ANALYSIS OF INNOVATIONS IN THE "SUBSCRIPTION" BUSINESS MODEL, USING NETFLIX AS AN EXAMPLE

Abstract

The article considers the traditional business model "subscription" and the ways of its innovative transformation. In today's changing environment, business models need to change just as much as companies' products and processes. It is innovative transformations of business models that give companies the best competitive advantage. It is suggested to consider innovative transformations by transforming at least two of the four components: the customer, the value proposition, the value chain, and the profit generation mechanism. Such transformations are particularly appropriate for adapting traditional business models successfully used in various fields. This model is now being used by a growing number of content producers and distributors on the Internet. One of the factors causing the growth in the number of subscribers to such streaming services is the pandemic and the increasing demand for access to content by people from all over the world who are forced to stay at home. Thus, the advantages of streaming services over traditional content producers and distributors were defined as the possibility to save time, the convenience of payments and their regularity, which provides the same regular access to a huge library. The "innovative" business model of Netflix, the market leader in the subscription box business, was chosen as an example. The innovativeness of the Netflix business model is defined by a change in two of the four parameters - the way value is created and the monetization mechanism. This was realized through the concept of subscription and unlimited use at the same time with access to paid content at any time. The third parameter of the business model changing Netflix is customers and their preferences. The result of its market penetration across Europe, Latin America and Asia-Pacific is precisely because the company is spending more and more on creating an original product, paying attention to local stories, cultures and characters. In 2021, the company continues to diversify its product by creating mobile games on Android and iOS. Netflix's "innovation" business model is justified using David Skok's subscription business model performance criteria based on the ratio of subscriber lifecycle value to customer acquisition cost.