3 important lessons that tech companies can learn from Netflix’s recent troubles
For many years, Netflix has been a household name in the entertainment industry, offering a wide variety of films and TV shows for audiences across the world. However, despite their strong growth in the past decade, their fortunes have changed considerably since the pandemic.
According to the BBC, the share price of the streaming giant slumped by more than a third in April after it revealed a sharp drop in its number of subscribers. This fall represents a $50 billion loss to the firm’s market value and many wonder if it will be able to recover.
Of course, while this may be a harsh blow to investors, there are some useful lessons to be learnt from the challenges they faced. If you want to ensure that your company doesn’t make the same mistakes, find out what Netflix’s recent troubles can teach you.
Netflix has struggled to match the content offered by rival platforms
In recent years, Netflix has enjoyed its position as one of the main streaming services in the UK. From Stranger Things to Squid Game, audiences couldn’t get enough of the TV shows and movies that they offered.
However, the past few years have also seen a sharp increase in the amount of competition that the service faces. Rival platforms, such as Apple TV and Disney+, have offered a tempting alternative, as we’ll discuss later.
As households have to tighten their belts due to the cost of living crisis, subscriptions are one of the first things that people have cut in order to save money. According to the Guardian, the streaming giant’s total number of subscribers fell by 200,000 in the first quarter of 2022.
While they may not seem obvious, there are several lessons that tech companies can learn from Netflix’s recent problems, so read on to find out what it can teach you.
1. It’s important to stand out from your competition
One of the main reasons why Netflix became a household name was because it was a trailblazer for the business model of streaming services. It took a chance to innovate and reaped the rewards for doing so.
While this gave them a considerable amount of early success, problems began to arise as more and more streaming platforms popped up. One of the biggest issues they faced was a lack of engaging and original content to keep audiences coming back.
While rival streaming services, such as Disney+ and Amazon Prime, were able to draw on large archives of films and TV shows, Netflix did not. Even though they spent a considerable amount of money on trying to create new content, they failed to do so in a meaningful way.
As you’ll know, the sheer number of new start-ups in the tech industry each year means that there is no shortage of rival companies. In every field, from fintech to machine learning, competition can be cutthroat.
Whether you’re looking to attract clients or investors, the key to success is to stand out among the crowd. When there are dozens of different companies to choose from, you need to emphasise what you do differently and better than everyone else.
This may involve showing off an innovation that you’re particularly proud of or underlining how the skills of your team help you to solve problems in more effective ways. However you choose to show it, it’s important that prospective clients know why your company is head and shoulders above the rest.
2. Understanding your audience is the key to success
On top of their lack of new and engaging content to keep viewers’ attention, Netflix also ran into problems with their pricing structure. To boost profits, the company announced in March that they would be raising prices for the first time in a decade.
Of course, at a time when many households were having to tighten their belts due to the rising cost of living, this move didn’t create much goodwill.
Furthermore, its plan to offer a cheaper service with ads also misread the mood of their subscribers. After all, avoiding channels that offered mediocre content, punctuated by ad breaks, was the reason that audiences turned to streaming in the first place!
If you want your company to thrive, it’s important to have a strong understanding of what your client base wants. As we touched upon in our article about the challenges facing startups, this is where market research can be invaluable.
Doing your homework on what your audience wants can help you to market your company’s services more effectively. By having an accurate and in-depth picture of their needs, you can demonstrate why you’re the best firm to meet them.
3. Don’t be afraid to try new ways of doing things
Another criticism levelled at Netflix is that, with some exceptions, they are generally too averse to taking risks with the content they produce.
While this may have been understandable when they were on top of the streaming market, critics have argued that it has posed an increasing problem as the number of rival platforms grows.
The streaming giant’s aversion to risk can be seen in their lack of creative solutions to grow their company. For example, according to the Guardian, the service had the option to branch out into news and sports back in 2018, as their competitors eventually chose to, but decided against it.
If you want to build your business effectively, it’s important to know when to take risks. Being able to think outside the box can be an invaluable skill, as it enables you to solve problems, and overcome obstacles, more effectively.
In many fields, but in the tech sector especially, nurturing a culture of innovation can help your company to grow and adapt to changing market conditions.
Of course, while taking a chance can have benefits for your company, it can also be important to minimise the risk of anything going wrong when doing so. This is why it’s essential to have the right type of cover in place when seizing market opportunities.
If you want to be able to rest easy, knowing that you’re protected against any unexpected problems, working with a broker can give you invaluable peace of mind. Having the right cover for your needs can give you one less thing to worry about, so you can focus on growing your company.
Get in touch
If you want to protect your business, but aren’t sure what types of cover you may need, we can help. To find out more, email creative@eggarforrester.com or use our contact form to request a callback from our team.
