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  • Netflix. (2011) 2010 Annual Report. www.netflix.com. Accessed: February 22, 2012. Available: http://files.shareholder.com/downloads/NFLX/1707858920x0x460274/17454c5b-3088-48c7-957a-b5a83a14cf1b/132054ACL.PDF
  • Accenture. (2011). Reshaping The Business For Sustainable Digital Growth. www.accenture.comAccessed: February 22, 2012. Available: http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-Entertainment-High-Perfromance-Study-2011.pdf(2009). Economies Of Scale and Scope. www.wiley.com Accessed: February 22, 2012. Available: http://media.wiley.com/product_data/excerpt/45/EHEP0002/EHEP000245-2.pdf
  • PBS NEWSHOUR, (2011). Interview “While Netflix Stumbles, Competitors See New Opportunity” Interviewee: Eric Schmacher-Rasmussen and Cecilia Kang. Last Accessed on 22ND February 2012. Available: http://www.pbs.org/newshour/bb/business/july-dec11/netflix_10-27.htmlITVS, and Corporation for Public Broadcasting. 2011. “2011 Digital Survey”. Accessed on: 22 February 2012. Available: http://www.pbs.org/newshour/bb/business/july-dec11/netflix_10-27.html
  • Netflix (2012). Accessed: 21 February 2012. Available: www.netflix.comFoxnews.com (2011). “Netflix Sags As Wal-Mart Video Streaming Service Debuts”. Accessed: 22 February 2012. Available: http://www.foxnews.com/scitech/2011/07/26/wal-mart-takes-on-netflix-offers-video-streaming/Amazon.comWalmart.comStore.apple.com

Transcript

  • 1. Consulting Methods Final Project Objective: Help Netflix Improve Profitability To Sustain Market Leadership Team 4 GreenwichAlexandra Bayet Christina Alvarado Atman Bhesdadiya Anastasia Toumazou Daniel Marczinek Jargalan Amarsaikhan
  • 2. Problem definition SCQ Analysis • Market leader • Key figures in 2011: • 90% of customers are from the USA • 61% market shares • Share prices: $299/share in July versus $62/share in December • Split between DVD and Streaming offers. • 60% increase in price and miscommunication • Increasing competition • Loss in market share • Licensing contract expiration • Increasing licensing prices • Loss of subscribers • Loss of investors confidence • Decreasing liquidity Can Netflix improve profitability to sustain market leadership?
  • 3. Approach Issue Analysis Can Netflix improve profitability to sustain market leadership? 3. Can Netflix reduce negative 2. Can Netflix attract more1. Can Netflix reduce costs? risks associated with content customers? licensing? 1.1 1.2 2.1 2.2 3.1 3.2 Can Netflix Can Netflix Can Netflix Can Netflix Can Netflix Can Netflix identify cost reduce identify what deliver identify develop a plan to drivers ? identified costs? customer identified negative reduce negative wants? customer outcomes? outcomes? wants? c c c .• Conduct secondary research on • Conduct primary research on customer wants • Interview risk management department on the major cost drivers within the through surveys and telephone interviews. current risks & outcomes connected to the company. • Conduct secondary research on technological library content.• Interview the controllers and adaptation of new devices. • Interview independent expert to benchmark accountants to identify cost • Conduct secondary research on competitor level of retrieved information. drivers and saving solution. products and services. • Develop ranking of major negative affects.• Conduct secondary research on • Launch pilot project to research customer wants • Develop plan to reduce maor negative risks. solutions cost saving. • Analyze whether organizational capabilities• Interview employees to evaluate and internal knowledge of company are feasibility of found possibilities. sufficient to create their own studio.
  • 4. Approach Work Plan MEETING CHECKPOINT PRESENTATION
  • 5. Findings and Recommendations Final Presentation Netflix can improve profitability to sustain market leadership  Netflix can reduce costs.  Netflix can attract more customers.  Netflix can reduce negative risks associated with content licensing.
  • 6. Findings and Recommendations Final Presentation Netflix can reduce costs Netflix can identify cost drivers. Netflix can reduce identified costs.
  • 7. Findings and Recommendations Final Presentation Netflix can reduce costs Netflix can reduce identified costs  Decrease Marketing costs by switching TV and radio advertisements to online advertising, specifically by using social media.  Decrease Fulfillment expenses by creating efficiency in content processing and customer service.  Achieve economies of scale by spreading high content acquisition costs over increased number of subscriptions.
  • 8. Findings and Recommendations Final Presentation Netflix can attract more customers  Netflix can identify customer wants.  Netflix can deliver customer wants.
  • 9. Findings and Recommendations Final Presentation Netflix can attract more customers Customer want identification  Variety in content: movies and TV shows  Low prices  Availability on the greatest number of devices  Ease of use
  • 10. Findings and Recommendations Final Presentation Netflix can attract more customers Netflix can deliver identified wants What Netflix delivers What Netflix can do (extra) • Variety: largest content • Offer different type with 60% TV shows service options: pay- per- view and advertising supported online content • Greatest number of devices: Xbox, Wii, PS3, • Competitive price PC, Mac, iPad, Apple TV, strategy smart TV, Blu-ray players, iPhone, Android, • Develop a software to smartphones with offer all-in-one service Windows
  • 11. Findings and Recommendations Final Presentation Netflix can reduce negative risks associated with content licensing  Netflix can identify negative outcomes.  Netflix can develop a plan to reduce identified negative outcomes.
  • 12. Findings and Recommendations Final Presentation Netflix can reduce negative risks Negative outcome identification Situation Online streaming through licensing by studios Licensing periods & terms depend on individual contracts ConflictsStudios discontinue Studios do not want to Netflix can not retrieve Studios raise licensing on short renew licensing new content from studios licensing notice (on acceptable terms) on acceptable terms prices Negative outcomes Loss of subscribers Slower subscriber base Increased & lower revenues through subscribers growth costs Lower profitability Loss of market value
  • 13. Findings and Recommendations Final Presentation Netflix can reduce negative risks Plan to reduce negative outcomes Ranking of risks by expected negative outcome impact (from high to low) Plans to reduce risks Plans to reduce outcomes Studios discontinue licensing on short notice Netflix implements punishment clause Netflix receives licenses by several studios Studios do not want to renew licensing (on acceptable terms) Netflix implements priority clause Netflix contracts new studios Netflix can not retrieve new content from studios on acceptable terms Netflix partners with other distributors Netflix sources content in foreign markets Studios raise licensing prices Netflix buys on pay-per-view base Netflix (co-) produces content
  • 14. Findings and Recommendations Final Presentation Netflix can improve profitability to sustain market leadership  Netflix can reduce costs.  Netflix can attract more customers.  Netflix can reduce negative risks associated with content licensing.
  • 15. ReferencesAccenture. (2011). Reshaping The Business For Sustainable Digital Growth. www.accenture.comAccessed: February 22, 2012. Available:http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-Entertainment-High-Perfromance-Study-2011.pdfNetflix. (2011) 2010 Annual Report. www.netflix.com. Accessed: February 22, 2012. Available:http://files.shareholder.com/downloads/NFLX/1707858920x0x460274/17454c5b-3088-48c7-957a-b5a83a14cf1b/132054ACL.PDFNetflix (2012) 2011 Annual Report. www.netflix.com. Accessed: February 22, 2012. Available:http://files.shareholder.com/downloads/NFLX/1707448931x0xS1193125%2D12%2D53009/1065280/filing.pdfWiley (2009). Economies Of Scale and Scope. www.wiley.com Accessed: February 22, 2012.Available: http://media.wiley.com/product_data/excerpt/45/EHEP0002/EHEP000245-2.pdfPBS NEWSHOUR, (2011). Interview “While Netflix Stumbles, Competitors See New Opportunity”Interviewee: Eric Schmacher-Rasmussen and Cecilia Kang. Last Accessed on 22ND February 2012.Available: http://www.pbs.org/newshour/bb/business/july-dec11/netflix_10-27.htmlITVS, and Corporation for Public Broadcasting. 2011. “2011 Digital Survey”. Accessed on: 22 February2012. Available: http://www.pbs.org/newshour/bb/business/july-dec11/netflix_10-27.htmlNetflix (2012). Accessed: 21 February 2012. Available: www.netflix.comFoxnews.com (2011). “Netflix Sags As Wal-Mart Video Streaming Service Debuts”. Accessed: 22February 2012. Available: http://www.foxnews.com/scitech/2011/07/26/wal-mart-takes-on-netflix-offers-video-streaming/Amazon.comWalmart.comStore.apple.com