The widely anticipated release Friday of The Crown on Netflix (NFLX) once again underscores what its marketing strategy largely hinges on: original content.
The production reportedly cost $130 million, or $13 million an episode, making the show about a young Queen Elizabeth II one of the most expensive ever.
With user growth still a key metric for Netflix, the marketing strategies of the video streaming service and how it is adding and retaining subscribers both domestically and internationally have attracted attention. Rather than turning to traditional marketing channels, Netflix has relied on word of mouth for its top-quality original content -- a strategy that industry observers say has fared well. Still, as the company looks to emphasize markets overseas, Netflix may have to start thinking creatively.
Historically, Netflix hasn't made substantial marketing or advertising expenditures, according to Michael Goodman, director of digital media strategies at Strategy Analytics.
"Frankly, it's a big word-of-mouth company," Goodman said. Netflix's third-quarter results, for instance, were largely lifted by success of Stranger Things and Narcos.
"They do some social, and they certainly do some digital advertising. You'll see their banners pop up," he said, adding that the media coverage on Netflix's content also has become a major avenue of marketing for the Los Gatos, Calif., company.
For instance, when Netflix originals score Emmy nominations, media coverage creates appetite for subscriptions, according to Goodman.
In fact, Netflix has been touting its content as its main distinguishing factor.
When asked at the 25th Annual Goldman Sachs Communacopia Conference in New York in September how Netflix views Alphabet's (GOOGL) YouTube, its growth and its investments in content, Netflix CFO David Wells said there's "nothing" the company would do differently.
"We're just going to continue to focus on making our services great, adding a lot of content and building that out," he said.
Netflix, which has been on a multiyear transition and evolution to more of its own content -- it plans to release more than 1,000 hours of original programming in 2017, up from more than 600 this year -- will continue to strive for a 50-50 balance between original and licensed content, Wells said at the conference.
Original content also is playing a significant role in the company's efforts to gain more international subscribers. But Netflix's marketing strategies depend heavily on the geographic market, according to Joel Espelien, a senior adviser at TDG Research.
For instance, Netflix has used outdoor billboards in markets such as Latin America, while it hasn't been active with such investments in the U.S.
"100% of their marketing budget is used to make these originals look like movies and make them look spectacular. They make them look like they're must-see, ultra-premium content like a new movie that's coming out," Espelien said. "It's really treating [itself] as a movie studio brand."
Particularly in some areas overseas, Netflix has emerged as a gateway to a "global urban middle class," Espelien added, comparing a Netflix membership to a drink from Starbucks.
"Starbucks is a premium brand. In some parts of the world, it's the most expensive cup of coffee you can buy. It's a cool cosmopolitan place with free Wi-Fi," he said.
Localization also has played a huge role in Netflix's overall advertising efforts. If the company particularly wants to target Italy, for example, it is likely to produce a show in the country with an Italian cast. Localization also entails subtitling and dubbing various titles, in addition to implementing local language marketing.
While Netflix's strategy of enticing consumers to watch a show or a movie has paid off in the U.S., it remains to be seen how Netflix can best tackle smaller markets overseas.
Going after subscribers in Latin America is fairly easy, as Netflix can target the region's big Spanish-speaking population with similar localized content. By comparison, markets such as Turkey and Russia will prove to be more difficult areas to conquer, according to Espelien.
To be sure, Netflix is already pouring more capital toward international markets versus domestic areas as it builds its brand awareness overseas.
In the U.S., where Netflix's business is fairly saturated and penetration is mature, subscriber retention has become as important as subscriber addition.
Meanwhile, other players in video streaming are approaching marketing in their own ways.
Time Warner's (TWX) HBO, for example, relies on distribution partners such as Comcast (CMCSA) advertising three months of free HBO for signing up with the cable company. Netflix hasn't pursued partnership marketing so far.
Amazon.com's (AMZN) Amazon Prime has been an anomaly within the video streaming space, given that users don't typically sign up specifically for its video or original content.
"Netflix is writing the rule and setting the template," Espelien said. "It's almost like what ESPN has done in sports. I think the other players truly have no choice but to follow the Netflix model."