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Netflix Case Study Analysis
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Netflix Case Study Analysis

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  • 1. NetflixLauren J. Uphouse November 5, 2012
  • 2. CLICK Analysis Online movie rentals; receive & return thru mail; no late fees. Movies, flexibility, convenience, technology. Lives of consumers keep getting busier. Provides a convenient wayfor them to rent movies without having to worry about traveling to a store, due dates, or late fees. Busy consumers who rent movies.Obtained a Masters of Computer Science from Stanford University. Founded a software company, “Pure Software”, and grew it to be among the 50 largest software companies in the world.
  • 3. SWOT AnalysisStrengths Weaknesses• Brand recognition • Older titles• Producing original TV series ex: House of Cards, • Expired contracts with Sony & Stars, resulting in with prominent actor Kevin Spacey lost videos• Extensive customer data on file • Lost video provider EPIX to Amazon.• DVD rental cost so low that competitors don’t • Competition has more money bother trying to emulate that part of their • Damaged reputation after attempting to increase business. fees and separate DVD & streaming video• App is on all platforms – even the Kindle (device memberships. made by competitor Amazon) • Revenue is still rising but streaming & subscribers• Partnered with start-up eyeIO as their 1st are slowing = growth is slowing. customer – using their encoding technology to lower bitrate of their HD video streams, which helps them in the mobile marketOpportunities Threats• Collaborate with well-known actors to create • Competitors offering streaming video and bidding more original series for exclusive rights ex: Amazon, HBO, TV networks• Bid for more popular TV titles • Competitor partnerships (ex: Amazon & Epix)• Target/market to kids & young adults • Higher licensing costs• International expansion • Biggest competitor, Amazon, now developing• Partner with companies to develop Netflix original programming programs specific to their platforms that will come • Streaming video increasing; DVD rentals pre-installed on all their devices decreasing• Partner with cable & gaming companies to be an • Movie & TV industry less willing to make exclusive on-demand option for video & games. deals with online video services.• AppleTV Partnership • EPIX provides Disney videos to Amazon; Disney recently acquired Lucasfilm (& entire StarWars franchise).
  • 4. Competitor Analysis
  • 5. ADVANTAGES DISADVANTAGES Customers rent DVDs thru mail;  Shipping costs for DVD rentals. Redbox – Must rent from kiosks.  Redbox has newer titles. More older titles.  Redbox offers video game rentals & Offers streaming video service. event ticket printing. Offers TV shows  Customers must make a commitment to use service. Low monthly subscription costs & no late fees attractive to customers;  Can’t profit from long-term Redbox – DVD rental fee $1/day. rentals/late fees. Website has a more advanced  Customers must wait to receive DVDs; customer rating & recommendation Redbox – Can get DVDs same day. system.  Company as a whole has more Developing original content. competition. More partnership opportunities.
  • 6. ADVANTAGES DISADVANTAGES More titles; DVD rental service.  Charges fee for all content. Hulu.com offers limited content for free & offers No ads/commercials in video content. more content thru Hulu-Plus for Hulu-Plus – Most videos contain ads. $7.99/month. Content available on all devices.  Older titles. Hulu offers current TV Hulu currently doesn’t have rights to shows – new episodes available day make all of their video content after airing. available on all devices.  No social media integration. Customer recommendation system. Developing original content. Available on more devices. Hulu.com – PC environment only. Hulu-Plus – Accessible on fewer devices. Available in more countries.
  • 7. ADVANTAGES DISADVANTAGES More titles; DVD rental service.  AmazonPrime membership includes free 2-day shipping & instant access to Monthly subscription that can be e-books (on Kindle). canceled/frozen any time. Amazon Prime - $79/year, paid in full.  Revenue only from video services. Amazon – Business model generates Higher quality video playback. revenue many ways. Better customer recommendation  Losing exclusive partnerships with system, user interface & organization. online video distributors, some Growth of international expansion. directly to Amazon Prime (ex: EPIX). Focused solely on video services = benefit to customers.  Amazon offers additional online videos, including new movies & TV Partnership with Apple; soon possibly episodes, that can be purchased cable companies as well. individually or as a package and are accessed from the same location as Amazon Prime videos.
  • 8. Business Model CanvasKP Key Partners KA Key Activities VP Value Proposition CR Customer Relationships CS Customer Segments  DVD Rent-by-Mail  Free trials/sign-up deals  DVD Rent-by-Mail Service – Cost so  AppleTV owners Apple Service low not worth  Convenient sign-up thru competing many devices  Owners of RADius-TWC  Online Video  Pre-installation on Windows 8 Streaming Service  Extensive customer devices devices database, 10+ years deep.  Aggressively working to  Adults, families, Twentieth improve content & kids Century Fox  Original content playback quality KR Key Resources  Partnership with  Recommendation  Benefits from System Hasbro Studios  Experience of Apple; soon long tail: Classic Management & possibly cable TV/Movies, Board of Directors companies Warner Bros CH Channels Documentaries,  Stockholders  Accessible on Adult Animation, greater number of  Online, print, & direct Stakeholders, devices mail marketing Stand-Up  Extensive customer database  Pre-installation on Comedy, such as Carl  Advanced technology for devices Romantic Icahn, & their better quality video  Gift subscriptions Comedies, affiliates playback  Offers to friends/family Action/Sci-Fi of members R$ Revenue Streams DVD Rent-by-Mail Plans (per month) C$ • 1 DVD: $7.99 or $9.99 with Blu-Ray Cost • 2 DVDs: $11.99 or $14.99 with Blue Ray Structure • 3 DVDs: $15.99 or $19.99 with Blue Ray • 1 DVD (2 max per month): $4.99 or $5.99 with Blue Ray Video Streaming Plans (per month)  Unlimited: $7.99  Limited: $4.99 FIXED PRICING STRATEGY; FREE TRIAL OFFERS
  • 9. Alternative Business Models Bundle Customers Partner Develop services sign up for with gaming “HBOwith pay-tv service companies quality”packages. directly on to offer on- originalLess money from AppleTV & demand content.more customers = pay through video game Lure & retain Revenue boostLess competition iTunes. services. customers with content that’s= Lower licensing Reach more New customer untouchable by fees customers = segment = competitors = Revenue boost Revenue boost Revenue boost
  • 10. ReferencesRoettgers, J. (2012, February 01). Eyeio: Netflixs secret weapon against bandwidth caps?. Retrieved from http://gigaom.com/video/eyeio-video-encoding-netflix/Martin, S. (2012, October 12). Netflix rivalry with amazon heats up. USA today, Retrieved from http://www.usatoday.com/story/tech/2012/10/11/amazon-netflix/1621579/Bedigian, L. (2012, October 31). Netflix lost star wars 13 months ago. Retrieved from http://community.nasdaq.com/News/2012-10/netflix-lost-star-wars-13-months-ago.aspx?storyid=185982Holmstrom, M. (2012, October 31). Why you should not buy netflix. Retrieved from http://seekingalpha.com/article/964251-why-you-should-not-buy-netflixWarren, C. (2012, March 09). Netflixs apple tv deal could signal new business model. Retrieved from http://mashable.com/2012/03/09/apple-tv-netflix-subscriptions/(n.d.). Netflix_large_verge_medium_landscape. [Web Photo]. Retrieved from http://cdn0.sbnation.com/entry_photo_images/3279699/netflix_large_verge_medium_landscape.jpg(n.d.). netflix-branded-xbox-360. [Web Photo]. Retrieved from http://learnfrenchsoftwarereview.org/wp-content/uploads/2012/01/netflix-branded-xbox-360.jpg(n.d.). Applenetflix. [Web Graphic]. Retrieved from http://1.bp.blogspot.com/-_iUTPj8GBuA/UEeY1qwdxcI/AAAAAAAAATo/2Htm5N8CQzA/s1600/AppleNetflix.jpg(n.d.). Prime_vs_netflix-650x163. [Web Graphic]. Retrieved from www.gadgetreview.com(n.d.). Hulu_vs_netflix_big-650x541. [Web Graphic]. Retrieved from http://www.gadgetreview.com/wp-content/uploads/2012/01/Hulu_vs_netflix_big-650x541.jpg(n.d.). Redbox_vs_netflix-650x129. [Web Graphic]. Retrieved from http://www.gadgetreview.com/wp-content/uploads/2012/01/Redbox_vs_netflix-650x129.pngwww.netflix.comwww.hulu.comwww.redbox.com

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