Netflix ~ A Case Study in Finding Insights

Netflix Case StudyBy Ruth Zamoyta
December 2011

The digital entertainment industry reminds me of one of the rings in Dante’s Purgatorio, where spirits swirl and crash haphazardly in a ubiquitous chaos. With constant technological one-upmanship, content wars that grow bloodier by the day, and rampant piracy, it will be a while before we see dominant movie-watching technology or a dominant distributor of movies and shows.

Netflix, the first subscription-based DVD rental service, entered the scene in 1997 and not only disrupted, but indeed upended the entire DVD rental industry. It was the only player for a while, but the competitive landscape is enormously complex, including direct competitors such as Amazon Prime, Blockbuster MoviePass, hulu, and iTunes; free services such as YouTube, imdb, and pirate sites; DVD services such as RedBox and Blu-ray; content hoarders such as HBO Go; cable services such as pay-per-view and video on demand; and DVR services such as Tivo. In a battlefield like this, your only hope is a strong brand—one that has achieved a tight emotional connection with its customers.

My team knew that Netflix had immense brand equity based on the severely plaintive customer reactions to Netflix’s 2011 announcement that it would raise subscription fees and spin-off its DVD rental service. But we wanted to know what was responsible for that brand equity and how it could be utilized to strengthen loyalty and grow subscribership.

We held a focus group and ran an extensive survey of 500 movie-renters nationwide, and both of these produced surprising insights into attitudes about different video entertainment providers. Netflix was by far the most widely known and used, but the challenge was to preserve and nurture its differentiation among a sea of endless choices.

Demographic-wise, we found that Millennials with HHIs of $30,000 and up who watched five or more videos a month at home were a prime target audience for Netflix, as they indicated an interest in subscribing and they tend to stay at home more to watch movies, rather than go to the theater.

What about psychographics? According to our survey, most of these Millennial at-home movie-buffs enjoy collecting movies, wish they could have their own movie collection, are envious of people who have an interesting movie collection, have more fun with people who like the same movies, believe you can tell a lot about someone by looking through his/her movie collection, like movies because they give them something to talk about, and believe that movies define who they are.

Some focus group comments corroborated these insights: “I feel I can stay on top of a cocktail party conversation because of the television shows I watch,” “I don’t watch enough TV that I can help in trivia nights,” “At home, it’s something I need to do. It’s like a job. I need to get this done to keep up with pop culture, so I can keep up the conversation and know what I’m talking about. It’s that kind of convenience: I don’t have to go to movies.”

Based on these insights and our assessment of the competitive landscape, we drafted the following positioning statement: To Millennials who watch a lot of movies and shows at home, NETFLIX is the brand of movie and TV-show provider that gives them the best tools to build and share their movie collections so they can feel like they are interesting people.

Then we put together a marketing campaign that used the Netflix Queue as a tool to facilitate and amplify millennial movie-buffs’ desire to build their collections, so that they could be seen as interesting people. We recommended that Netflix, through partnerships with social media platforms, experiential marketing, and paid advertising, send out the message: “The Q is U.”



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