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Marketing

Published August 29th 2018

What Can Netflix Teach You About Managing Your Brand Like a Boss?

Guest blogger John Stevens reviews Netflix's way of understanding what the consumer needs and delivering on those needs spectacularly.

Netflix is undoubtedly one of the most controversial brands in the world today.

While there are many instances in which Netflix’s actions have generated debate, very few brands would have gotten away with some of the things they have.

To name just a few:

  • Hiking the prices of their product and refusing to back down despite massive backlash – it was estimated that 500,000 people would cancel their accounts as a result.
  • Posting a tweet showing how much data the company has on its users’ viewing habits, generating strong criticisms for its “Big Brother”-like behavior.
  • Issuing a blanket ban on the use of VPNs to stream content on Netflix, despite the fact that over 30 million Netflix users access the service with a VPN.

As you can see, all of the above controversial moves are bold and some might be considered downright foolish. Yet Netflix has only grown stronger.

Here are some interesting facts:

  • Since instituting its blanket ban and price hike Netflix has added over 40 million new users.
  • Over 125 million subscribers currently pay Netflix to use its services.
  • In the first quarter of this year alone Netflix added almost half as many subscribers as one of its major competitors, Hulu, has in total.
  • Netflix is being used in over 190 countries

How is Netflix able to manage this? Here are four key brand management lessons from them.

Lesson #1. The importance of catering to the needs of a diverse audience

85 per cent of Netflix’s total spending in 2018 will be going towards original content – in case you don’t know how big of a deal that is, Netflix projected that it will be spending up to $8 billion on content this year.

Netflix has bet big on a lot of things in the past but its biggest bet is evidently on original content. While their strategy to focus on original content is influenced by a lot of things, a major factor is undoubtedly its desire to cater to the needs of a diverse audience.

Due to licensing restrictions, Netflix users are limited when it comes to shows they can access depending on their geographical location. Many resorted to using VPNs to bypass this restriction and, in an attempt to satisfy their content partners, Netflix issued a blanket ban on VPN use. Users aren’t taking too kindly to this, and some sources reported that subscriber growth has slowed as a result.

By investing heavily in original content, Netflix can create shows for lots of different regions and tastes that meet the needs of their audiences, ensuring that everyone enjoys the Netflix shows available in their location.

The lesson here is simple: Focus on forward-thinking ways to address the needs of your audience. Don’t ignore user complaints, especially when it affects a significant portion of your user base, or your brand will suffer.

Lesson #2. Netflix Socks, and why it matters that users know you’re listening

In December 2015, Netflix introduced Netflix Socks, a creative pair of smart socks designed to keep users warm and pause the show when it detects that they’ve have fallen asleep.

Since Netflix is known for its streaming product, not as a manufacturer of socks, Netflix Socks naturally got a lot of attention. In the aftermath of its release, Netflix socks generated a whole lot of media coverage, resulted in an average of 1,175 tweets per day from over 20,000 users, and won a Shorty Award.

What’s interesting, however, is how Netflix came about the idea for Netflix Socks: through social listening. After noticing complaints from users on social media about falling asleep in the midst of a TV show, only to wake up several episodes later, Netflix decided to introduce Netflix Socks.

With the introduction of Netflix Socks, Netflix was able to kill two birds with one stone:

  1. It made it clear to customers that it is listening, and that it values their input
  2. It generated a lot of media and social attention that it wouldn’t have gotten otherwise, generating yet more exposure for the Netflix brand

Lesson #3. Quality over quantity: How Netflix is out-manoeuvring competitors

While Netflix has made it clear that it won’t hesitate when it comes to spending money on original content, another lesson to take from the streaming giant is that this isn’t simply a numbers game.

Netflix is not only releasing more shows than other media producers, but it is releasing better shows. This is evidenced by the position of Netflix shows in the rankings.

In Thrillist’s ranking of the top TV shows of 2017, shows from Netflix appeared 11 times – that’s more than every other media producer on the list including HBO and NBC.

So while focusing on quantity might seem like a good approach, it won’t necessarily give you an edge. When you are known for consistently giving users quality, however, your way to the top is guaranteed.

Lesson #4. From shipping DVDs to global internet streaming, or why you should have an adaptable brand

When Netflix started, very few people knew that it would be on the path it’s currently on. While Netflix started by shipping DVDs, it is currently the number one content streaming service in the world with over 125 million subscribers. It didn’t get there by shipping DVDs. Nor did it get there simply by streaming content. Instead, it got there by being flexible. Or at least that’s what its CEO, Reed Hastings, said when VentureBeat asked him where Netflix will be in the next five years:

“It’s not Netflix that’s making the changes. It’s the Internet. We’re figuring out every year how to use the Internet to make a great consumer experience. Every year is an experiment.”

In other words, when Netflix realized that what users really wanted is content that can be streamed, not shipped DVDs, it pivoted. Now that it realizes that users want a consistent content experience across the globe, and that it needs to be in control of its content to achieve that, its once again altering its strategy to create killer original content.

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