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As of 2023, Netflix is the largest streaming-video provider. However, it faces increased competition, as well as slower growth in subscriptions, which have caused it to reconsider its past practices. This case describes the history of Netflix's business model and the antecedents that have led it to make some significant changes—the most important of which is an ad-supported subscription option. It is also engaged in cost-cutting measures, discouraging password sharing, and even making a small foray into video gaming. This case is suitable for a capstone strategy course or an advanced elective in competitive strategy at the MBA level. It has been used by MBAs and executives (both in the United States and in Europe) in classes covering strategic management.
The case has one generic and two Netflix-specific objectives. The generic objective is to gain an appreciation of how a company can be profitable with a loyal buyer or a subscription-based model. The two specific objectives deal with Netflix’s decisions: first, what about Netflix specifically has enabled it to be so successful with its own version of a subscription model since 1997, and second, why Netflix is changing a long-held practice of offering its content without any ads.