NETFLIX’S SECRET PATH TO THE TOP: ANALYZING THE TRIAD INNOVATION – TECHNOLOGY – PERFORMANCE

Abstract

The term triad represents a complex concept widespread in various fields of scientific research or general knowledge, defining conceptual constructs based on a set of three interrelated elements. The authors suggest that triad of innovation–technology–performance, together with capital movements, represent factors that decisively contribute to economic growth. Starting from the triadic conceptual model of innovation–technology–performance, the current study aims to pursue the analysis of each component of the model within Netflix, a leading company with a high business performance in the entertainment industry, and to validate within it the hypothesis according to which investments in research and development (R&D) significantly contribute to a high profitability. To verify the implicit link between R&D investment and profitability measured by profit margin, the correlation coefficient will be calculated. Netflix is a global leader of the entertainment industry, a disruptor of the consumer’s way of enjoying free time while being a business and a technological innovator. It counts a high number of subscribers spread in almost 200 countries, which have the possibility to enjoy anytime and anywhere, on a diverse number of devices, a high-quality digital content by the means of a wide number of entertainment products like TV series, documentaries and movies transmitted through the streaming technology. The company that is publicly traded, has surpassed all the industry’s competitors and the present paper focuses on studying the Netflix’s model of success, based on the interconnection between intensive innovation, latest technologies and a high performance, elements which have ensured an organic evolution and the top position by counting the number of subscribers, in a highly competitive and ever-changing market, the investments in innovation and state-of-the-art technology being reflected in company's superior performance. Encouraging results and conclusions open possible investigation paths to other companies and industries.