HOW DOES NETFLIX EARN MONEY?
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| HOW DOES NETFLIX EARN MONEY? |
Netflix is one of the most popular media streaming platforms in the world. Netflix is based in the USA and was founded in 1997.
Netflix is one of the richest organizations in the world and owns assets worth $34 Billion.
It also generates a revenue of $20 Billion and earns around 2 Billion Dollars annually.
But ever wondered how Netflix earns this lump sum? Let’s talk about the Business Model of Netflix and how Netflix invests and generates income.
- Subscriptions
Subscriptions are the main source of revenue for Netflix. Netflix has over 1 Million subscribers across 190 Countries. Netflix has over 125 Million Hours TV Shows and Movies in 75 Languages. Netflix generates around 70 Billion Dollars from its subscriptions. Netflix offers 3 types of subscriptions: Basic, Standard, and High Definition, and its cost vary.
- Licensing
Netflix has to acquire content from various production houses to stream its content on its platform legally. The licensing cost differs for different content. The production houses license their content on their discretion. However, Netflix earns an edge over its competitors for high-class quality licensed content.
- Production Cost:
Netflix Originals was formed by Netflix in 2013. The main motive of Netflix behind this step was to cut the licensing cost. Netflix produces its own exclusive content under the label of Netflix Originals. However, there is a huge expenditure incurred on the Production of TV Series under Netflix Originals.
- Human Resource:
In order to maintain the goodwill and operate the platform, Netflix has to hire a human resource for the management. This Human Resource also helps in Research and Development. Netflix employs over 5,000 employees across the world.
- Marketing Cost:
Netflix Inc. has to bear a heavy expenditure on Marketing. They face cut-throat competition from new streaming platforms like Amazon Prime and Hotstar. However, Netflix has managed its marketing department very well and is well known as the most luxurious media streaming platform.
- Technology:
Netflix has to spend on its technology in order for a user-friendly experience for its subscribers. Millions of users stream online at a particular time and the technology has to be really good in order to win the subscribers’ minds. Netflix recently launched the Netflix Party in which multiple users can chat while streaming online.
Netflix is really doing great with the perspective of the business. The net worth of Netflix is worth $114 Billion. The share price of Netflix was also valued at $400/share in early 2020. This makes Netflix the most successful media streaming platform.