Case Study - Business Policy & Strategy

Global Capsule 3

What Company Is Growing Fastest Globally?

The answer to the question posed may be Netflix, a firm that pursues global expansion with a vengeance. Netflix added 4.45 million new international subscribers in the third quarter (Q3) of 2017 alone, with Q3 revenue increasing 30 percent. Netflix is taking advantage of the opportunity associated with the population of the world approaching 7.5 billion; the United States has slightly more than 320 million people. That leaves billions of people outside the United States who may be interested in the products and services produced through domestic firms. Remaining solely domestic is an increasingly risky strategy, especially as the world population continues to grow to an estimated 8.6 billion in 2030, 9.8 billion in 2050, and 11.2 billion in 2100.

Netflix is also mitigating an external threat in that some content owners such as Walt Disney Company are planning to offer their own movie- and video-streaming services instead of working with Netflix. Apple also expects to spend more than $1 billion in 2018 to produce its own original content. To combat this threat, Netflix is spending over $8 billion on content annually, substantially more than its rivals Hulu, Amazon.com, and HBO. Netflix is focused on signing creative talent and acquiring its own production and intellectual property. For example, the company recently made it first acquisition, taking onboard the comic-book publisher Millarworld. In addition to continued global expansion, Netflix’s long-term strategy is to continue international expansion, rely less on licensing programs from content suppliers, and focus increasingly on acquiring original content.

Source: Based on Austen Hufford, “Netflix Subscriber Growth Surges,” Wall Street Journal, (October 17, 2017): B2.