Netflix's Product-Led Growth - All You Need to Know
Netflix's Product-Led Growth - All You Need to Know
The Netflix Playbook on How to Get Your Product to Sell Itself!
Okay, let's be real – Netflix is pretty much everywhere these days. It feels like they completely took over the world of streaming.
But how did they actually pull off this crazy growth?
A big part of their success is something called Product-Led Growth, or PLG for short.
Basically, In PLG we make the make the product itself the star of the show. We create an amazing experience for users, making things super simple to use, and letting people see the value of our product quickly.
That way, customers pretty much sell themselves on getting it!
In this article, we're going to dive headfirst into Netflix's PLG strategy. We'll see what they do so well and how their approach can inspire you.
Netflix's Core Product-Led Growth Principles
Alright, let's see how Netflix makes everything super smooth for their users!
Frictionless User Experience:
Think back to when you first signed up for Netflix (or maybe a friend convinced you to try it). It was really easy, right? They don't ask for a ton of details upfront, and in the past, they even had free trials to get you hooked.
That's the whole idea – get people started without a bunch of hassle.
Once you're in, it's simple to figure out. Your home screen has stuff picked out just for you, it's easy to search for anything you have in mind, and you can quickly pick up where you left off in your current binge-watch.
No complicated menus or weird settings to mess with!
Data-Driven Recommendations:
Okay, here's where things get a bit sneaky (in a good way!).
Netflix is super smart about what they recommend to you.
Netflix has this whole system in the background that's constantly watching what you watch. Not just the shows and movies you choose, but how long you watch them, if you finish them, what kind of stuff you search for... all of it!
They take this info from everyone on Netflix and use it to make crazy accurate predictions about what you'll probably like next. (Magic of AI)
This is why your home screen is filled with shows that seem to mysteriously match your taste.
It's not magic, it's their algorithms at work! And because of this, you end up spending more time on Netflix, discovering shows you might not have found otherwise.
Continuous Experimentation and Innovation
Netflix doesn’t let things get boring. They're always tweaking their service, trying out new things to see what sticks. Here's how:
Features Aplenty: Think about all those little features that make Netflix so convenient. Things like:
"Top 10" lists: Giving you a quick glance at what's popular right now.
"Play Something": This is perfect for those times you're feeling indecisive, it just picks something for you based on what you've watched.
Thumbnails that Change: You notice how the image for a movie or show sometimes changes when you hover over it? That's Netflix testing to see which image gets you to click!
Behind the Scenes Testing: Netflix uses A/B testing a lot. Basically, they'll show slightly different versions of their interface to different users and carefully track which version performs better. This helps them figure out even small details, like what kind of button design or layout gets more people engaged.
All this experimenting means they're constantly refining how Netflix works. The little changes might seem subtle, but over time they add up to a user experience that always feels fresh and keeps you coming back for more.
Original Content as a Key Differentiator
These are the real game-changers for Netflix.
Netflix realized early on that they needed to offer stuff you couldn't find anywhere else. So, they started pouring money into creating their own shows and movies. We're talking a LOT of money. This was a big gamble, but it paid off huge!
Blockbuster Originals: Remember Netflix's early hits like "House of Cards" and "Orange is the New Black." These shows were so good and buzzworthy, they became a major reason people signed up in the first place. Netflix just kept building on that with hit after hit – "Stranger Things", "The Crown", "Squid Game" ...the list goes on!
Here you can find the list of all of the Netflix Original Programming.
Exclusive = Must-Have: Because you can ONLY watch these originals on Netflix, it makes their service way more valuable. You don't want to miss out on what everyone's talking about, right? This kind of exclusive content keeps folks subscribed. You can't just try it out for a month and cancel if you've got a favorite show in the middle of a season!
Building a Powerful Brand: All those successful originals also strengthen the Netflix brand itself.
When people think Netflix, they don't just think streaming – they think about high-quality, must-watch entertainment.
This makes standing out in the crowded streaming world a whole lot easier.
Netflix's PLG Strategies in Action
Expansion into Mobile Gaming
A little while back, Netflix did something interesting and unexpected – they started including mobile games with your subscription. It might seem like a random move, but it's a clever part of their PLG strategy. Here's why:
Extra Value (at no extra cost): Let's face it, everyone loves getting a little something extra. By adding games that you can just download and play right on your phone, Netflix is giving subscribers more bang for their buck. It sweetens the deal and makes you feel like you're getting a lot from your subscription.
Expanding the Fun: While watching stuff is the heart of Netflix, gaming opens a new avenue for entertainment. It gives you more options within the app to chill out with. Maybe you want to binge a show, or maybe a quick, casual game is more your speed on a commute – Netflix now has you covered either way.
Targeting New People: Mobile gamers are a HUGE audience. By getting into games, Netflix has tapped into a whole different group of people who might not have considered a streaming service before. Someone into mobile games will try Netflix to see what's up, and then discover all the great shows and movies too!
Important Note: Netflix's mobile gaming selection is still growing. They're not aiming to compete with full-blown console games. It's more about offering simple, fun games that tie in with their shows (like a Stranger Things themed game) or offer a quick distraction for their audience.
Technology for Scale
Let’s see how Netflix handles being a streaming giant available almost everywhere!
There are millions of people across the world, all wanting to stream Netflix at the same time. That's a LOT of data flying around! Netflix pulls this off with powerful technology behind the scenes:
The Power of the Cloud: Netflix runs on cloud-based infrastructure, mostly from Amazon Web Services (AWS). (See what AWS has to say about Netflix) This means they don't rely on their own giant data centers. Instead, they tap into a massive network of servers spread all over the globe. Which means they have unlimited room to grow!
The cloud lets them easily add more computing power whenever they need it, which is important for handling those peak streaming times.CDNs: The Speedy Delivery Network: Content Delivery Networks (CDNs) are the key to making sure your shows don't buffer. Basically, Netflix stores copies of its content on servers located close to its users around the world. So, when you hit play, the video is coming from a nearby server, not traveling halfway across the planet. This means way faster loading times and smooth playback.
Why this matters for PLG:
Global Reach: Using the cloud and CDNs means Netflix can expand into new countries quickly and reliably. The tech side of things is ready to handle it, so more people have access to their awesome content.
Frustration-Free Streaming: No one likes waiting for videos to buffer, or worse, getting error messages. The focus on seamless streaming keeps people happy and removes a major reason folks might ditch the service.
Room to Experiment: Because Netflix has this flexible foundation, it's easier for them to test out new features and roll out updates. This ties back into their constant innovation!
Addressing the Password Sharing Issue
let's talk about the elephant in the room
For years, Netflix was pretty relaxed about people sharing their logins with friends and family. But lately, they've gotten way more serious about putting a stop to it. Here's what's going on:
Why Change Now? Netflix claims password sharing is seriously hurting their ability to invest in new content. They figure if everyone chipping in together actually paid for their own subscription, they'd have more money to work with.
Testing the Waters: Netflix wasn't just going to suddenly change the rules on everyone. They've been experimenting for a while now in certain countries, trying different ways to limit account sharing. This included things like:
Charging extra for users outside your household
Sending verification codes to the main account holder
Taking Action: In 2023, Netflix announced a wider crackdown. The details vary from country to country, but the main gist is that you'll need to designate a "primary location" for your account. They use your IP addresses, device IDs, and what you watch to figure out if you're streaming from outside your designated home.
Potential Revenue Impact
The hope for Netflix is that this = more paying subscribers = more money. It's hard to say for sure how successful this will be. Some people sharing passwords might cave and get their own account, while others might get annoyed enough to ditch Netflix entirely.
The User Experience Tradeoff
The big concern is that all these restrictions hassle legitimate users. What if you're traveling? Or have a kid at college? Netflix says they'll have ways to temporarily verify devices, but it certainly complicates things compared to the old freewheeling days. There's a risk of frustrating long-time, loyal customers in an attempt to squeeze a bit more revenue.
Netflix is betting that the revenue increase from converting 'freeloaders' into paying subscribers will outweigh the potential customer dissatisfaction. It's a calculated risk, and the long-term success of the password-sharing crackdown remains to be seen.
Further Reading There are tons of articles analyzing this move from every angle! eg: https://www.techradar.com/news/netflix-password-sharing
Let's get down to the practical takeaways! Here's how you can learn from Netflix's success:
Lessons for Businesses Adopting Product-Led Growth
Netflix didn't become a powerhouse by accident. Their PLG approach holds a ton of lessons if you’re looking to grow in a customer-centric way.
1. Relentless Focus on the User
Know Your Audience Inside Out: Netflix studies its users intensely. Your business needs the same focus. This means:
User Personas: Create detailed profiles of your ideal customers – what motivates them, what are their pain points, and what challenges do they face?
Track the Right Metrics: Go beyond basic numbers. Analyze how people actually interact with your product – what features they use most, where they get stuck, etc.
Solve Real Problems: Every feature, every tweak, should tie back to making your users' lives easier or better in some way. An app that helps people seamlessly track their fitness goals will be far more compelling than one with fancy visuals but no real value.
For example, Imagine you make accounting software. Super niche, right? Instead of tons of bells and whistles, you could relentlessly focus on the most common pain points for small businesses – making invoices quick, automating taxes, etc.
2. Data is King
Collect the Right Data: What user actions on your product are good predictors of success? Maybe it's trial signups, using a certain feature regularly, or referring friends.
Use Data Wisely: Netflix uses data for hyper-personalized recommendations. You might not get that fancy, but you can still use data to:
Segment your audience for better targeting
Identify areas where users drop off and figure out why
Personalize your marketing messages
For example, A language learning app could track how frequently people complete lessons, their accuracy levels, and what topics they struggle with. This data helps personalize lessons for better retention and engagement. (Exhibit A, Duolingo)
3. A Culture of Experimentation
Embrace the 'Always Beta' Mindset: Like Netflix, be prepared to constantly test and iterate on your product. Get comfortable with launching things that aren't 100% perfect and learning from the results.
Get User Feedback Early & Often: Don't just build in a vacuum! Easy ways to get feedback include:
In-product surveys
Usability tests with real users
Active online community
Even a brick-and-mortar business can experiment! Shift displays around to see what arrangement gets more attention, offer a new temporary service to gauge interest, or test different social media strategies to find what connects with customers.
4. Invest in Original Value
Be More than a Commodity: Netflix has its originals, what's your equivalent? Identify what makes your product truly unique and indispensable for your customers.
Quality Matters: Ensure that whatever you offer is top-notch and solves user problems effectively. A single killer feature is better than many mediocre ones.
Don't just add features for the sake of it.
If you're building a project management tool, your 'original value' could be seamless integration with popular communication apps, or AI-powered deadline predictions.
Find the niche that sets you apart.
Let's wrap this up pretty quick!
Conclusion
Netflix's success story clearly shows the power of Product-Led Growth. They relentlessly focus on the user experience, use data intelligently, embrace experimentation, and constantly invest in offering unique value. While they're a massive company, the core principles apply to businesses of any size.
Remember, PLG isn't using a few specific tools or tricks. It's a fundamental shift in how you think about building and growing your product.
Prioritize understanding your users, letting data guide your decisions, relentlessly improving your product, and building something people truly can't live without.
For Startup Founders
Excited about implementing Product-Led Growth in your own startup? Here are a few things to consider:
Read up: Search online for resources like blogs, case studies, and even books focused on PLG strategy. (Here are three suggestions from me: The Lean Startup by Eric Ries, Product Led Growth Wes Bush and Hooked by Nir Eyal)
Find a Mentor If you can connect with someone who has experience in PLG implementation, it will be invaluable. (for example me 😜)
Don't be afraid to start small: You don't have to overhaul everything at once. Focus on specific areas where you can make a user-centric change
Want personalized guidance?
As someone who is passionate about Product-Led Growth, I'd be happy to discuss how I can help your startup with PLG strategy. Feel free to book a consultation with me – https://calendly.com/productgrowth/. Let's talk about how to unlock growth for your business!