...distributing movies to consumers located in United States. It continued to grow its streaming service both domestically and internationally. Netflix’s international expansions began with Canada in 2010 and have since launched their service in Latin America and Caribbean by September 2011.UK and Ireland was the third region that Netflix launched in by January 2012.And Scandinavia was the last region to see the introduction of the service including Sweden, Denmark, Norway and Finland on October 2012. Netflix’s idea behind global expansion is that it recognized that growth will be slower in the US than it has been in the past and hence they are looking to international markets for aggressive growth. Since the content license obligation of the company now totals over $4B according to the company’s report, new subscribers do not increase content cost, the major debt category for the company. Netflix remains profitable with a net income of $32 million and revenue of $1.1 billion, despite investing in international markets. Also, the subscriber addition in the international segment surpassed its US subscriber additions. The company’s global expansion strategy is characterized by the following: They focus on markets with broadband services. The company has been very clear that their domain is streaming only and will not launch international DVD by mail service. Netflix does not partner within market companies or form joint ventures. They contract with individual providers to...
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...introduced only their on-line streaming service internationally to over 43 countries. In 2011, it was announced that Netflix would stop the combined services of streaming and DVD rental and instead offer these services in separate subscriptions. Their customer base was displeased and the company’s stock prices had experienced a major drop in a short period of time. During the same year, Netflix sold a portion of their stocks to mutual finds causing their stock price to drop once more. In this case study, we will explore the competitive forces in the movie rental marketplace through the use of a five-forces analysis, the forces that are driving change in the movie rental industry, the key factors that will determine Netflix’s success in the movie rental industry, Netflix’s strategy, what a SWOT analysis reveals of the overall attractiveness of...
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...To: Reed Hastings, Founder and CEO From: Omar Medina Consulting RE: Growth strategy/Penetration of the video-on-demand (VOD) market Netflix’s competitive environment is becoming hostile; a strategy for entering the video-on-demand (VOD) market must be selected in order to achieve growth targets. This strategy must address issues related to user connectivity, content limitations and initial target market. It is recommended (Exhibit 1) that Netflix develop, and integrate, a VOD platform for its core offering. Netflix’s current subscriber base is built on early adopters; these individuals, with free VOD access, will support and help market the VOD platform. Partnerships must be established to expand connectivity options (Exhibit 2) to overcome a key barrier. Strengthening relationships with studios and TV networks is a primary focus in order to obtain digital distribution rights. As a content risk management measure, Red Envelop Entertainment will continue to aggressively pursue high quality content for acquisition. Several alternatives (Exhibit 1) were evaluated and ranked against key decision criteria. Customer satisfaction (quality of the experience) is the most important element to Netflix’s business. Netflix has one channel for customers, their website. With high customer acquisition costs, a positive experience is necessary to reduce churn rates. High customer satisfaction will increase revenue growth by adding and retaining subscribers. As a public company...
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...transmission systems that allow consumers to access the studios media content in virtually any location with a power source and a fast Wifi connection. As a distributor, Netflix has been forced to evolve with these changes, and changes in content consumption methods have had a major impact on the home entertainment ecosystem and the profitability and power of the players involved. The paper is organized into three sections. The first section investigates the circumstances and decisions that helped Netflix launch successfully in 1998. The second section looks at Netflix’s approach to and experience in the internet video streaming business. These sections were selected because they offer rich case studies on entering and managing an evolving ecosystem. The final section considers the future of the Company and the steps that they can take to increase value capture in the future. Phase I: Building the DVD-By-Mail Business Netflix’s corporate creation myth starts with, allegedly, a story about CEO Reed Hastings paying a $40 late fee to a Santa Cruz video store after renting popular movie Apollo 13. The real story is much simpler: Hasting’s co-founder Marc Randolph looked at the migration of commerce from offline to online and felt like there was a way to make a...
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...Background Netflix had grown to be the largest online movie rental service provider with subscribers reaching over 53 million in nearly 50 countries with people enjoying more than two billion hours of television shows and movies per month. For only one low monthly price, Netflix customers can watch as much as they want at anytime. Starting as only a DVD by mail service, Netflix has expanded its company to digital streaming at the click of your finger. Giving you the option to watch over 12,000 titles online, which includes movies and television series. This concept of movies on your computer grew to a prodigious convenience for people who now do not have to worry about late fees. To thank for this convenience in our daily lives is Netflix’s Chief Executive Officer Reed Hastings; he developed the concept of Netflix after he had to pay forty dollars in overdue fees to Blockbuster. Starting in 2002 Netflix created an innovative program called CineMatch, which provided customers with video titles recommendations based upon their ratings and previous video rentals. The customers rated movies by assigning them one to five stars. This system helped customers and Netflix become successful knowing the recommendations were aspiring and brought more value to their subscribers. In 2003 Netflix began expanding, the company reported its first profit of $6.5 million on revenues, his is when business was booming; Netflix had over twenty million subscribers due to subscription change price...
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...for a certain level of membership that determined how many DVD’s could be rented at one time. DVD’s were mailed to the customer and then returned by the customer when they were done watching. After a couple years in business, the company began including streaming services along with this. The goal here was to reduce costs by trying to get the subscribers to switch to streaming, which would reduce the costs incurred for postage and shipping with the mailed DVDs. By 2009, Netflix was offering a collection of 100,000 titles on DVD and had surpassed 10 million subscribers. Strategic Challenges and Analysis: Hastings developed a strategy which made Netflix the largest online subscription service for streaming entertainment in the world. Netflix’s strategy includes the following: * Providing customers with a wide selection of DVD titles to view. * Continually acquiring new content by establishing relationships with entertainment provider. * Provide easy to use technology for customers to use to order and identify what they wish to view. * Providing options for subscribers between streaming and mail services. * Aggressive spending...
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...access to services provided by Netflix and hence, has the majority of the Netflix patrons. Netflix depends on this segment to maintain its continued success of the online video streaming market. The global market poses a tremendous opportunity for growth with new customers as technology advances and more countries have internet and device capabilities. However, the expansion is costly and the Netflix’s plans for international expansion are moving at a slow pace. The intended market are those that have the technological support to access the services provided by Netflix like the urban population who has both the technology and the income to afford them. TARGET MARKET Target market segment The target market for Netflix’s services is the males and females between the age group of 17 to 60 that has both the access to online video streaming and the income to afford it. Netflix specifically targets the lower middle class and up, with income levels of $30,000 and above. Size of the segment In addition, Netflix offers movie and TV titles that appeal to many racial/ethnic groups with its array of international films. The target market also...
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...Netflix Case Analysis Key Strategic Issue This article is about the past business history and current business situation Netflix company is in. The case begins talking about how Netflix started with a bang making positive profits and revenues, but has recently hit some trouble due to strategic mishaps negatively affecting the company. The article then begins to describe the industry and various competition within it, and how they do business. There is some information on market trends in home viewing of movies, but most importantly the meat of the article discusses Netflix’s business model and strategy in detail. The one primary problem/key issue facing Netflix is how it will continue to remain the subscription-based leader in the instant movie streaming/DVD delivery industry. There are many rival competitors emerging offering a wide variety of services and options to consumers, and it is important Netflix modifies its business model/strategy and uses its brand recognition/positive traits efficiently. The best-case scenario is Netflix modifies its strategy to once again differentiate itself from competition. Also, it would be ideal that for the global markets targeted to generate massive revenue/profits. The likely scenario is that Netflix will steadily improve internationally, but retain a firm hold of those markets before anyone else has. Also, it is likely that Netflix will remain prominent but will be in tough competition with rivals such as Amazon Prime and Hulu...
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...and enjoy TV shows and movies anywhere, any place, and anytime as long as they have internet connection, TV, computers, and mobile devices. This type of market is very competitive especially with all the changes that are going on in the future. There are many competitors that Netflix has to compete with like Redbox, Hulu, and other companies. Netflix core strategy is to grow their streaming subscription business domestically and internationally. Also, their goal is to expand streaming content, focus on programing an overall mix of context to satisfy customers, enhancing user interface while staying within the parameters of their net income (loss) and operating segment contribution (loss) profit targets. (Netflix 10-k 2013, p.1) Netflix’s market information fluctuates through the years. The revenue for Netflix have increased each year. In 2013 the revenue was 4.47B and in 2012 it was 3.61B which was a 21.20% increased. When revenue increases,...
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...Netflix Rebecca Zent Managerial Finance December 15, 2015 Company & Industry Overview Netflix is the world’s leading Internet television network with over 69 million members in over 60 countries enjoying more than 100 million hours of TV shows and movies per day, including original series, documentaries and feature films. Members can watch as much as they want, anytime, anywhere, on nearly any Internet-connected screen. Members can play, pause and resume watching, all without commercials or commitments. The DVD-by-mail is where DVD’s and Blue-ray disks are sent via permit reply mail. The company was established in 1997 and is headquarters are in Los Gatos, California. It started its subscription-based service in 1999. By 2009, Netflix was offering a collection of 100,000 titles on DVD and had surpassed 10 million subscribers. People love TV content, but they don't love the linear TV experience, where channels present programs only at particular times on non-portable screens with complicated remote controls. Linear TV was a huge advance in entertainment over radio, just as fixed-line telephone was an advance in communications over the telegraph. Now Internet TV - which is on-demand, personalized, and available on any screen - is maturing and will eventually replace the linear TV experience. The world's leading linear TV networks now offer their programming on-demand through apps that run on phones and smart TVs. These apps, such as CBS All Access, BBC iPlayer...
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...Netflix’s Underperformance Analysis | BUS 478 FINAL GROUP PROJECT | Instructor: Anthony Chan | Group MemberJackSandraJing(Ivy) Cong 301087222Gavin | Table of Contents EXECUTIVE SUMMARY 1 BACKGROUND INFORMATION 3 CORE ISSUES 5 Price Pressures 5 Competition 5 International Expansion 6 ANALYSIS 6 Industry Analysis 6 Business Model 8 Company Analysis 9 Competitor Analysis 11 Amazon 11 Blockbuster 12 Redbox 13 ALTERNATIVES 13 Additions of Subscription Fee Package 14 Introduction of Netflix' Pay-For TV Channels 15 Domestic Elimination of DVD-mail-in Services in 16 Strategic Partnerships 17 International Expansion 19 Market Strategy 20 RECOMMENDATION 22 CONCLUSION 26 REFERENCES 26 EXECUTIVE SUMMARY Netflix is the world’s leading subscription service provider, offering its members access to an extravagant collection of TV shows and movies. Initially, the company offered its subscribers a low price, single monthly plan, consisting of both the unlimited Internet video streaming service and a DVD-mail-in service. Subscribers could “watch TV shows and movies anytime, anywhere.” In July 2011, Netflix eliminated the combined plan and separated the two services into their own monthly plans. If subscribers wanted to continue receiving both services, they were obliged to sign up for both the services separately, Consequently, the resulting price increase of the new “combined” plan significantly increased subscription cancellations...
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...as long as they have an internet connected screen. Since 2007 they have pioneered delivery of TV shows and movies on a newly developed ecosystem that enables consumers to enjoy TV shows and movies directly on their TVs, computers and mobile devices. The company has three reportable segments: domestic streaming, international streaming and domestic DVD. The domestic and international streaming segments derive revenues from monthly membership fees for services consisting solely of streaming content. In the United States, members can receive DVDs delivered quickly to their homes, which is an additional 5.7 million users and 32% of net income even though it is on rapid decline. The domestic streaming content membership is 39 million members versus the international which is 18 million. In today’s market, there are several risk factors that Netflix faces and needs to handle to be competitive in the future. Some of these risks are the high licensing costs for the content they host, high reliability on other sources for streaming to customers devices and the need to constantly improve and innovate their corporate strategies (Netflix, 2013). Netflix expansion activity has been aggressive; in 2010, Netflix launched in Canada and a year later expanded to Latin American and Caribbean markets. In 2012, Netflix launched into the United Kingdom, Ireland, and the Nordics markets. In 2014 Netflix continues with strategic alliances with cable companies Atlantic Broadband, Comcast...
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...growing and bringing in profits. The following analysis focuses on operation management principles attributable to the online video streaming sector of Netflix, as well as its DVD-by-mail rental service. Today, Netflix streams on demand videos from nearly any web-enabled device to over 30 million members world-wide. In order to do so, Netflix utilizes all of the key elements of Operations Management. This analysis evaluates those key elements currently in place and offers areas for improvements. INTRODUCTION What makes a company successful? This broad, open-ended question is one that analysts and strategists devote their life to answering. The answer lies in a deep analysis of the operation management principles of a company. Netflix’s long, fundamental strain of standards regards operations and productivity, operations strategy, project management, forecasting, quality, statistical process control, capacity planning, location and layout strategy, and inventory management. Netflix operates in the entertainment services industry, most specifically, the online streaming service industry. The highly competitive industry with low switching costs places importance on effective and efficient operation management principles. Because of the...
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...Netflix Analysis Netflix, Inc. is an internet television network. The company derives revenues from monthly subscription dues. Its members can watch as much as they want, anytime, anywhere, on nearly any internet connected screen. Members can play pause and resume watching, all without commercials or commitment (Netflix, 2014). Netflix does not have an actual mission statement, however, according to Reed Hastings, founder and CEO, their mission and vision is “to grow our streaming subscription business domestically and globally, continuously improving the customer experience, with a focus on expanding our streaming content, enhancing our user interface and extending our streaming service to even more internet-connected devices, while staying within the parameters of our consolidated net income and operating segment contribution profit targets” (Hastings, 2014). Nine company published values provide further clarification about the principles which guide its employees in their daily decisions and activities. Those company values as published are: judgment; productivity; creativity; intelligence; honesty; communication; selflessness; reliability; and passion. Hastings has expressed a clear vision for the future of Netflix, which is to become the best global entertainment distribution service, licensing entertainment content around the world and creating markets that are accessible to filmmakers, thereby helping content creators around the world to find a global audience. The...
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...Case 6: Netflix A. Summary “Since launching the company’s online movie rental service in 1999, Reed Hasting, founder and CEO of Netflix, had diligently strive to improve on the company’s service offering and better enable the company to outcompete its competitors. Hasting’s goals for Netflix is to build the world’s best Internet movie service to build the world’s best Internet movie service and to deliver a growing subscriber base and earning per share every year. In May 2010, Netflix’s strategy was producing impressive strategic and financial results. During the past five years, Netflix had emerged as the world’s largest subscription service for streaming movies and TV episodes over the Internet and sending DVDs by mail.” B. Analysis I. Strategic Analysis 1. Competitive forces in the movie rental industry a. Rivalry among companies: strong Netflix have to deal with rivalry from Blockbuster, Redbox, and video-on-demand providers. The battle includes many competitors and each of them is trying their best to attract the customer. Customer has many options and their choices are based on some factors: * Price: rent each DVD or buy subscription plan/ what kind of plans * Convenience: stream from your device or got DVDs then return * Variety of rental library: how big and how vary the company library is * Availability: customer who choose to stream movie over internet or VOD never face the situation when there are no available DVD to rent...
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