analysis
Established rivals who have explored every element of the market, leaving little room for exploitation by newcomers, are linked to the existing challenge of new entry. The force of new entry hampers Netflix’s launch and continued operation in the Indian market since they must invest sufficient resources to compete on a level playing field with their existing competitors. Netflix incurred significant financial expenses to roll out its foreign growth program, which in some ways challenged its existing approach.
The investment measures reduced the effect of Netflix’s revenues by a modest amount, but they laid the groundwork for longer-term improvement. Netflix spent more money to market itself in India as it struggled to boost brand awareness (Suraj, 2017). The massive investment in attempts to expand Netflix India impacted the company’s bottom line, especially as they had to pay additional costs in generating unique content relevant to the Indian audience. The expenditures did not stop creating content and advertisements; Netflix also had to form agreements with local businesses, including telecommunications companies, and pay for exclusive licensing to original programming, hosting, and technical fees that characterize its service delivery in India.
Netflix lowering spending while seeking to construct a budget required them to slice their budget until it is convenient enough to handle. This produced financial problems since the market needed the improvement of its products and services, which came at a cost. The same is valid for creating one-of-a-kind materials.
Netflix India will need to lay the groundwork for its content development to easily support and anticipate its release. Diversification with a possibly less expensive budget will be challenging to implement since it would require the creation of a large volume of original material. This becomes problematic for an organization attempting to establish itself in a new market.
Problem Analysis
Based on its SWOT analysis, Netflix India is well prepared and ready to establish itself in the Indian digital market.
Strength: Netflix India is known for its high quality, experience, and tried-and-true membership options. Netflix’s website offers both American and worldwide entertainment. Thus it enters India with a well-organized inventory. This appears to be a competitive advantage that the online content supplier has over its competitors if appropriately used.
Weakness: Netflix’s vulnerability in India may be due to the limited number of memberships and dependence on the internet. Netflix may need to alter its membership pricing to gain a competitive advantage. Due to the fixed subscriptions, Netflix finds it challenging to align its statistics with the expectations of its intended audience.
Opportunities: Due to its originality, Netflix India also has very high odds of success. Netflix creates original material to help it establish its brand in India because it focuses on producing regional and local content for its Indian consumers. The ability to create its content helps Netflix strengthen its position in the Indian market. With the power to create its content, Netflix can cater to the wants and desires of its target audience by creating and distributing material appropriate to the Indian market.
Threats: In India, Netflix faces challenges from well-established companies such as Hot Star and Eros Now. Aside from competition, Netflix must deal with the threat of changing technology. Well-known competitors better understand the Indian market due to their much longer involvement in the sector. Aside from competitors, Netflix must also fight the danger posed by developing technology. Technology is continuously changing, and Netflix must keep up with technological advancements and ensure that it does not lag as things change.
Based on VRIO analysis, Netflix significantly relies on entertainment content creators. Although its value chain includes its original films and TV episodes, the company also releases third-party content on its platform with the strategic goal of attracting and maintaining more customers. According to the resource-based perspective, this element renders Netflix sensitive to strategic shifts and producer competitive factors. The competitiveness of Disney and other corporations with the potential to provide their content on their platforms is notable. Because other companies have comparable technical resources and skills, Netflix’s information systems assets provide a merely competitive system.
Recommendation
Given the multiple obstacles, Netflix’s primary objective will continue to enhance its margins compared to rivals. Price should be Netflix’s final option if they want to create operations while keeping consistency. Pricing should be considered a last resort when it comes to increasing profits.
By not changing rates as often as possible, Netflix will ensure that their clients get accustomed to their pricing and that they can continue to provide their services without having to deal with extra service provision challenges brought on by dwindling finances. To borrow from its competitors, Netflix would make a portion of its library available to viewers while retaining subscribers’ most popular and recent shows. Likewise, Netflix may employ commercials to generate more revenue by attracting more customers.
Action steps
Netflix’s global expansion has been a complex and challenging experience. The company’s management must be well-versed in the targeted markets, competitors, existing local market dynamics, and the requirement to properly launch and drive growth. Before going global, it is vital to comprehend your firm’s implications fully.
Netflix will have to begin by conducting market segmentation research to determine whether its products and services would be effective in the local market. It is vital to have a localized strategy and business plan that promotes local success while remaining consistent with the larger company’s strategy and aims. To be a smooth entry into the market, Netflix should bring on qualified temporary officers with extensive knowledge to help build their financial infrastructure (Kumar et al., 2020). To achieve high-impact product differentiation, Netflix should take the necessary steps to advertise its products and services based on product gap research.
Based on the Evaluation of the organization of structure, Netflix needs to adequately implement the company’s plan by developing a competitive pay package based on local standards. Netflix should also choose the ideal sales framework for the operations: direct or indirect sales, OEM, vendor, or even combination. The company also has to decide on its sales strategy, create a final budget, and forge strong ties with local firms by forming a partnership.
References
Kumar, J., Gupta, A., & Dixit, S. (2020). Netflix: SVoD entertainment of next-gen. Emerald Emerging Markets Case Studies, 10(3), 1–36.
Suraj, S. (2017). Netflix In India: The Way Ahead Ivey [Review of Netflix In India: The Way Ahead Ivey]. W17100.