The role of Netflix’s business model in disruptive innovations formation on the video steaming market

Abstract

In the article the analysis of the processes of formation of disruptive innovations in the video streaming market on example of Netflix has been done. The role of the company’s business model in the formation of disruptive innovations has been determined, as well as the dynamics of its changes, which has been proposed to analyze though divided into four stages. The fourth stage of the business model was highlighted exactly by the authors, and let to research the changes in the Netflix business model during the 2020 lockdown, which allowed the company to attract more customers and to make easier the company’s transition to a new stage of doing business in the conditions of comprehensive digitalisation of social life. The evolution of rising of the Netflix company has been researched, since its foundation and the competitive struggle against Blockbuster, and the transition of Netflix to disruptive innovations in the video steaming market; the authors have paid special attention to the continued functioning of the company after huge changes of the competitiveness landscape of the market. The dynamics of profit of the Netflix company has been investigated, and the dependence of changes of it’s business model and changes of it’s profit has been determined. The dependence between renewing of the company’s business model and the growth of it’s profit has been found. By middle group point method, the forecast of the profit of the Netflix until 2025 has been made, recommendations for the further development has been given. As the result of the research, the authors have made to the conclusion, that the Netflix’s business model allowed company to become innovative, with disruptive innovations, because it’s business model allowed the company to offer a new value proposition to customers that did not exist before and which could not be offered by competitors, who acted within the framework of the “traditional” view of the video streaming market. Freedom of choice became such a value for customers, when customers were able to choose what to watch and when, staying at home – the uniqueness of the approach to creating value by innovation created an impetus for changes in the market.