CHAPTER I

INTRODUCTION

1.1 Background

These topics added to the research on Digital Media Marketing (Digital Marketing). The
topic that is going to be described in this thesis is on how Over The Top (OTT) services affect
things such as digital marketing, customer engagement, and purchase intention on Netflix
streaming service. Digging deeper into the pattern on how people use OTT applications that are
available on the market, makes this topic interesting and quite new for thesis purposes. Digital
marketing on the other hand is very popular these days, most of those traditionally driven
companies, startups, and even multinational companies are now mostly focusing themselves to
compete in the market with advanced Digital Marketing to make sure they are not left out in the
competition.
Video on demand (VOD) refers to the broadcasting of video via Over-The-Top (OTT)
applications over the Internet (OTT). Any Internet-connected device, including a mobile phone,
TVs, tablet, desktop pc, laptop, etc., can be used by viewers to access video content via OTT
applications. Contrary to conventional media, streaming sites present a variety of stories without
censorship, box office, or audience restrictions. If the viewers have a reliable Internet connection,
it provides a visual experience with significantly improved sound and visual quality (Sundaravel,
et al. 2020).
Both television and movie content are mostly available on all of the major streaming video
services, which could result in a blending of both types of media. The media frequently own them
in order to proceed to distinguish between the two divisionally, as well as related organizations.
Despite this, television and movies remain distinct from one another industrially. Streaming has
also had a different impact on each industry, in part because of these institutional definitions. Since
more and more people are utilizing the new form of social media, live stream broadcasting has
grown. The environment is free and open for users to engage inside this kind of interaction thanks
to a variety of live streaming services. In actual use, the live streaming platform has advanced
significantly. In academic fields, however, it received less attention (Wang, M, & Li, D. 2020).

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 With over 200 million subscribers in more than 190 countries, Netflix streaming service
has attracted a lot of attention with an annual content budget surpassing $15 billion ever since
launch in 1997. Netflix streaming service as a well-known American video streaming company,
has transformed from a small-town mail-order DVD rental service into the top Internet
entertainment provider. The data-intensive strategies used by Netflix streaming service are meant
to increase hours spent on it and profit from viewers viewing habits are very effective. The ability
of the brand to generate focus value revolves around the practice of binge-watching and its
experiential characteristics, in addition to the promises of abundance, participation, and
personalization (Pilipets. 2019).

Figure 1. 1 Numbers of Netflix streaming service streaming service’s user 2013-2021

(Source: https://www.statista.com/ (18 March 2023))

There is still not a lot of information available about how Netflix streaming service engages
with the global television market or what effects this service is possessing on live TV industries.
In addition, there hasn't been much research that looks at this American company's international
growth in the context of current discussions about cultural media globalization and content
delivery (Lobato. 2020). In addition to the interconnected world of internet and film industries,
Netflix streaming service's decision to broadcast video content in 2007 signaled the start of a series
of disruptions in the television industry. Before launching its own original programming, Netflix

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streaming service decided on an ad-free delivery method and eventually purchased old series
straight from conventional TV networks. The decisions made by Netflix streaming service over
the past ten years have changed both the future of the TV industry as a whole and the potential
viewing options that are available to TV viewers (Novers, S. 2018)

Figure 1. 2 Comparison on Netflix streaming service streaming service and Rivals

(Source: https://www.ign.com/ (18 March 2023))

Netflix streaming service, as we know today, is a company that is focusing on brand-to-

consumer marketing (B2C) systems. Their services are delivered straight to their customer to
provide streaming in the form of a movie, either in cinema-like movies or even show series.
According to Forbes in the year 2021, with over 200 million of total subscribers that Netflix
streaming service has, it makes them the number one streaming service by the year 2021. Netflix
streaming service beat their competitor by a significant amount, their next-to rivals are Prime
Video, HBO Plus, Hulu, and Disney Plus which has significantly less subscribers than Netflix
streaming service, it is shown in figure 1.2 Netflix streaming service has the majority of percentage
with more than 50% taken out of more than 20 thousand votes. With that said, Netflix streaming
service has to have excellent customer engagement to make sure that they are still holding up to
the top of the leaderboard.
At this point of time, Netflix streaming service provides products such as OTT and it is
indeed their number one income. In Indonesia Netflix streaming service is available in four types
of services, which is Mobile, Basic, Standard, and Premium. The price range for Netflix streaming
service’s subscription in Indonesia is around Rp 54.000 up to Rp 186.000 before tax. On the other

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hand, Netflix streaming service USA also provides merchandise stores for online shoppers that are
available online and serving worldwide shipping. Their product is based on the USA price point
with many products on offer starting from t-shirts, books, up to board games that are currently
trending in the merchandise and souvenir market, taking the idea from their top movie or series
hits.
The rise in internet usage in Indonesia, particularly among mobile users, has altered
consumer preferences and actions when it comes to entertainment consumption. The growing
popularity of Netflix nations, especially in Indonesia, is a result of internet penetration. One of the
biggest OTT providers worldwide with a subscription model is Netflix streaming service. Netflix
streaming service's global subscriber base decreased due to the intense competition inside the OTT
market (Lestari, et al. 2020). The majority of Indonesians prefer streaming video-on-demand
services when it comes to types of. Indonesia has a population of 65 million people, and 17% of
those people subscribe to OTT services. Despite having fewer users than Malaysia, Indonesia still
contributes a sizable amount of OTT service revenue, at about $ 14 million annually (Lobato, R.
2020).
There are a lot of differentiation between the buying pattern and the purchase intention
between Generation Z and all the generations below, especially if you have discussed Netflix.
Generation Y, also known as the "Millennials," is the workforce with a great purchasing power
and does not really use Netflix as often as Generation Z. Thanks to the Internet, this generation
makes better and more knowledgeable purchasing decisions. While Generation Z is described on
how dependent they are on their phones and other technology, let alone social media as their form
of communication with Netflix. They also value and frequently believe in user-generated content
and social media endorsers. Because Gen-Z consumers prefer easy and seamless transactions, pre-
shopping research should be done on the product before purchase.

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 Figure 1.3 Netflix streaming service streaming service’s Instagram Account
(Source: https://www.instagram.com/ (17 March 2023))

Netflix streaming service makes use of social media's potential to keep its productions at
the leading edge of popular culture discourse. Netflix streaming service utilizes social media and
interesting content to inform viewers about new shows, generate excitement, and increase
viewership. To generate buzz, they produce blog posts that capitalize on popular trends. They add
a dose of eccentricity, humor, and intrigue to each of their campaigns. With more than 70 profiles
spread across Facebook, Instagram, YouTube, Twitter, and LinkedIn, the brand is present on social
media actively. On Instagram, Netflix streaming service currently has more than 30 million
followers. Meme marketing is another interesting illustration of a Netflix streaming service
streaming service marketing tactic. Popular memes are incorporated into their posts as part of this
strategy to promote their marketing plan. It is a good way to engage the audience. Memes are
extremely shareable and have excellent engagement rates.

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 For Netflix streaming service, email marketing isn't quite dead. Netflix streaming service
shares emails in a variety of ways. Upon registration, they send an email to welcome new users.
They circulate emails to generate interest in their fresh content. Additionally, they send emails to
their users notifying them of updates. Netflix streaming service recommends movies based on past
behavior in order to send emails that are more individualized. In addition to making
recommendations, Netflix streaming service tries to push visitors to rewatch movies and TV shows
or pick up where visitors left off with previously watched content.

Figure 1.4 Netflix streaming service streaming service’s SEO Data

(Source: https://moz.com/ (17 March 2023))
As part of its overall digital marketing strategy, Netflix streaming service also utilizes SEO,
including geotargeting and global SEO. SEO enhances Netflix streaming service's natural search
results. With a domain authority score of 93, Netflix streaming service clearly has a successful
SEO strategy. A key component of Netflix streaming service's marketing strategy is SEO. They
use expressions that appear straightforward and help them rank higher, such as "watch movies,"
"watch online," "tv online," etc.

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1.2 Research Questions
From the data above, the following questions are obtained which are taken from the data
which will be examine deeply;
1. Does digital marketing have a significant influence on the purchase intention of netflix
streaming service?
2. does digital marketing, the higher the customer engagement towards netflix streaming
service?
3. Does digital marketing consumer engagement have a positive influence on building the
brand image of netflix streaming service?
4. What is the relation between the brand image of netflix streaming service and the
relationship between digital marketing and purchase intention?
5. Does consumer engagement have a significant influence on purchase intention towards
netflix streaming service?
6. Can consumer engagement mediate the variable between digital marketing practices and
purchase intention towards netflix streaming service?
7. Can brand image mediates the variable between digital marketing and purchase intention
towards netflix streaming service?
1.3 Research Objective
From the data above, the following objectives are obtained which are taken from the data
which will be examine further;
1. To analyze people’s pattern on buying intention of Netflix streaming service using the point
of view of Digital Marketing.
2. To analyze the level of customer engagement towards Netflix streaming service streaming
service using the data of Digital Marketing.
3. To analyze that Digital Marketing gives Netflix streaming service a benefit by giving their
positive influence from their brand image.
4. To analyze what connection exists between Netflix streaming service streaming service's
brand perception and the relationship between Digital Marketing and purchase intention.
5. To analyze if Customer purchase intention really came from Netflix streaming service
streaming service’s consumer engagement.

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1.4 Research Benefit
1. For academic Purposes
The research that is done in this paper will be beneficial for future research about OTT
especially in Indonesia, given the growing population of OTT users in the country. This research
is also expected to provide a new perspective on customer engagement, digital marketing, and
purchase intention in Indonesia.

2. For Practical Benefit

This can be used further to further explain about the data and can be read by consumers or
the public, as a reference before subscribing to Netflix streaming service. Netflix streaming service
Indonesia can use this data for further examples on how they make decisions.

1.5 Thesis Structure

Chapter I: Introduction
The background material will be discussed in this chapter, as well as how it may influence the
problem formulation and study aim.
Chapter II: Literature Review
This section discusses the perspective of the wider community about the goods they use every day.
This is intended to ensure the validation of the research carried out and to support the data to be
described.
Chapter III: Research Method
The research methodology that will be used to perform the study will be described in the third
chapter.
Chapter IV: Research Results and Discussion
This part discusses about the result that has been done earlier in the research, in this part of the
chapter discussion for the topic is also necessary
Chapter V: Conclusions and Recommendations
describes the conclusions of the research that has been done. This chapter also contains
recommendations for future research.