Netflix Expanding in Global Markets

1. Entertainment Expanding
Markets
Globalization
By: Alesha Nelsen

2. Article Overview
• Netflix expanded in 130 additional countries last year
• Goal is to takeover global market for streaming
television
• Baines results show an increase in reaching its goal, even
with Hulu and Amazon Prime growing as well

3. Article Overview
• Netflix has a total 93.8 million members
• Added 5.1 million international members
• Now has 44.4 million members outside of the U.S. which
is more than 47 percent of its total membership

4. Article Overview
• Profits are rising steadily, net income increased 56 percent to $67
million in the quarter from the same time period in 2015
• Streaming television is a competitive industry and remains a
challenge for Netflix
• Amazon has recently announced global expansion and YouTube
which leads online viewing time online. Including television
companies are adding more streaming resources.
• After increasing 135 percent in 2015, they only increased 8
percent in 2016.
https://www.nytimes.com/2017/01/18/business/netflix-profit-
rises-56-percent-to-67-million.html?_r=0

5. Globalization
• The globalization movement has lead to practices such as
outsourcing, which businesses move manufacturing and and
service centers to countries where labor is cheap
• In a global economy, many organizations have multinational and
international presence, with employees of a single organization
found in many locations worldwide
Miller, Katherine. Organizational Communication: Approaches and Processes.
Stamford, CT: Cengage Learning, 2015. Print.

6. Globalization in Netflix
• Netflix is now available almost
anywhere in the world with blind spots
being China, Syria and Crimea.
• 2010 was the first time they started
steaming outside of the U.S.
• CEO Reed Hastings is working on
bringing his company into the largest
world market but may take time to
gain approval from the Chinese
government.
https://www.statista.com/chart/4205/ne
tflixs-global-expansion/

7. How Netflix Competes with Expanding Markets
• Netflix Business perspective
• Identify what customers want
• Wide Range of Movies/TV shows
• Free & Fast Shipping
• No Late Fees or Due Dates
• Easy/Fast to Watch Movies
• No Cancellation Fees
• Blu-ray substitution free

8. Netflix Business Perspective
• Multi Channel Offering
• Rent-by-Mail service
• Online streaming

9. Marketing Expenses
• Advertising
• Promotional activities – Television & online advertising
• Allocated cost of revenues in relation to the free trial period (1st month
free)
• Payments to Affiliates & Consumer Electronic Partners and payroll
Related Expenses
• Fixed fee or revenue sharing paying

10. Technology & Development
• Payroll & Related Costs incurred in making improvements to
Netflix’s Service Offering & Telecommunication Systems
• Testing, maintaining and modifying user interfaces, recommendation &
merchandising technology
• Computer Hardware & Software's

11. Netflix Polices
• Guaranty Efficiency, Quality, & Great Customer Service
• One0day delivery & Same day processing
• 95% of DVDs are delivered in a day
• Inspection of DVDs upon return
• When a customer receives a damaged DVD or does not
receive any DVD (theft) Netflix immediately sends a
new one
• 93,000 different choices from movies and TV shows
• Keep the movie as long as you want
• https://promo.dvd.com/q1-2017-lp-g2/

12. Netflix Services
• Streaming Service Plan Options:
• $8 basic, 1 screen
• $10 standard, 2 screens
• $12 Premium, 4 screens
• DVD Service Plan Options:
• Prices built into streaming plans
http://www.digitaltrends.com/movies/netflix-cost-pricing-plan-
breakdown/

13. Weakness of Services
• Monthly fee can discourage membership vs. one time or yearly fee
• Causing non frequent movie/TV show watchers from purchasing
• Lack of control over DVD return time
• DVDs can arrive scratched or broken from mail processing

14. Suggestions/Opportunities Netflix Could Take
• Product line expansion – video games
• Expand movie offerings
• Expand partnerships with content providers and technology
providers

15. How Expansion has Benefited Netflix
• The benefit of Netflix's approach for this expansion is the cost of
entering each new market will be a lot lower.
• Because Netflix owns global rights to its original content
• Will not have to spend money upfront for content licensing
• Adds support for new languages
https://www.fool.com/investing/general/2016/01/10/netflix-inc-completes-
its-global-expansion-with-on.aspx

16. Why Expansion Could Hurt Netflix
• Limited amount of local content
• Markets abroad have more localized content for similar competitors
• Language barriers
• Most content is English – Russia only has 5% of people that speak English
• Expensive price point in certain markets
• Has the same price point across the board – makes it expensive compared to
local competitors, many have lower price points
• Underdeveloped payment processing and broadband infrastructure
• Netflix has been plagued by payment issues even in the US, where it claimed
the switchover to “chip” credit cards caused people to accidentally cancel their
subscriptions.
• http://www.businessinsider.com/4-challenges-to-netflixs-international-
expansion-2016-7

17. Competitive advantage in Global Markets
• First mover advantage in online rental
• Patented method of web based DVD selection
• Customer centric, monthly subscription based service

18. Expanding in Global Market Learning Outcome
• To reach an international market you need to take risk
• Partnerships can be beneficial to help grow your company
• Give you a competitive advantage with global markets even if the
outcome is not the greatest in other markets
• Not all markets are equal so you will have more beneficial areas
than other, need to decide the places you will benefit the most
from after trying a myriad of places
• Do not be afraid to take risks

19. Questions
• Will there be more cable service provider offers?
• How will the most recent expansion help the goal of continuing their service
in other countries?
• Will you have to invest in other countries local content to be successfully
internationally?
• Are you still profiting from DVDs or will you eventually switch over to all
online streaming?
• Will costs change depending on certain markets to increase business in
other markets?

20. Sources
• Steel, E. (2017, January 18). Netflix Goes Global and Its Profit Soars. Retrieved March 28, 2017,
from https://www.nytimes.com/2017/01/18/business/netflix-profit-rises-56-percent-to-67-
million.html?_r=0
• Miller, Katherine. Organizational Communication: Approaches and Processes. Stamford, CT: Cengage
Learning, 2015. Print.
• Richter, F. (2016, January 07). Infographic: Netflix's Global Expansion. Retrieved March 28,
2017, from https://www.statista.com/chart/4205/netflixs-global-expansion/
• Rent Movies and TV Shows on DVD and Blu-ray. 1-month free trial! Fast, free delivery. No late
fees. (n.d.). Retrieved March 28, 2017, from https://promo.dvd.com/q1-2017-lp-g2/
• Grozanick, R. (2016, August 25). How much does Netflix cost these days? Here’s the lowdown.
Retrieved March 28, 2017, from http://www.digitaltrends.com/movies/netflix-cost-pricing-plan-
breakdown/
• Levine-Weinberg, A. (2016, January 10). Netflix, Inc. Completes Its Global Expansion (With 1
Big Asterisk). Retrieved March 28, 2017, from
https://www.fool.com/investing/general/2016/01/10/netflix-inc-completes-its-global-expansion-
with-on.aspx
• McAlone, N. (2016, July 06). 4 things that could hurt Netflix in its quest to take over the world.
Retrieved March 28, 2017, from http://www.businessinsider.com/4-challenges-to-netflixs-
international-expansion-2016-7