#11: A Case Study: Netflix 2020

Applying my strategy frameworks to Netflix today.

Black Mirror’s “Bandersnatch” is one of Netflix’s new interactive stories.

As companies grow, product strategies evolve. Here’s how Netflix might communicate its product strategy today. The purpose of this mock strategy is to:

  1. Demonstrate how product strategy evolves, and

The GLEe Model

Earlier in this product strategy series, I outlined how Netflix hoped to “Get Big,” “Lead,” and “Expand” during its startup phase. Below I have added the company’s current focus, as well as a speculative next step, which may have substantial traction in five to ten years:

1. Get big on DVDs

2. Lead downloading

3. Expand worldwide

4. Original content

5. Interactive storytelling

Like product strategy, these step-function innovations are hypotheses about the product’s future. There’s no reason the “GLEe” model should end at three steps, however. As companies evolve, extend the model further into the future.

It’s evident today that original content is vital for Netflix, but a previous original content effort, “Red Envelope Studios,” failed in 2008. In 2013, however, “House of Cards” succeeded, paving the way for hundreds of Netflix original movies and TV shows.

One hypothesis for Netflix’s next step is interactive storytelling. After success with a children’s choose-your-own-adventure (“Puss in Book”), two more Netflix interactive stories launched: Black Mirror’s “Bandersnatch” and an interactive version of “Unbreakable Kimmy Schmidt.”

The intent of the “GLEe model” is to encourage product leaders to think long-term and to think big. We’ll know in a few years if interactive storytelling is Netflix’s next big thing.

Should Kimmy “Make-Out” or “Plan Wedding?” You decide.

The DHM Model

There are lots of high-level product hypotheses in test today at Netflix, but I’ve outlined four strategies that I think are most important. Each has the potential to delight customers, in hard to copy, margin-enhancing ways:

  • Personalization. This capability makes it easy for members to find and watch movies they’ll love, and it’s also hard to duplicate. Personalization improves Netflix’s margin, too, by enabling Netflix to “right-size” its content investment, based on forecasts of how many members will watch a movie or TV series.

I’m confident Netflix focuses on many other high-level hypotheses. Still, each of the product strategies above has the potential to delight Netflix members in hard to copy, margin-enhancing ways.

The GEM Model

After twenty years, Netflix’s membership continues to grow at a fast rate. Here’s how the company might force-rank growth, engagement, and monetization today:

I think Netflix will continue to prioritize growth to build economies of scale, its brand, and establish an even larger network effect via its hardware partners. Second, Netflix will look for ways to improve its economic efficiency so that it can re-invest the additional profit in original content. Third, Netflix will continue to increase engagement, as measured by monthly retention. But with only a 2% monthly cancel rate, this metric is getting harder and harder to improve.

The SMT Lockup

Below, I outline four product strategies on the left, along with the proxy metrics and tactics that correspond to each hypothesis:

I’ll focus a little on the “better watching experience” strategy, highlighting the lockup with its proxy metric and tactics. The theory: If members experience exceptional visual and sound quality, they will be less likely to cancel Netflix. But because retention is so hard to move, the product team needs a more sensitive proxy metric. I speculate that the “percentage of members who watch at least 40 hours/month” is a reasonable proxy — more watching will increase retention. Two of the projects that may improve the watching experience are better lip-synching for foreign titles and the roll-out of server-based UI for all hardware partners, ensuring members have the most up-to-date browsing and viewing experience on their TV.

The Rolling 4-Quarter Product Roadmap

Here’s my speculative roadmap, beginning Q3, or July of 2020:

The key strategies are on the left, and you can see when projects against each strategy will launch. Again, this is a fictional exercise to demonstrate the concept of a roadmap.

This roadmap presents a story of how the product strategies and projects may come to life over time. It also shows how the pieces fit together.

Again, all of the work I have presented is speculative. I am re-applying the product strategy frameworks to Netflix today, so you can see how product strategies evolve. We’ll see how well this essay stands the test of time.

I hope you enjoy the next essay. It’s another case study, focused on Chegg, a textbook rental and homework help startup I joined in 2010:

Essay #12: “A Startup Case Study: Chegg”



Gibson Biddle


PS. Here’s an index of all the articles in this series:

Former VP/CPO at Netflix/Chegg. Now speaker, teacher, & workshop host. Learn more here: www.gibsonbiddle.com or here: https://www.linkedin.com/in/gibsonbiddle/

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