Business Model of Netflix.
                     Business Model of Netflix
INTRODUCTION
 Netflix is a subscription-based business model 
making money with three simple plans: basic, 
standard, and premium, giving access to stream 
series, movies, and shows.
Source: fourweekmba.com
HOW IT STARTED?
 It all began in April 1998, when Netflix started 
renting out DVD’s by mail. Only a year later Netflix 
changed its pay-for-use model into a subscription 
model. 
Source: businessmodelsinc.com
BUSINESS SEGMENTS
 The company has three business segments:
 Domestic streaming: revenues from monthly 
membership fees for services consisting solely of 
streaming content to our members in the United 
States.
 International streaming: revenues from monthly 
membership fees for services consisting solely of 
streaming content to our members outside the United 
States
 Domestic DVD: revenues from monthly membership 
fees for services consisting solely of DVD-by-mail
Source: fourweekmba.com
CUSTOMER SEGMENTS
 The Netflix platform is designed to offer a vast 
collection of different types of genres for 
subscribers to select from. 
 Everyone, who is interested in watching movies, TV 
shows and documentaries 
 Although Netflix offers content for children and adults 
alike, Netflix aims to promote Family-friendly, 
educational and entertaining content to help capture 
the better interests of families.
Source: bstrategyhub.com
IS NETFLIX PROFITABLE?
 Netflix is a business that is profitable. It generated 
over $1.2 billion in 2018, a 116% increase 
compared to 2017, primarily driven by substantial 
growth in paid memberships.
 However, Netflix has negative cash flows as it 
invests massively on content license agreements 
and original content.
Source: fourweekmba.com
TRENDS DRIVING THE GROWTH
 Technology: available to watch content seamlessly 
on different devices
 Comfort: people want comfort where content is 
presented to them (personalized)
 On demand: being able to watch content 
anywhere and on any time you want
 Subscription addiction, low cost monthly fee and 
simple structure
 Data driven: pro-actively used to create content 
that fits personal preferences
Source: businessmodelsinc.com
BUILDING BLOCKS FOR AN 
EXPONENTIAL BUSINESS MODEL
 Netflix made use of all these buildings blocks to 
grow exponentially, but there are two things 
particularly interesting to point out.
Source: businessmodelsinc.com
HOW NETFLIX IS DIFFERENT?
 Affordable price: every fourth household in the US 
has a Netflix subscription, that’s why they can sell 
so cheap
 Accessibility: available on all devices, when and 
where you want
 Original content: invest in own shows, based on the 
analysis of their own customer data
Source: businessmodelsinc.com
HOW DOES NETFLIX MAKE MONEY?
 Subscription-based Business Model
 Netflix has over 193 million members from over 190 
countries (as  of July 2020)
 In fiscal year 2019, Netflix generated $20.16 billion 
annual revenue  from both the United States and 
international regions.
Source: bstrategyhub.com
NETFLIX’S REVENUE STREAMS
 Monthly subscriptions fees with three different price options 
In market (Basic – $8.99/month, Standard – $12.99/ month & 
Premium – $15.99/ month)
 Upselling opportunities – Upgrade from Basic to Premium 
Plan etc.
 Money-making movie studio with Netflix original shows.
Source: bstrategyhub.com