Netflix Business Opportunity

Netflix Opportunityto Change the World Some Background For Candidates 1

Watch popularTV shows and movies when you want, where you want,without commercials, for only $8 a month 2

First Era of Television:Linear Broadcast Networks Few choices to watch at any given time ABC, CBS, NBC, … 3

Second Era of Television: Linear Cable Networks ~200 choices at any given time ESPN, HBO, Discovery, TNT, AMC, etc. DVR adds some on-demand on top of linear networks 4

Third Era of Television: Internet Networks  Millions of Choices  Pure On-demand  Apps Keep Improving  All Screens 5

Broadcast Networks Adapted to Cable Network Eraby Becoming Cable Networks (ABC is now mostly watched over cable) 6

Similarly, Cable Networks arebecoming Internet Networks HBO and ESPN already offer great internet video apps 7

New Era of Television Also EnablesNew Networks to ThriveNetflix, YouTube, Hulu, iTunes,… 8

70 Years of 1941+ 1972+ 2010+ Television Broadcast Networks Networks Networks Internet Cable Showtime Discovery YouTube Netflix ESPN HBO AMC NBC ABC FOX Hulu CBS TBS Over The Air with Antenna Comcast Cable Cox Directv MVPD Satellite Dish Verizon IPTV ATTOver The Top (OTT) Internet Emerging TV Everywhere Apps 9

Billions of people getting high-speed internet 10

TV becoming app-centric,like tablet, phone, and laptop 11

Internet Enables Rapidly Improving Video AppsInternet-pace updates for video apps, in comparison to time-grid UI of linear TV 12

Internet Apps Allow TV Personalized to YourTastes, and Social TV with Your Friends 13

Internet EnablesGlobal Video Networks,Like YouTube Today and Netflix Soon 14

Internet Apps Pioneering Pointers, Touch, Voice for Choosing Video “Play Lilyhammer” 15

Smart TV AppsBuilt into TV Tiny Affordable Box or Game Console 16

Many Internet Video Networks 17

Each Network Keeps Improving Their Own App Because Optimal UI Is Unique: ESPN vs. Netflix Apps on a platform follow thatplatform’s conventions, so easy to use Platform search works across apps 18

TV Everywhere isthe Economic Bridge for Existing Firms 19

TV Everywhere• If you keep paying your $80/month to your MVPD, you get access to internet apps for your existing networks (ESPN, etc.)• Allows cable networks to also be internet networks, without economic disruption• MVPD companies make some money through video bundle billing, and lots of money through being an ISP 20

Cable & Fiber ISPs Prospering• $60+/month for 60+ megabit speeds• ISPs embracing internet video to drive adoption of high speed internet• Very profitable for ISPs because no content costs and few competitors 21

The best way to predict the future is to invent it -Alan Kay 22

Netflix is Radically Improving Video Entertainment by Creating a Leading Global Internet TV Network, That Others Will Follow (Like HBO did 40 years ago) 23

Netflix Is: Personalized, social, intuitive, evolving UI on all internet screens Simple “click and watch” viewing with the highest video quality possible Wide-ranging semi-exclusive selection of tens of thousands of prior-season TV shows and movies, and some original TV shows Inexpensive, $8/month, commercial-free 24

What Netflix is Not:• Pay-per-view new release movies – like Apple iTunes, Walmart Vudu, Amazon Video, YouTube Movies, …• Ad-supported free content – like YouTube, Crackle, Hulu• Sports, contestant, news, porn, music video, instructional, or user-gen video• All movies and TV shows in one place 25

Netflix is Supplemental, like HBO At $8/month, we augment rather than replace the $80 video package 26

USA Market Size for Netflix• Linear HBO is about 30m USA subs• But Netflix is much better: – Only $8/month and unbundled – Offering broader content including kids, anime, family, and thousands of more titles – Pure simple “click and watch” on-demand – Built-into smart TVs, plus on tablets, laptops, phones – Consumed through personalized social UI• Netflix market size: 60-90m USA members 27

Global Market Sizeis Large and Growing600m broadband households 850m Facebook users 6b mobile phones 28

Netflix Virtuous Cycles

MoreContent More Members & Revenue

More MoreContent Word of Mouth More Members & Revenue

More MoreContent Word of Mouth More Members & Revenue More R&D for Better Service

Netflix is innovating at web speed to create amazing internet-video experienceson all internet-connected screens 33

Fantastic Customer Sat Through Democratizing Innovation• Our internal innovators try to improve our service for random 100,000 members• Then we compare member satisfaction• Only changes that improve satisfaction get published to all members• A/B testing enables many people at Netflix to have ideas and learn what pleases 34

Five Long-Term Threats to Netflix 35

TV Everywhere• Great internet apps on all screens for all existing networks, at no extra consumer cost, would eventually mean: – less watching of Netflix – less desire by networks to license prior-season to Netflix, because they can self-monetize in their app• Our most direct competitor for viewing time will probably be HBO GO 36

Other Subscription Internet Networks• Hulu+, also at $8, but with commercials• Amazon Prime streaming• Lovefilm streaming in UK• Large new entrants willing to invest heavily in content, marketing and technology 37

ISP Market Power Issues• ISPs can give their own video data special treatment (doesn’t count towards cap, faster, etc), violating net neutrality principles• ISPs can refuse us, or try to charge us for, sufficient entry ports to their network for the video data their subscribers are requesting from us• ISPs can charge consumers per-gigabyte even through off-peak usage has zero marginal cost 38

Piracy Growth• Piratebay.se• Cuevana.tv• Letmewatchthis• Hotfile• And 1000 more… 39

Ad-supported Video• Ad targeting on internet could get so efficient that free ad-supported TV shows and movies become most of internet video• The better the targeting, the fewer ads needed to support a piece of content, thus the fewer people willing to pay for commercial-free Netflix 40

SucceedingDespite All These Threats is our Challenge 41

Strategy• Keep improving our service faster than any competitor – License more streaming content, and expand into original 1st window TV shows – Improve personalized social UI to generate more satisfaction from existing content – Ever better audio video quality• Get global scale by investing domestic profits into international expansion 42

Innovators Needed to Create One of the World’s LeadingInternet TV Networks Updated: 24-Apr-2012 43

http://jobs.netflix.com	366542
http://account.netflix.com	170346
http://www.netflix.com	126105
http://www.hackingnetflix.com	92679
http://www2.netflix.com	26785
http://www.wired.com	17540
http://gigaom.com	4616
https://signup.netflix.com	3398
http://ca.netflix.com	1866
http://www.btigresearch.com	1583
http://www.netflix.ca	1225
https://www.netflix.com	703
http://irwebreport.com	563
http://accountqa.netflix.com	535
http://pragmaticstory.com	281
http://jobs101.prod.netflix.com	201
http://static.ak.facebook.com	191
http://investorsmosaic.squarespace.com	159
http://www.johnkeehler.com	133
http://www.queuetheday.com	128
http://www.next-tv.it	124
http://localhost	109
http://www.electronista.com	99
http://translate.googleusercontent.com	95
http://www.theproactivenetwork.com	80
http://proactivecrg.squarespace.com	65
http://207.46.192.232	65
http://blog.tvrecaps.com	63
http://www.newsblur.com	62
http://jasonanderman.tumblr.com	60
http://feeds.feedburner.com	57
http://www.linkedin.com	54
http://eclass.gv.br	53
http://www.investorsmosaic.com	48
http://jobs2.netflix.com	43
http://mike.blogs.com	40
http://webcache.googleusercontent.com	34
https://ca.netflix.com	32
https://account.netflix.com	31
http://fredericguarino.tumblr.com	29
http://transmedia.collected.info	28
http://www.hackingnetflix.com.	25
http://baseline2.netflix.com	21
http://maps	21
http://maxdome-pm.posterous.com	21
http://lglt-pmalik.corp.netflix.com	20
http://blog-admin.wired.com	18
http://www.jocaonstuff.com	18
http://blackboard.gv.br	18
http://www.pitchengine.com	18
http://www.harishvenkatesan.com	17

Netflix Business Opportunity

by Reed Hastings on Nov 21, 2010

Accessibility

Categories

Tags

Upload Details

Usage Rights

132 Embeds 817K

Statistics

Netflix Business Opportunity — Presentation Transcript