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    Netflix Netflix Presentation Transcript

    • Richa Arora & Shiya Hsu
      GMBA 5885
      23rd March, 2011
    • Agenda
      Company Intro & Facts
      Business Model
      Innovations / Differentiations
      CineMatch & Benefits
      Customer Services & Impacts
      SWOT & Future Threats
      Long-Term Strategies
    • US DVD Market (as of Sep. 2010)
    • Introduction
      Reed Hastings (among 100 most influential global citizens)
      Origin: $40 dollar late fee?
      Initial flop (Sep. 1999)
      Success came…
      Streaming (Jan. 2007)
    • 20 million subscribers as of 2010 (nearly 20% of US household)
      (cite: http://www.netflix.com/Jobs Netflix Business Opportunity)
    • (cite: http://www.netflix.com/Jobs Netflix Business Opportunity)
    • Company Facts
      Biggest source of streaming web traffic in America.
      Netflix’s customer volume is growing at the rate of 50% each year.
      Accounts for more than 20% of all Internet download traffic during peak evening hours.
      Over 17 million subscribers watch Internet-streamed video each month.
    • Facts Contd….
      Over 17 million subscribers watch Internet-streamed video each month.
      Online catalog includes over 20,000 movies.
      Agreements and partnerships with :
      Nintendo Wii, Xbox. PS3, blu-ray, ipad and other internet TV companies.
    • Long Tail Business Model
    • Company Innovations
      Low subscription fee with instant watch and mail-in.
      No late fee and mailing expenses.
      One month free trial.
      No contract , can cancel anytime.
      Third party applications
      Business Development Page (http://developer.netflix.com/)
    • Netflix vs. Blockbuster
    • Netflix vs. Redbox
    • CineMatch
      A proprietary recommendation technology
      Direct customers to preferred titles with collaborative filtering
      Customize to individual needs
      Personalized experience
      DATA is key
    • Benefits of CineMatch
      Better cost analysis
      Better inventory control
      Advantage on strategic planning & decision-making
      Lower carrying cost
      Higher subscription growth with lower SAC and churn rate
    • Customer Service
      Building Brand
      Movie recommendation system
      Saturday processing (added in 2009)
      58 distribution centers close to USPS
      8 hrs turnaround time
      Top satisfaction rating
      DVD delivery in 1-2 business days
    • Impacts of Customer Service
    • “Netflix attempting to second-guess a mysterious, perverse and profoundly human form of behavior: the personal response to a work of art.”(Time Magazine)
    • Strengths
      Subscription, no late fee
      Competitive advantage (early mover)
      Lower fixed cost
      Largest DVD selection
      Fast processing and ordering.
      Online streaming or VOD
      Serves a large geographic area.
    • Weaknesses
      Delivery delays
      Small collection of instant plays
      Difficult inventory control
      Expensive cost per DVD
      Competitors access to same contents
    • Opportunities
      Canada- New destination
      More International expansion
      Movie downloading in future
      Extending video game rental
      Netflix set-top box with Blu-ray player
    • Threats
      Hulu and Youtube, streaming threats
      Big competitors
      Increasing Price & spending
      Technology shift
      Irreversible subscription service decline around 2014
    • Long-Term Threats
      Decline of Current Core Business: DVD-By-Mail subscription
      (cite: http://www.netflix.com/Jobs Netflix Business Opportunity)
    • Long-Term Threats
      Competition on markets for online streaming (Video On Demand)
      Huge array of competitors
      AT&T’s new bandwidth cap
      Tricky streaming licensing
    • Threats from Internet Service Provides
      • ISPs charge consumers more per gigabyte above a low cap making internet video more expansive for consumers
      • ISPs can refuse to let in all the data their subscribers are requesting from Netflix by not providing Netflix enough entry ports
      • ISPs can slow or block Netflix bits within their network or favor other bits to protect their video business or to try charge Netflix a toll to avoid slowdown.
    • New prices (Nov.2010)
    • Solutions?
    • Decline of Current Core Business
      Reposition as Online Streaming Company
      “We are a North America Streaming companyThat is becoming a global streaming company
      That also has a great DVD-by-mail supplemental option in the USA.”
    • Competition on markets for online streaming (Video On Demand) and PPV
      Ubiquitous availability through diverse services and platforms
      From computer-only consumptions to mainstream experience
    • (cite: http://www.netflix.com/Jobs Netflix Business Opportunity)
    • Huge array of competitors
      Find Niche segment
      Consumer-Paid Subscription
      Older TV shows and movies
    • (cite: http://www.netflix.com/Jobs Netflix Business Opportunity)
    • Obstacles
      Competitive advantage (from atoms to bits)
      Content quality & quantity
      Content delivery – ISPs
      Going International (Piracy)
    • For Now…
      Web movie downloads will not become an imminent threat
      Online streaming gaining attraction
      (cite: http://www.netflix.com/Jobs Netflix Business Opportunity)
    • Long term strategies
      Adds ABC shows for net viewing.
      Agreements with film distributors
      Focus less on new DVDs and more on older TV shows and movies.
      Push latest releases for online streaming
    • The future is uncertain, but currently Netflix is making the right moves to be in as many places as it can.
    • Thank you