Netflix - Strategy management
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This document provides an overview of Netflix including its business model, strategy, and financials. It discusses Netflix's mission to offer high quality streaming and DVD services to customers. It outlines Netflix's subscription-based business model and pricing, as well as its strategy of acquiring new content and expanding internationally. The document also analyzes Netflix using PEST, Five Forces, and SWOT frameworks. Financially, it notes Netflix's high subscriber growth and cash balances, but also cost pressures from competition and expansion. Overall it finds potential opportunities for Netflix through continued global expansion and acquisition.
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Netflix - Strategy management
- 1. Group D10 Gabriela D’cunha – 14052 Genevieve Nora Dias – 14053 Jovita Francy Dcosta – 14056 Manisha Kumari – 14058 Mario Allen Clement – MODULE 2 NETFLIX 1
- 2. CONTENT Netflix – An Intro Mission, Vision and Value Presence Netflix Business model and Pricing Subscription based business model Strategy Adopted & Market Trends Technology Channels & Subscribers Qwickster and Netflix PEST analysis, Five forces analysis & SWOT Analysis Financial Summary Is Netflix Attractive??? 2
- 3. NETFLIX – AN INTRO An American provider of on-demand Internet streaming media North America Australia New Zealand South America Parts of Europe Flat rate DVD-by-mail in the United States DVDs and Blu-ray are sent via Permit Reply Mail. 3
- 4. MISSION, VISION AND VALUE Netflix referred to its brand promise as a Values - Judgment, Productivity, Creativity, Intelligence, Honesty, Communication, Selflessness, Reliability, Passion. At Netflix, we seek to be the highest quality subscription business that offers Internet streaming and DVD by mail content (2). We believe in offering the best customer service possible by teaching our employees to be honest, respectful and ethical (6) while also valuing every customer’s individual needs. Our employees (9) are provided with the latest technologies, excellent benefits, and the safest working conditions in the industry. We provide outstanding customer service and in return, our customers (1) in our North American and Mexican markets (3) recommend their friends to Netflix (5). Our vast library of DVD’s and streaming service (4) provides a competitive advantage (7) as compared to offering only streaming. At Netflix, we strive to be a good corporate citizen (8). 1.Customers 2.Products or services 3.Markets 4.Technology 5.Concern for survival 6.Philosophy 7.Self-concept 8.Concern for public image 4
- 5. PRESENCE 5
- 6. NETFLIX BUSINESS MODEL AND PRICINGDVD and Video Game Model Online Streaming Model 6
- 7. SUBSCRIPTION BASED BUSINESS MODELThe DVD-by-Mail option: Netflix website Select one or more movies Received DVDs by first class mail 2004-10 added more distribution channel The streaming option Instant watching capability Licensing increasing amount of digital content Netflix took a “metered” approach to streaming Switched to an unlimited streaming option 2011- No single subscription plan 7
- 8. STRATEGY ADOPTED A comprehensive library of movies & TV episodes. New content acquisition. Convenient & easy-to-use movie selection software. A choice of mail delivery vs. streaming. Marketing & advertising. Transitioning to internet delivery of content. Expanding internationally. 8
- 9. MARKET TRENDS Renting movies & TV content - streaming movies & TV shows Strategic initiatives: The owners of Hulu offered a free online video service TV everywhere concept & program offerings Google TV Apple TV Reasons Introduction of new technologies & electronic products Increasing number of devices Wide variety of distribution channels & providers Experimenting Movie Studios with shortened release periods 9
- 10. 10
- 12. SUBSCRIBERS 12
- 13. QWICKSTER AND NETFLIX In September 2011, split off the DVD rental business. Into a new company called Qwickster. NetFlix loses 800,000 customers. Stock prices falls from $295 to $108/share. In October 2011, decides to NOT split off the DVD business. 13
- 14. PEST ANALYSIS Political Piracy. Content licenses and copyright. Economical Unlimited market size. Social Wish to watch on tv screen. Applicable everywhere. Technological VOD increased popularity. 14
- 15. FIVE FORCES ANALYSISThreat of new entrants – high (Apple, Amazon, Hulu, Youtube) Threat of substitutes – high (Apple TV, Hulu) Bargaining power of customers – high (a lot of substitutes) Bargaining power of suppliers – high (content is key) Intensity of rivalry – high (HBO, low entry barriers) Complementors – high (Microsoft, Wall-Mart, Roku, Vizio, LG) 15
- 16. SWOT ANALYSIS Strengths User Experience Streaming Capability Very competitive prices Weakness Pricing power Content Distribution Competitors Opportunity Branding Distribution Expansion Threats Internet pipe providers Competition Streaming Offerings NETFL IX 16
- 17. FINANCIAL SUMMARY Fit for Purpose Balance Sheet 40% of assets are content related High cash balances / Bank revolver capacity Investment in Technology Other Considerations Cost pressure (competition, streaming video and international expansion) Investors have significant expectations Ability to monetize subscriber growth Average subscriber growth 40% Manage churn rate below market average Focus on internal cost management Maintain healthy gross margins 17
- 18. IS NETFLIX ATTRACTIVE??? Global Expansion. Australia to be more attractive. Expected to make profits from 2017. Flexibility in Business Marketing Opportunity if Apple acquires Netflix. Innovation. Strong Alliances. Quality, Brand and Size. Cost Management. 18
- 19. THANK YOU 19