Case Study Report: The Success of Netflix

Introduction

The assigned article concisely depicts the major factors of the success of Netflix. This company is widely known as one of the most successful distributors of video material. Its films and series were nominated for numerous Primetime Emmy Awards and won 14 of them. Notwithstanding the fact that this number is lower than the number of nominations and awards obtained by movies of other distributors like HBO, Netflix is still considered as a strong player on the market of online video streaming. Nowadays it stands alongside such big studios as CBS, ABC, NBC, and HBO. The case depicts the major factors which attract the viewers, like making movies really interesting, changing the viewing style, and posting all the episodes at once instead of one by one over tie. Additionally, the convenient search engine helps users to find the movies that correspond to their requirements and have the highest marks from viewers.

Situation Analysis

The assigned case gives a clear understanding of the background of success of Netflix as it precisely describes the differences between tradition movie distribution practices and the innovative approach introduced by Netflix (mentioned above as factors). The emphasis is made on the fact that these factors particularly (which are based on the knowledge of viewers’ cognitive behavior) are the main pillars of the company’s success. No information concerning other factors (like advertising, cost of service, etc.) is given in the assigned article. Thus, the reader cannot form their own opinion concerning the factors that have led to the success of Netflix. Moreover, no data except for the number of nominations is given. The market share of Netflix in distributing movies in any location is not given and is not compared with the market share of the studio giants mentioned above. Consequently, the reader cannot properly evaluate the successfulness of Netflix. Thus, the information provided in the article can be questioned.

Consumer Behavioral Issues

It is notable that all of the above mentioned factors of success are connected with consumer behavioral issues. As it is noted, consumers want high-quality entertainment which is interesting to them. Netflix addresses this desire and provides attention-catching and engaging entertainment that increases customers’ attempts to watch their favorite shows. This desire is closely connected to such a behavioral issue as selective perception. It can be described as paying attention only to interesting information while ignoring other information and entertainment. Selective perception can be considered a form of bias because it is based on favoring one type of interpretation of attractiveness of information over other. This behavior can be connected to such problem as being blinkered because of focusing on a particular type of content.

Releasing complete seasons at once is rather successful because it meets such behavioral issue as immediate (or instant) gratification. It is reflected in the intent to gratify personal needs and wants as soon as possible. In the case of streaming video online, this issue can be explained by the viewers’ desire to act on their urges, i.e. to watch a new series and obtain an understanding of the course of events. Previously, in traditional movie distribution, people had to wait till the release of a new series. However, Netflix strategy of releasing complete seasons at a time eliminates this obligation, because viewers can watch the whole story at once.

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The last behavioral issue addressed by Netflix is avoiding decision making and shifting the responsibility from oneself on someone or something else. Viewers do not want to spend time choosing a movie and be responsible for their choice. They prefer to rely on the reviews of other people or use the sophisticated search recommender system that helps to decide what to watch. Thus, Netflix appreciates the diffusion of responsibility, i.e. unwillingness of an individual to take responsibility in the presence of other people (in this case – other viewers) as they have already took this responsibility (i.e. viewed movies) and are responsible for taking actions (i.e. viewers make their choice of a movie for watching based on the reviews of others or recommendations of the system).

Reflecting Academic Research

Selective perception is studied by James P. Walsh. The author provides examples and evidence that demonstrate how this behavioral issue leads to significant performance shortcomings, as workers in offices pay attention only to the information that relates to their activities as per their viewpoint. However, they fail to acknowledge other data that can indirectly influence their work and the work of the whole department (Walsh). This results in missing relevant details, failing to recognize organizational gaps, and other related issues.

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The behavioral issue connected to immediate gratification was studied in the works created by Ted O’Donoghue and Matthew Rabin. The authors state that people “pursue immediate gratification in a way that we ourselves do not appreciate in the long run” (O’Donoghue and Rabin 233), because people usually fall for time-inconsistent things. Immediate gratification is closely connected to the self-control problem. O’Donoghue and Rabin provide the ways to address this problem by means of timing of gratification and improvement of personal awareness concerning this issue. They emphasized that the desire for immediate gratification is widely used in marketing (O’Donoghue and Rabin). This statement is supported by the following example: “naughty goods are often sold in small packages” (O’Donoghue and Rabin 245) because people who know that they suffer from a lack of self-control tend not to buy big packages (O’Donoghue and Rabin). Thus, consumers tend to buy smaller packages which cost more. In such a manner, modern marketers appreciate and use not only human over-consumption, but also the personal desire to address it.

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Stephen M. Garcia, Kim Weaver, Gordon B. Moskowitz, and John M. Darley studied the issue of crowded minds that is closely connected with the diffusion of responsibility.  They insisted that being in a group stipulated the development of a feeling that an individual is less responsible for personal and group actions and behaviors. This feeling causes diminishing accountability and responsibility and often leads to inaction. The authors analyzed different studies which explain the bystander behavior that supported the idea that individuals in groups show behavior connected with the lack of accountability and the desire to make decision.

Marketing Implications

Netflix adopted numerous marketing strategies connected with behavioral issues, which has brought the company to success and enabled it to compete with other movie distributing giants. The selective perception is addressed by providing a great variety of series on different topics. Thus, the products of Netflix can be attractive for people with different tastes. As it was mentioned above, the modern issue of immediate gratification is addressed by releasing complete seasons at once instead of introducing separate episodes, i.e. the viewer can gratify their desire to watch the whole story immediately. Such issues as shifting responsibility are used by introducing a comprehensive search program and the ability to use reviews of others to choose what to watch. Consequently, the responsibility for their choice is shifted from the viewers of a program to other people.

 

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