As #Netflix’s 2022 strategy has changed abruptly, so should an IT vendor’s #ABM “plays” and overall messaging/alignment with this key Fortune 100 prospect. Here are 4 #accountinsights from PipelineIQ that every #b2b Technology sales/marketing team should know after their Q1 news:
1. Netflix is losing subscribers
Netflix has 222 Million paying households. They predicted Q1 2022 would add 2M new subscribers. Yesterday, they stunned the market by losing 200K – and expect to lose 2 million more next quarter. Suspending service in Russia is one factor, but clearly the COVID boost in streaming has clouded the actual health of the company. Netflix has 60% penetration in the U.S. market, so their strategy is to go after international markets (a market opportunity of 500 Million new subscribers). But to win globally, Netflix must invest in personalization and language localization.
2. Competition in streaming has accelerated
Netflix is still the dominant player in streaming, leading in share of “total TV time.” But streaming services from Disney (196M subscribers, including ESPN+ & Hulu), Amazon, Apple, HBO (now part of Warner Bros. Discovery, Peacock, and Paramount drive up costs to buy/produce content. Non-traditional platforms like YouTube, TikTok and video game companies also compete for eyeballs.
3. Data Insights, Machine Learning & Cloud are critical for growth
Netflix has a centralized Data & Insights organization focused on Data engineering, analytic insights, machine learning algorithms, optimization models & automation. Data will improve and evolve all parts of Netflix’s business including the member-facing product, streaming delivery, content, studio production, marketing, customer service, business operations, and growth. Despite competition with Amazon Prime in streaming, Netflix uses AWS for most of their cloud computing and storage needs; including databases, analytics, recommendation engines, video transcoding – hundreds of functions that in total use more than 100,000 server instances on AWS.
4. Despite a tough Q1, they remain committed to Increasing Margin
Netflix remains on track to sustain double digit revenue growth, increase operating income (even faster) and growing operating margin. Q2 will see the benefit from price increases in U.S. and Canada. Netflix is also considering an ad-supported version of their service, and have acquired three video game developers in the last 6 months which opens up areas for growth.
