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    Case Study

    Netflix (D): Streaming wars (Cartoon case)

    By Stefan Michel and Sarah Von Blumenthal
    2 pages
    February 2023
    Order this case study
    Reference: IMD-7-2155

    This case is part of a series on Netflix. Case (A) discusses the company’s growth until July 2011. Case (B) tells the story of Netflix’s sharp share price decline after it announced it was splitting the business in two and increasing prices. Case (C) covers the years 2012/13, when Netflix found its way back to success. Seeing that the industry bottleneck was shifting from the channel (who can reach the viewers?) to the content (who owns the movie rights?), Netflix started to produce its own TV shows (e.g., House of Cards, Hemlock Grove). Case (D), set in 2020, focuses on a diverse set of strategic challenges Netflix is facing. First, as indicated already in the (C) case, the cost of content through licensing and production continued to increase. Netflix users had to get used to more frequent cancellations of their favorite show. Second, the “streaming wars” between Netflix, Disney+, Hulu, HBO Max, Apple TV, Amazon Prime Video and YouTube was intensifying on two fronts: competition for subscribers and for content. Third, Netflix was increasing its global presence to accelerate economies of scale by introducing new pricing strategies in foreign countries. Fourth, most movies are watched on mobile phones, where a vertical format is more natural than the traditional horizontal format. It was an open question whether movie producers should adopt this trend set by Instagram and TikTok. Thanks to the growing subscriber base, Netflix’s revenue and profitability were increasing. But is the company well equipped for the intensifying “streaming wars”?

    Learning Objective
    • Identify and categorize the different strategic challenges Netflix is facing
    • Infer the changing customer behavior for movie entertainment
    • Evaluate Netflix’s key resources and capabilities against a variety of aggressive competitors
    • Assess the importance of economies of scale due to the high and increasing cost of content, both licensed and produced.
    Keywords
    Strategy, Marketing, Global Marketing, Digital Transformation
    Settings
    World/global, United States of America
    Netflix, Media
    2020
    Type
    Published Sources
    Copyright
    © 2023
    Available Languages
    English
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    This case study is part of a series
    • Netflix (A): Business model innovation (Cartoon case)
    • Netflix (B): The 2011 fiasco (Cartoon case)
    • Netflix (C): The race to videostreaming (Cartoon case)
    • Netflix (D): Streaming wars (Cartoon case)
    • Netflix (E): Capture value (Cartoon case)
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    Case reference: IMD-7-2620 ©2024
    Summary
    Daikin’s success in the Chinese air conditioning market serves as a compelling case study in strategic adaptation and collaboration. Following its entry into the market in the 1990s, Daikin faced formidable competition from well-established domestic brands like Gree and Midea. Despite the initial challenges of breaking through in a fragmented and competitive landscape, Daikin’s innovative inverter technology became a distinguishing feature of its product offerings. The watershed moment in Daikin’s trajectory occurred in 2008 when it formed a strategic partnership with Gree, China’s largest air conditioner manufacturer. This collaboration enabled Daikin to tap into Gree’s expansive distribution network and manufacturing expertise, significantly enhancing its own market reach. The partnership proved mutually beneficial; Gree capitalized on Daikin’s advanced inverter technology while Daikin secured a foothold in a market driven by increasing consumer demand for energy-efficient solutions. By 2012, inverter air conditioners claimed over 60% of the Chinese market share, a figure that surged to over 90% by 2024, illustrating the success of their joint efforts. Furthermore, Daikin’s commitment to sustainability was manifested in its pioneering use of HFC-32 refrigerant, known for its low global warming potential. By openly licensing HFC-32 patents globally, Daikin not only positioned itself as an environmental leader but also fostered industry-wide innovation. This case highlights the critical importance of strategic partnerships and innovation in overcoming competitive challenges and underscores Daikin’s role as a transformative force in the global air conditioning market.
    Reference IMD-7-2620
    Copyright ©2024
    Copyright owner IMD Copyright
    Organization Daikin Industries
    Industry Consumer Goods, Home Appliances
    Available Languages English
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