Introduction

In recent years, the market has become much more competitive as a result of the industrial
development. To keep up with the rat race, businesses must continually be on the cutting
edge with their distinctive ideas. PESTEL analysis is a one-of-a-kind method that enables
businesses to modify their game and stay one step ahead of their competitors.
In simple terms, PESTEL is a technique that assists businesses in monitoring the macro-
environment that influences their growth. This Netflix PESTEL analysis can be regarded as a
framework for achieving the company's long- and short-term objectives. It aids in the
evaluation of external factors that have an impact on the organization and the industry as a
whole.

Background
Netflix is the world's leading provider of internet streaming entertainment. Netflix's PESTEL
analysis allows them to maintain stability in the face of increasing obstacles. Furthermore,
the study can be used by the company to determine its strengths and weaknesses. It can
assist them in providing a better customer experience while also increasing revenue for the
organization.
Netflix is the most popular Internet TV station in the world, with more than 83 million
people in more than 190 countries watching more than 125 million hours of TV shows and
motion pictures every day, including original programming, documentaries, and highlight
films. Members are free to look as much as they want, whenever they want, on nearly any
Internet-connected screen. Individuals can watch, pause, and resume their viewing without
any advertising or obligations.
Profile
Company Name Netflix Inc
CEO Reed Hastings, Ted Sarandos
Company Type Streaming entertainment service company
Year Founded 1997
Number of Employees 12,135 (2021)
Annual Revenue 25 billion US dollars (2020)
Founder Reed Hastings, Marc Randolph
Area Served Worldwide excluding Mainland China, Crimea, North Korea, and Syria
Headquarters Los Gatos, California US
Operating Income The US $ 4.585 billion (2020)

PESTEL ANALYSIS
Political, Economic, Social, Technological, Environmental, and Legal (PESTEL) elements
are the external remote factors that affect a corporation. It works in a similar way to the
SWOT analysis, which analyses internal elements to assess an organization's growth
potential.

POLITICAL FACTORS
The influence of the government and its policies on the firm is referred to as political factors.
It takes into account a number of elements, including tax, foreign trade, and fiscal policy.
Other factors that have a direct impact on the organization are also included. The following
political variables influence Netflix's decisions:

 Censorship has proven to be a problem for Netflix. It has been banned in some of the
world's most powerful economies, including China, due to its content.
 Netflix's whole programming is not available in all countries or to all of its viewers
due to government regulations and policies. Netflix will suffer a significant loss as a
result of this.
 Netflix is unable to operate in many countries due to access restrictions. Even if the
brand agrees, federal regulations prevent it.

ECONOMIC FACTORS
Economic considerations evaluate a company's supply-demand graph. Economic growth,
exchange and interest rates, inflation rate, and other factors have a long-term impact on the
financial health of a corporation. Consumer purchasing power, for example, can influence
revenue growth. The economic elements that determine Netflix's business choices are listed
below.
 When purchasing content from others, the variable exchange rate has an impact on the
economics. Netflix, on the other hand, may benefit from its original material, such as
movies and TV episodes.
 Netflix subscribers have been complaining about a constant increase in the monthly
price. High-quality material may be the answer to satiating visitors and convincing
them that the content is worth their money.
 With the rise of a major rival with high-quality content, increased competition in the
streaming services poses a danger to Netflix.
 Content piracy poses a significant danger to the company's security. It has an impact
on profitability.

SOCIAL FCATORS
The social elements of the PESTEL study determine the socio-cultural background of a
potential market. It identifies the consumer's preferences and needs based on a thorough
examination of cultural trends, demographics, society norms, customs, population statistics,
and other factors. For future growth and development, Netflix should consider the following
social factors:

 The organization benefits from the pleasant working atmosphere.

 Netflix and its CEO are well-known for their generosity, and their good deeds have
affected many people. They not only give 2% of their annual income to the black
community, but they also help youngsters from low-income families.
 The company has profited from the flexibility. Netflix has made it possible to view
the live stream on a mobile device, thanks to the latest trend.

TECHNOLOGICAL FACTORS
A healthy business is shaped by technological innovation. Technological innovation,
automation, and technical awareness are all important factors in the industry's operation and
attractiveness. The following are the technical variables that have an impact on Netflix's
business:
 Netflix allows users to watch high-quality video while using very little data. It is one
of the company's many benefits.
 Users are frequently perplexed by the constantly shifting algorithms. The content
rating system is the best example of this.
 The automatic translation software Hermes is very popular among Netflix subscribers.
ENVIRONMENTAL FACTORS
Low carbon emissions, environmentally friendly services, reusable resources, and a focus on
sustainability are the foundations of ecological consciousness. Businesses must think about
the environment while designing their operations. The following environmental conditions
have a significant impact on Netflix's business:
 The company's recent investment in partnering with the Environmental Protection
Agency (EPA) demonstrates its commitment to transition to renewable energy. This
enhanced environmental consciousness, on the other hand, could lead to growth.
 Reduced consumption of paper in the office is another step toward a more sustainable
future.
 The media company operates virtually entirely online and has no direct influence on
the environment. Its electrical consumption, on the other hand, is rather high.

LEGAL FACTORS
Legal aspects refer to the laws that a corporation must follow if it operates in a particular
country or state. Consumer law, health and safety, labor regulations, discrimination laws,
copyright, and other issues are only a few examples. The following are the legal factors that
have an impact on Netflix's business:
 The abrupt increase in membership costs caused a rift between the corporation and its
clients. Customers who were displeased with the service even launched a class-action
lawsuit against the corporation.
 Netflix is having problems with a small percentage of its consumers due to the
ongoing copyright claim. Rather than restricting users from other nations, the
corporation needs to devise a viable approach.

KEY TAKEAWAYS
Market dangers abound for the corporation, which operates in over 190 countries and serves a
staggering 195 million consumers. The remote macro-environmental elements have a multi-
faceted impact on this organization. Netflix's PESTEL study aids the corporation in
identifying risks, addressing issues, assessing the scope of future market expansion, and
focusing on productivity.

STP
STP is a three-step market approach that includes segmentation (S), targeting (T), and
positioning (P) (P). STP is a comprehensive examination of the current state of the business
sector and the organization. The results are then used as a foundation for the brand's critical
promoting and positioning, but its value rests in its ability to create profitable business
opportunities from similar business sector situations.
SEGMENTATION
Netflix's business sector is continually on the lookout for indicators of change in terms of
innovation and customer behavior. According to Hannah (2016), a survey estimates that over
2.7 million Australians used Netflix to view movies and TV shows in 2015.
There are several methods for segmenting the market in the video streaming sector; however,
due to the very diverse nature of clients, who alter in age, income, geographic region, and
viewing preference over time, there are a variety of methods for segmenting the market. None
of the divisions will be identical in terms of property, quantitative, generous, open,
distinguishable, notable, and, most importantly, productive.

TARGETING
Netflix focuses on a mass market of people who buy Netflix memberships to watch TV
shows and movies, hoping to grab the biggest slice of the pie with the most number of
supporters possible, regardless of age, foundations, convictions, or inclinations. Despite the
fact that Netflix focuses on mass business sector enrollment, it focuses on individual
supporter demands in order to keep them for a long time. Because of the business and
administration model, the bigger the number of paying supporters, the more Netflix can
achieve a return on overwhelming interest in content and innovation.
Netflix has highlighted its categorization on the basis of the following aspects due to its
growing popularity and simplicity of use:

 Statistics on the population (Age, gender, income)

 Psychographics are the characteristics of people (Personality, values, opinions)
 Number of people watching (number of screens)
They provide these respective segments with a differentiated offering based on their
particular tastes. As a result, the targeting and positioning tactics employed for different
categories differ significantly.

POSITIONING
The top needs of customers are comfort, reasonableness, quickness, video customisation, and
a large selection of titles. Netflix strives to be the best option for its customers by providing a
more personalized, speedy, helpful, high-definition, but modest internet streaming service
than the bulk of competitors.
Netflix has successfully positioned itself in the minds of current and potential consumers as
the most:
 Comfortable
  Reasonable
 Compatible
 Personalization-friendly
 User-friendly
 high-quality
A current platform for watching television and online series, films, documentaries, and other
media on a number of different displays.

Micro Environment Factors

• Suppliers: At a time when every other studio wants to be a Netflix competitor, Sony
Pictures has decided to become one of its top suppliers.
Culver City-based Sony has signed a multi-year deal to release movies on Netflix after they
hit theatres and home video.
• Resellers: If the product the organisation produces is taken to market by 3rd party resellers
or market intermediaries such as retailers, wholesalers, etc. then the marketing success is
impacted by those 3rd party resellers. For example, if a retail seller is a reputable name then
this reputation can be leveraged in the marketing of the product.

• Customers: In 2001, Netflix had fewer than half a million subscribers. Today, it has 209.18
million paying members, and the company’s market cap is closing in on $300 billion.

• The competition: Disney+, HBO Max, Paramount+ and Apple TV+, as well as the Amazon
Prime Video and Hulu have cut into Netflix’s share of viewers’ attention. This has led to a
slower growth rate for Netflix.