Netflix gets a lot of bad press lately because they failed to secure as many new subscribers as the markets would have expected. Consequently, the markets reacted and the Netflix share price was in free fall for a few days – resulting in further bad press. Everyone, who deemed to be an expert, said they have to rethink their business model, they have to merge with Apple or Viacom or they should do this and that.
Everyone has an opinion on Netflix – and so do I.
And I say: Netflix should trust into its own unique culture. That is what made them great and that is what will stir them through these challenging times.
Firstly, I think the Netflix specific culture is the true asset of this company. Like no other player in the entertainment industry they managed to concoct this extraordinary melange of outstanding content creation, user-oriented technology innovation and superb corporate storytelling. Such a blend of talent, geniality and mission is hard to copy – and its in peril when you merge this company with a classic media behemoth.
Secondly, it is exactly this culture that will generate a new, fascinating story for Netflix. And that is why I think they should be bold and buy a Fitness Club chain.
What is my reasoning for such a bold move?
In my humble opinion, Netflix has a couple of strategic options at its hand for the next move and is slightly surprising and disrupting the market.
To outline them, one must understand that Netflix is considering itself an entertainment company that caters to a very specific market segment. Netflix is obsessed with this very specific ‘customer persona’ and does everything to occupy the virtual shelf-space of this persona when it comes to entertainment. In that regard, they compete not necessarily with Disney, for example, who has a different content portfolio, but rather with gaming, for instance, as Netlfix CEO Hastings admitted himself.
Naturally, if Netflix wants to stay relevant and wants to grow, they need to look for options in the entertainment segment – anything that entertains their core customers is on the table.
Gaming comes to mind first. It is a no-brainer and Netflix will certainly investigate how it can advance into that arena more deeply.
A more complex approach is by creating interesting bundle offers and also building a sense of community around Netflix. Both strategies are well-known to keep customers loyal, enhancing brand and product value and generating recurring revenue streams.
If I apply ideas around bundling Netflix must look into hardware and ‘offline’ options. Hardware-wise a natural fit is with Apple and game consoles. Offline, we are talking entertainment venues or any relevant service that is also close to the daily customer of journey of their cherished ‘persona’. There is also an option to bundle Netflix with software / apps that are being used throughout the day: again gaming, but also odd stuff like mediation apps; life-improvement / habit, health, lifestyle apps, etc
Taking the idea of offline and entertainment further and combining it with community, is in my opinion the most advanced, boldest, but also most winning strategy. People want to have analog, offline experiences again. As the COVID restrictions slowly seize, consumers go out for entertainment more often. In addition, people love to be part of a community; especially if its such an eclectic community as Netflix aficionados are.
Netflix can reinvent how we experience entertainment
My strategy for Netflix would be to buy movie theatres, convert them into modern, avant-garde entertainment venues with VR experiences and club membership. Taking this a step further why not also buy Club Med and fitness clubs.
Netflix could reinvent entertainment by offering total immersive media experience in combination with their brilliant sense for great, relevant, impactful content.
Netflix will need to show the next few months whether it is really trusting its culture of innovation, content, disruption and great storytelling – or whether it budges to the bullies of the market.