In this latest episode of the How Would You Beat podcast, we looked at how you can beat Netflix, or how Netflix could beat its current performance. Should Netflix invest in gaming platforms? Is the metaverse a threat or an opportunity for Netflix and other streaming apps?
The current state of Netflix
Netflix dominates its competition in the OTT industry with 45% market share, but their market capitalization is down 70%. It's hard to think of the OTT (Over-The-Top, indicating “over the internet” or streaming industry) without thinking of Netflix. That said, things are looking less-than-perfect for the streaming giant. One might argue that the market itself is on a downtrend, but Netflix has also lost 200,000 subscribers in Q1, and they forecast losing another 200,000 in Q2. This loss of traction is coming from Netflix’s competitors, from the lifting of lockdowns and increased subscription sharing, Netflix also lost 700,000 paid subscribers in Russia after the war in Ukraine. Netflix’s PE ratio is down to 17x from 92x. A price-to-earnings ratio of 17x is still good, and 45% is still a good market share to hold, but the fact remains that Netflix is losing subscribers (and has a lower PE ratio than previously)
In this blog, we’re going to look at: How can we use Jobs-to-be-Done to analyze Netflix and beat Netflix. Alternatively, how can Netflix turn around and continue to grow using Jobs-to-be-Done?
The Jobs-to-be-Done theory shows that customers do not simply buy your product; they hire it to do a job. The job is the goal customers hope to achieve by using your product. When you use the Jobs-to-be-Done approach, you define your market by your customer’s Job-to-be-Done rather than by your product.
How Jobs-to-be-Done Helps You Find New Competitive Approaches
So, what is the job that customers are hiring Netflix for? When using the Jobs-to-be-Done approach, you look at jobs-to-be-done for OTT platforms, and then you define the job without using the platform. What if we defined the job-to-be-done as “get entertained”? In fact, CEO Reed Hastings, who is famous for thinking this way, has been quoted as saying, Netflix is competing with a bottle of wine. This is a clear indication that he went beyond the narrower “jobs to be done for OTT platforms” view and instead defined the job-to-be-done as “relax at the end of the day.” In other words, Hastings looked at a larger competitive set than most companies would automatically focus on. Adopting this view can help open up new opportunities. You’re no longer limited to a growth strategy for streaming platforms but a growth strategy linked to the job “get entertained.”
There’s another angle to this perspective. From this point of view, we also automatically redefine who would traditionally qualify as Netflix’s competitors on these jobs. You start to look beyond the competition in the OTT industry and start to see who competes with you on jobs like “relax at the end of the day” and “get entertained.”
Approach 1: Gaming
You would not typically consider gaming as one of Netflix’s competitors. However, as a potential solution to the “get entertained” job-to-be-done, gaming also uses a screen - very much like Netflix - for the user to interact and be entertained and definitely presents competition to Netflix.
Netflix could stream games to compete even if the level of interactiveness might not be at the same level as gaming consoles; they could even consider acquiring gaming console companies. Gaming represents an unexpected threat to streaming TV shows and movies that you can only see if you look beyond jobs-to-be-done for OTT platforms and figure out what the functional job is.
Approach 2: Video
When you look at the job as “get entertained” and you are asking if Netflix - or Netflix’s competitors - should acquire gaming companies, you would ask if they should instead/ also acquire or try to compete with other forms of competition outside of the OTT industry. Like video streaming platforms, for example. People hire video to get the entertainment job done. In fact, people are hiring video as a platform for a whole lot of jobs. YouTube is a big competitor for Netflix, not only directly with YouTube TV but also because of the fact that its user-generated content gets a lot of other jobs done. YouTube gets the job done for “get educated on … pretty much anything”.
And yet, when it comes to the “get educated” job that YouTube solves, there are definitely critical unmet needs that present an opportunity for Netflix. For instance, there is no feedback or assessment on the skills one tries to pick up. If you are trying to learn a song, you might not get vital information like what revisions you should make in your practice routine to perform the song better. There are mobile apps that attempt to get this job done faster and more accurately when it comes to specific areas like learning a musical instrument or a game like chess. Netflix could acquire these or see if they can serve unmet needs in the job “get educated on just about anything” faster and more accurately.
Approach 3: The same game they already playing
Netflix is a formidable competitor to the likes of Disney +, Amazon Prime, HBO Max, and other content distribution networks. They have a lot of non-English content versus a competitor like Disney+, which does Hollywood blockbuster content. So they are differentiated here. As one of Netflix’s competitors, Disney helps customer jobs-to-be-done like “entertain my kids” or “keep my kids busy so that I can have a short break in the evening,” and Netflix might respond to needs such as “get entertained and experience another culture” or “get entertained and see how the world views my culture.” There’s a segmentation question here, and your growth depends on you finding the segment that presents the biggest opportunity. (Remember, when using jobs-to-be-Done, you define your segment by your customer’s job-to-be-done).
Approach 4: Compete using new platforms
Netflix would be making a huge mistake if it forgot to look at the threat or opportunity presented by the metaverse. What could be more competition to streaming a movie than being present where the narrative is happening? The metaverse could be a serious competitor to Netflix. But the metaverse is also a platform in the same way that the internet was a platform that Netflix capitalized on to develop its streaming product. They need to think, “there’s this new platform; how can we use it to get the job done better?”
Approach 5: B2B
Here’s another idea of what Netflix’s growth strategy - beyond OTT platforms - could look like:
Netflix could give creators tools to figure out what content to invest in. After all, producing films and TV shows is expensive. They could also improve recommendations on what to watch. Of course, they already do this, but can it be faster and more accurate?
Netflix has already transformed themselves once - from a DVD mailing platform (offline) to a streaming platform (online/software). Expanding from where it is now to providing insights for content creators and recommendations to users is a much smaller shift in gears. They simply get deeper into being a software company, a move they have already made.
At the end of the day, all you need to do is identify your customer’s job-to-be-done, find out the needs at every job step, and figure out which needs are unmet and how you can use new technology to meet needs better. Of course, you do also need to watch your back to stay competitive with other solutions that might serve needs that remain unmet by your product. Sound like a lot of moving pieces? It's actually easier than it sounds, especially if you have a survey mechanism and automated insights at a click. The thrv software allows you to create better product roadmaps (and avoid redundancy) by tying your roadmap to unmet needs that are ranked in order of how severely unmet they are.
Zero in on your customer’s unmet needs easily, and figure out how you can better serve these unmet needs to pursue revenue growth. Contact thrv today to get started.
