Grow Netflix 2x | PM interview product strategy question

Hi folks!

As with every PM interview question, strategy questions should start with:

Clarifying questions

• What does growth mean? Users, revenue, profits, etc.? Assume-> Revenue.
• What’s the timeframe? Assume-> 2 years.
• Are we focusing on any specific product? like Games, live stream, etc.? Assume-> Overall.
• Are we focusing on any specific location? Assume-> Globally.

Before jumping to strategies, take a minute or two to talk about:

The company and the product

Source: Netflix Logo

Netflix’s mission is to ‘entertain’ the world. Through its mobile, web, and TV applications, Netflix offers Movies, TV shows, and Originals, through its streaming service. In the last decade and more, Netflix has reached millions of users across the globe (190+ countries) and boasts around ~280 Mn paid subscribers. Recently, Netflix has started venturing into more verticals like Live Streaming (Comedy, Sports), and Games. Netflix has an early movers advantage in the US, Europe, and other parts of the world and commands a well-recognized brand power, so much so, that ‘Netflix and Chill’ has become synonymous with weekend hangouts with friends, for many age groups.

Let’s do a quick Strengths & Weaknesses analysis:

Netflix’s current revenue sources are:

• Subscriptions Fees
• Ads (in some countries)
• Content Licensing

The Strategy

Considering the revenue model and how Netflix operates (focusing on primary revenue driver — subscriptions), revenue can be increased by —

• Increasing the number of paid subscribers OR
• Increasing the cost of subscription

Let’s understand, how can we achieve this:

Increasing the #paid subscribers

• Expanding into new territories: Although Netflix is already available in 190+ countries, most of the paid subscribers are from the Americas, Europe, and top Asian countries. Expansion for Netflix could mean adding more local and culturally diverse content on the platform. This could be achieved by partnering with local production houses to procure existing content, and with directors, and content creators to add Netflix Originals.
• Acquisitions: One step further would be meaningful acquisitions of independent production houses like TVF in India, and so on. This needs a thorough analysis of new markets and consumption patterns alike.
• New offerings: Keeping Netflix’s mission in mind, I believe Netflix could explore new ventures. I have come up with 2 initiatives:

1. Sports Streaming
2. Netflix Merchandise

Sports Streaming

Netflix has already dipped its toes in live-streaming and has received mixed responses. But I believe with their strong technology and distribution network, it’ll only get better. Sports is a major entertainment business across the globe. Live events like the NFL, Football World Cup, IPLs are a testament to the fact that sports streaming has unlimited potential. It can prove to be the next wave of user onboarding for the streaming giant.

Netflix Merchandise

Netflix currently does a version of this with Netflix.shop, but I believe adding the shopping experience to the streaming app could be an experiment with great potential. I’m thinking about shopping recommendations along with streaming on mobile devices (easier navigation compared to TVs) to start with. This could be a subtle tweak in the UI, which is not obviously visible(accessible on 2+ clicks during streaming).

Prioritization

For prioritization, I’m going to use the RICE framework!

Expansion:

This needs identifying the collaboration opportunities, and careful analysis of local content consumption patterns. It is my strong belief that more local content in culturally diverse countries like India is the way to go. Moreover, global streaming platforms like Netflix are perfectly positioned to make local content available worldwide. Great examples of these themes playing out — Squid Games, Money Heist, etc.

• Reach — 3/5 (Identifying new geographies and adding relevant content is a slow process given we are looking at 2 years timeframe, especially when Netflix is already available in most countries across the globe)
• Impact — 4/5 (High, due to the possibility of adding new customers and revenue opportunities)
• Confidence — 70% (Moderate, as I believe this will be expensive and gradual)
• Efforts — 4/5 (We’ll need infrastructure investments, regulations analysis, etc.)

Acquisition:

Just like expansion strategy, the acquisition is all about the right opportunities and what makes business sense. This works best with smaller local players who are in the growth phase. The key deciding factor is the ROI.

• Reach — 3/5 (The reach might vary based on markets. For instance, acquiring new players in mature markets might not be as useful as new ones.)
• Impact — 3/5 (Moderate to high depending on the nature of acquisition)
• Confidence —70% (Moderate, as I believe this will be expensive and time gradual)
• Efforts — 3/5 (Not too difficult to add content, but regulations might come into play)

Sports Streaming:

I believe this is the next big thing for Netflix!! Different sports have loyal fan bases across the world and a consistent viewership. Sports fit the bill with the entertainment factor they bring and the capability to pull the crowd. Netflix will have to work hard on positioning the sports packages (with Ads, subscription tiers, etc.), producing the right deals, choosing the right games, working out legalities, and picking the right demography. I believe Netflix has the tech prowess to pull this off, but the rollout should be gradual, which gives Netflix the time to learn and adapt.

• Reach — 4/5 (The reach will mostly be high given the type of sports we decide to enter)
• Impact — 5/5 (Very high as it opens mega opportunities around new users acquisition and revenue)
• Confidence — 100% (Very high, because of proven models of sports from around the world.)
• Efforts — 4/5 (High due to costs, and collaborations)

Merchandise:

If brought within the Netflix experience, merchandise could prove to be a great global expansion strategy. In my opinion, this is a high-effort, high-impact feature with considerable risk too. Merging shopping into a streaming app experience needs UX A/B testing and meticulous design. The initial rollout could be about expressing interest in an item, like ‘T-shirt’, and a follow-up email with sopping details. Results can be monitored and if worked well, can be expanded to better positioning, marketing, influencers/celebrity collaboration, and so on.

• Reach — 5/5 (Potential to be a global product)
• Impact — 5/5 (Very high as it opens mega opportunities revenue)
• Confidence — 80% (High, considering loyal fans’ inclination towards buying into becoming a part of their favorite shows)
• Efforts — 3/5 (Moderate as we plan to expand it gradually with light MVPs to start with)

Netflix — 2X revenue Strategy

Summary

Based on the above evaluation, I plan to start with the roll-out of merchandise and sports features with respective MVPs and closely monitor the results to make adjustments, if required.

Expansion and acquisitions should be the priorities as and when the right opportunity arises, as these strategies open doors for new user and revenue opportunities.

And, that’s a wrap! Hope you found this exercise helpful. Do consider following me for more such exercises!! Thank you :)