Service System Applications Service System Applications Netflix runs off of a subscription service model. This type of model offers customers personalized recommendations that help the customer choose shows and movies of interest. Netflix prides itself on its proprietary and complex recommendation system in retaining members and acquiring new ones. Through this recommended system, Netflix utilizes the subscription service model to stabilize a monthly or yearly subscription revenue. This way, Netflix secures that the customer/member pays multiple payments for a prolonged amount of access to their service, either monthly or yearly. Netflix utilizes three distinct forms of revenue acquisition; revenue avenues are cancellation rates, rates at which former members rejoin, and acquisition rate of new customers. Hence, the more members that Netflix has, the more money Netflix generates every year. This model works best for companies looking to sell a product or service to receive monthly or yearly recurring subscription revenue. Moreover, one of the strengths of the subscription service model system is that 80% of the stream time from customers achieved is through Netflix's service system. Netflix keeps a keen eye on creating a user-friendly and personalized experience which heightens retention rates and translates to savings on customer acquisition in the long run (Chong, 2020). For example, Netflix uses a specific algorithm to piece together all data inputs from the customer to make recommendations with similar preferences for each member. However, a weakness of this model is that this subscription service prides itself on personalization through the aforementioned personalized offerings. Nevertheless, a cold-start problem exists because there is no user preference information to initial first-time customers. Netflix tries to curb this by asking novel members to survey the types of movies and shows of interest. However, suppose an initial Service System Applications customer and/or existing member decides to skip this step. In that case, the recommendations are diversified beyond the members' interests. The subscription-based billing platform truly allows Netflix to dedicate an essential part of their time to building better relationships with their customers. This subscription billing model maintains a low client turnover rate. New customers or existing members are opting into the monthly plans. Netflix has a perfect opportunity to focus on customer service and maintain its customers while also having a steady flow of new members entering the platform. Netflix has a knack for boosting their acquisition with better experiences, ultimately producing more revenue. Netflix offers a great onboarding experience by allowing the newly enrolled member to personalize and customize the genres and interests. By engaging customers through this personalization, Netflix made it simpler for them to drive their company's growth. However, as previously mentioned, if a customer decides to skip this step, they lose these personalization offerings, which could be a weakness in the structure. Nowadays, one of the leading competitors to Netflix is Disney Plus. Disney Plus has become extremely popular over this past year. As such, its popularity has caused it to become a significant competitor to Netflix. Disney Plus also offers a comprehensive and vast variety of content extensive to cinematic franchises and acquisition of television shows throughout the years. Also, Netflix cannot relate to the nostalgia of watching classic Disney offerings. Disney Plus is slightly cheaper in monthly and yearly subscriptions than Netflix. However, Netflix offers more options than Disney Plus; allowing the member to go from one episode to another. All of which affect customization and personalization of the interface of both subscription services, which retain customers and members. Service System Applications Reference Chong, D. (2020, May 2). Deep Dive into Netflix's Recommender System. Medium. https://towardsdatascience.com/deep-dive-into-netflixs-recommender-system341806ae3b48.
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