Netflix is an American OTT platform founded in 1997 by Reed Hastings and Marc Randolph as an online DVD mail service. Netflix emerged as a strong competitor of American DVD saling company BLOCKBUSTER & WALMART. Today Netflix is an online streaming portal with an active user of over 200 Million.
Business Model -
Netflix runs on a very simple business model and that is acquiring content from different content creators and producers and listing them on their portal with all the legalities. The revenue model of netflx is subscription based. Netflix earns through subscription fees charged by them from users. Also, there are romours that Netflix earns from Sharing Data to third parties (Still Rumours).
Despite of emerging as one of the most successful and amazing OTT Companies, then why Netflix is in trouble ?
The simple reason is, Netflix competitors - Disney Hotstar, Prime Video, HBO etc.
Netflix only does one thing to earn and expand and that is listing all the content of different production companies on its portal by purchasing license which means Netflix is totally dependent on other production houses for its content. But where as Disney and HBO are the production companies responsible for creating some amazing content and distributed to the world via theatre release and have made huge money already.
Now what is the threat ?
The threat is, big production companies like HBO, Disney are pulling out their content from Netlfix rapidly. Apart from that Amazon is slowly acquiring more and more content for its PRIME VIDEO. Amazon is one of the main threats for Netlfix becuase where Netflix is charging more amount than Prime and is just giving content (Which is being pulled by major production houses now),on the other side Amazon is serving with many features like Shopping, Music, Video etc through one and affordable subscription. Recently AMAZON also acquired MGM Media company for $8.5 Billion which straightaway reflects that now AMAZON is entering production business on a very large scale.
What is now Netflix doing ?
Netflix is now fastly converting its business model from Streaming Portal to Producing shows and movies. They have invested heavily in shows like Money Heist and House of Cards, but but but making and producing content requires huge amount of investment and here Netflix is facing the huge competition and trouble. As told above Netlifx only earns through subscription fees where as its competitors like HBO, Disney, Amazon, Apple, YouTube are into multiple businesses and their main aim is to grow their core business. Netflix's competitors are filled with tons of profits which will allow them to make amazin content where as Netflix is facing issues in this segment.
This doesn't mean Netflix is going to be Bankrupt. But the way things are going Netflix will soon loose its market leader title in coming years and can face tough competition from other companies.
Netflix seriously need to experiment out for other revenue model as soon as possible.