Case 9.2 Netflix Stream Becomes a Global River When Netflix was launched in 1997, few people could envision it would one day topple the former market leader for video rental, Blockbuster. Customers were attracted to Netflix's low subscription prices and lack of late fees. Netflix used the U.S. Postal Service to mail DVDs straight to the home, saving consumers a trip to the video store. Its superiority in price and distribution was only the beginning of Netflix's marketing prowess. Netflix is taking on the world as it becomes available in more countries. It became one of the first U.S. companies to expand into Cuba, and with a presence in about 190 countries, Netflix has announced its intention to enter into every country in the world.

The key to Netflix's rapid international expansion is its globalized approach. Because Netflix is an internet streaming service, it is easily obtained by any household with a strong enough internet connection. Its products and distribution channels are, therefore, highly standardized. As more consumers become connected to the internet worldwide, Netflix is taking advantage of the opportunity to reach them. Currently, it has more than 117 million subscribers who watch more than 140 million hours of content daily.

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Netflix is also moving its marketing strategy to focus less on pricing and more on its original content programming, including international content. For example, the company announced its first Polish original series directed by Agnieszka Holland and Kasia Adamik. Additionally, a collaboration with the Australian Broadcasting Corporation resulted in a six-hour international political thriller by screenwriters Greg Haddrick and Felicity Packard. Netflix's original content is rivaling traditional television shows and movies. Today, Netflix has not only conquered the rental movie industry, it is convincing more people around the globe to give up cable and direct television in favor of streaming.

Despite Netflix's advantage, competitors like Amazon Prime are making inroads in the streaming industry. This requires Netflix to continually improve its marketing strategy and adapt to cultural differences. For instance, consumers in some countries favor using mobile devices over computers. Netflix has adapted its streaming services to display effectively on mobile devices. It has also adopted mobile payment options such as Google Play and iTunes so subscribers can complete transactions straight from their phones. Netflix's constantly evolving marketing strategy is key to the firm maintaining its strong competitive edge.

However, even companies with a globalization approach face certain challenges that vary by country. U.S. sanctions on Syria and North Korea currently prevent Netflix from entering those countries. It was also forced to abandon its original plans to launch in China due to the country's government restrictions. Instead, Netflix has decided to license content to local firms rather than launching its own service. In Cuba, the price for its services is about half the monthly salary of the average Cuban worker. Payments must be made with credit or debit cards that are not accessible to the majority of Cubans. Netflix may, therefore, have to customize its payment options. Finally, Netflix's success depends upon how much of the population has sufficient internet connections. Only about 34 percent of Cubans have internet access. Despite these struggles, there is still plenty of room for international growth and expansion.

QUESTION: Describe some of the forces acting as barriers to Netflix in various countries.