Is Netflix Building a House of Cards?

Case Solution

Stefan Michel, Francois-Xavier Cart-Tanneur, Hannes Rupprecht, Jan Soderstrom, Joris van Raak
IMD ()

Netflix’s stellar growth is compromised by a changing competitive landscape and fluctuating market confidence in its comprehensive proprietary content development strategy. With the growing presence of Google’s YouTube and Amazon’s Prime Video, as well as the entry into the ring of Disney’s Apple TV Plus and Disney Plus, customers will have access to a broader range of content and added offerings. Still, content appears to be king, and Netflix is ​​trying to beat the competition with its own powerful and award-winning video library. However, this requires more investment in content, followed by costly marketing efforts to sustain growth. Critics wonder whether Netflix’s continued overspending will result in sustained growth as debt is increasingly weighted on the balance sheet and cash flow remains negative. Is Netflix still applying the right strategy at a time when most of its competitors, often driven by deep pockets, are looking for vertical integration or platforms? Or does Netflix have to review its business model to be able to compete successfully in the future? This case examines what is happening to and about Netflix and invites students to redefine the future strategic direction of Netflix.

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