Short Essay 1_LUO Yingxue(1155217397)

How Netflix made a name for itself-an application of Blue Ocean Strategy

Gone are the days we watch films and series only via traditional media. We now have access to diverse content for entertainment whenever and wherever we want thanks to the increasing development of new media, particularly streaming media, which refers to a type of media content transmitted and played in real time through the Internet. In the massive market of streaming media, Netflix definitely occupies a key position. It’s not only the industry pioneer, but also one of the most viewed platforms in the world with the widest range of content coverage. From my perspective, Netflix can’t make it without implementing Blue Ocean Strategy, which focuses on creating uncontested market space.

The main point of Netflix’s Blue Ocean Strategy lies in value innovation, which pursues differentiation and low cost, instead of beating the competition. Netflix shifted from traditional DVD rentals to an on-demand streaming media, solving problems like time and place constraints, rental fees and limited rental time. By offering unlimited streaming for a fixed price, Netflix made entertainment accessible, flexible and affordable, appealing to more and more viewers through a platform, which is both convenient and cost effective, just like its homepage says-we want to entertain the world. Whatever your taste, and no matter where you live...Furthermore, Netflix differentiated itself with an advanced recommendation system, which not only enhanced users’ experience with personalized features, but also made Netflix distinct from traditional rentals and platforms.

From Blue Ocean Strategy, the ERRC Grid provides a practical and clear framework to explain how Netflix achieved value innovation. 

Eliminate: Netflix eliminated traditional modes of DVD rentals, including due dates, late fees, and monthly rental limits, which result in a lot of inconvenience and unnecessary cost. By removing these elements, Netflix created a more flexible experience for users, which can be regarded as a significant step to value innovation.

Reduce: Netflix reduced its dependence on content produced by third parties, instead created its own original content. This change not only reduced costs of licensing, but also made Netflix have a better control over its content base. Therefore, Netflix enhanced its long-term value by setting up a unique and more competitive content ecosystem.

Raise: Netflix raised personalized level for users through its recommendation algorithm, including tailored promotional artwork and customized content tags, driven by data analysis of past viewing content and preferences. In addition, Netflix raised compatibility of diverse devices, which allowed seamless access to its platform and offline, on-the-go viewing, enhancing usage convenience and user engagement.

Create: Netflix created a variety of original content, which include different themes like romance, suspense, action, campus and so on. In addition to a growing number of content, most of its original series are high-quality and attractive. For instance, Stranger Things as a representative of world-known series, not only won a dozen awards, but also provoked a massive amount of viewers’ enthusiasm, even once caused breakdown of Netflix’s platform. As a result, original content creation helped Netflix stand out in a competitive media field and built a reputation that keeps viewers loyal.

Another concept of Blue Ocean Strategy-Three Tiers of Noncustomers, also helped Netflix broaden its market potential.

First Tier (Soon-to-be): Netflix’s initial target users was former cable viewers who pursued a more flexible approach to watch. Through offering an on-demand model at reasonable prices, Netflix attracted a lot of noncustomers “who are on the hedge of its market waiting to jump ship”.

Second Tier (Refusing): Netflix developed diverse and accessible content, which serve as a starting point, appealing to those noncustomers who were hesitant to accept subscription service.

Third Tier (Unexplored): Netflix’s expansion to international markets and investment in local content allowed it to reach various areas, more than 190 countries and 21 languages around the world, which not only attracted multicultural noncustomers, but also enhanced Netflix’s position as a leader of global streaming media.

In conclusion, Blue Ocean Strategy focuses on differentiated value and meeting customers needs in innovative ways, which make company achieve sustainable growth. As a good example, Netflix built a unique competitiveness in media industry through Blue Ocean Strategy. It has become not only just a streaming media, but also an essential part of modern entertainment. In other words, while making profit, Netflix is constantly making efforts to entertain the world.