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Netflix’s Business Model Canvas

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A brief overview of Netflix’s Business Model Canvas.

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Netflix’s Business Model Canvas

  1. 1. Business Model Canvas Miss Jacinta Hayden Miss Annie King
  2. 2. 2 1. Introduction 2. Business model canvas a. Customer Segments b. Value Propositions c. Channels d. Customer relationships e. Revenue streams f. Key resources g. Key activities h. Key partnership’s i. Cost structure 3. Conclusion Contents
  3. 3. 3 Introduction  Netflix is the world’s leading internet television network  With over 75 million streaming members in over 90 countries  Its customers enjoy more than 125 million hours of TV shows and movies per day  Its online catalogue includes original series, documentaries and feature films
  4. 4. 4 Introduction - SWOT Strengths • strong brand to differentiate from competitors • a large catalogue • original content • fast forwarding functionality • HD viewing • ability to watch content simultaneously on multiple devices Weaknesses • Their international business is not yet profitable • Investing large amounts of their revenue on original content is risky
  5. 5. 5 Introduction - SWOT Opportunity's - Grow its international market share - Grow its movie catalogue in order to gain more subscribers Threats - Ever changing due to technology advancement’s - Black market
  6. 6. 6 Business model canvas – Customer segments • It has an estimated 75 million streaming members in over 90 countries • Customer segment are that they are aged between 24-35 with annual salaries starting at $50,000. Have at least a bachelor’s degree and have children • Anyone who can afford an internet connection
  7. 7. 7 Business model canvas – Value Propositions There are three key features that attract Netflix’s customers which add a unique value to retain them 1) Original content 2) Multiple viewing options 3) Price
  8. 8. 8 Business model canvas – Channels • Website Netflix.com and mobile app. • Netflix started out as a movie and television rental delivery service. Movies and series were delivered to subscriber’s homes in exchange of a monthly fee. • Netflix has changed and adapted its business model to meet market demands and obtain growth by offering a large online streaming catalogue • Netflix can be viewed across different devices and mediums such as online streaming on your laptop or physical Blu-ray DVD rental
  9. 9. 9 Business model canvas – Customer Relationships • gives their subscribers a voice to rate what they are watching on Netflix and recommend movies of interest to other customers. This provides an element of trust amongst the Netflix community. • Netflix’s self-service model gives their customers a sense of control as it is solely up to them what they watch • They have a customer service and technical support line which is 24 hours. They also have an online form which customers can submit when they require support.
  10. 10. 10 Business model canvas – Revenue Streams • Netflix main source of revenue is from their online streaming membership which comes in three different price levels. • They also earn revenue from their DVD postal service which is only in the US • With their Netflix original content they also make revenue on product placement • Also they earn revenue from print advertising on their DVD postal packaging
  11. 11. 11 Business model canvas – Key Resources Netflix key resource are • Physical - Netflix has a top-quality streaming IT infrastructure, warehouses, offices, storage facilities and machinery to enable their shipping side of the business model. • Intellectual - To protect their strong brand Netflix use a combination of patent, trademark, copyright and trade secret laws and confidentially agreements to protect their intellectual property • Human – Netflix have over 3700 employees which make their business operate on a daily basis which includes CEO and co-founder Reed Hastings • Financial – Netflix revenue stream earns them a large amount of cash which is key to keep funding their operating. Netflix also floats on the stock market which is another source of finance which enables them to continue their expansion plans.
  12. 12. 12 Business model canvas – Key Activities • maintaining its online platform to ensure it its performing to a high standard • creating and acquiring new content to add to its online and physical catalogue • ensuring its key partners, vendors, operational functions and human resource are meeting SLA’s and strategic objectives • continuous training, innovation and service improvement activities to support problem solving scenarios
  13. 13. 13 Business model canvas – Key Partnerships • Netflix have agreements with various cable, satellite and telecommunications operators to ensure their service is reliable and available for their customers. • Netflix also partner with such high profile television networks and motion picture studios such as FOX and Universal
  14. 14. 14 Business model canvas – Cost structure Incoming - Netflix has a fixed price cost model which they have raised in increments over the years. As previously stated they earn other elements of their revenue from advertising but the majority of their revenue comes from their subscription fees. Outgoing - As a business they would have a number of their own fixed and variable costs to pay out such as wages, delivery costs, property rental, machinery costs, electricity, packaging, Tax’s, content acquisition, data warehousing storage, IT costs etc.
  15. 15. 15 Conclusion Netflix saw a gap in the market and created a business model to sell their service. Then continuously innovated its model to adapt to the ever changing environment around it. Their expansion plans are risky but there financial return on investment is the evidence to prove that their strategy has been a success.
  16. 16. 16 • Alexander Osterwalder, 2013. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. 1 Edition. Wiley. • Netflix, 2015 Annual report, Available at https://ir.netflix.com/annuals.cfm [Accessed on 06 November, 2016] • Investazor, The Netflix Saga, Part 1: Understanding the Business model, Available at http://investazor.com/2013/11/15/netflix-saga-part-1-understanding-business- model [Accessed on 06 November, 2016] • I Know first, Netflix SWOT Analysis: What is there to come in 2016?,Available at https://iknowfirst.com/netflix-swot-analysis-what-is-there-to-come-in-2016 [Access 03 November, 2016] • EBSCO Publishing Firm,(2016), Netflix Inc. SWOT Analysis, Available at http://www.marketlineinfo.com [Accessed 03 November, 2016] • Unicorn Economy, How does Netflix make money, Available at http://unicornomy.com/how-does-netflix-make-money-business-model [Accessed on 08 November, 2016] References

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