Netflix is building an army to fight Disney & Amazon

There’s business strategy… and then, there’s execution. Netflix is showing what a company can do when it does both well and continues to adapt. That’s how a company can win, even against the most powerful competition around.

First, some background: Disney launched its Disney+ streaming platform on November 12, 2019 and in direct competition with Netflix. Coincidentally, about a month prior to the announcement, I wrote an article about how Netflix could compete with Disney. (I wasn’t the only one writing about it at the time.)

Back when Netflix was a new venture, it initially built its platform on licensed content. However, as Netflix became more and more popular and successful, licensees realized that they too could make more money by running their own distribution networks. That way, they could get more money for their content. Disney was just one of many companies willing to pay for it.

As well, Netflix was faced with a challenge of how to attract new subscribers. Solution: producing its own content. It worked like a charm. Now we could watch Netflix Originals like Stranger Things, Peaky Blinders and You -- all blockbusters (but not Blockbusters, if you catch my drift).

But great content comes at a great cost. Lots of content keeps sucking money in the billions. That's why Netflix raised $16 billions to fund the creation of the original content. That’s not something Netflix could continue forever -- and now it doesn’t have to.

This year, Netflix announced that it no longer needs to borrow. It has enough free cash flow from subscriptions.

Now comes the fun part. Netflix is a distribution platform, a production company, a technology company, a data company and (most important for its future success) a studio for visual artists and animators.

Netflix is using its technological might to create a platform for artists where they can have access to the best tools and focus on what they do best - creating the best content. The rest? Netflix will take care of it. This business strategy will allow Netflix to rapidly expand its content library and get a talent pool from which it can draw for its own content productions.

What's next? Netflix channels and bundles. Netflix, as we know, will become Netflix Movies channel, still for the same price as you are paying right now. Then for an extra few dollars a month, you can add Netflix Animation. Why to stop with animation? We can have Netflix Kids, Netflix Concerts, Netflix News, Netflix Sport. Each comes with a few extra dollars a month. Before you know it, you will be paying the same as you were paying for your cable subscription. The difference this time is that this platform is truly global and on every device.

Netflix started out by renting out DVDs through the mail in 1998. The reason they are still successful today? They adapt their strategy alongside available technology to stay one step ahead of the competition - which is an amazing thing when your competition includes Disney and Amazon. That’s how you build a highly successful company with a smart business strategy that evolves.

And that’s the recurrent pattern.