2. 2|
About
Netflix
Netflix was founded in 1997 by software executives Reed Hastings and Marc
Randolph to offer online movie rentals mailed to the customers’ doors. Netflix is
now the leading internet subscription service for streaming movies and TV shows
with over 62 million members in over 50 countries enjoying more than 100 million
hours of content per day. In just the past quarter (April 2015), Netflix has seen a
24% sales gain and 4.9 million new subscribers.
“We promise our customers stellar service, our suppliers a
valuable partner, our investors the prospects of sustained
profitable growth, and our employees the allure of huge impact.”
EstimatedCompanyValue:
$40Billion
Revenue:
$5.5Billion(2014)
3. 3|
Netflix provides a
diverse and
customizable library of
movies and television
shows available for
unlimited streaming or
mail delivery at low cost
and user-convenience.
ValueProposition
Customers and Value Proposition
Netflix customers are avid movie
and television watchers that are
not very particular in the viewing
selection. They value easy and
immediate access, as well as the
portability and transferability of
the product. Consumers are
typically younger and tech-saavy.
Netflix has an international
audience.
Customers
4. 4|
Channels andCustomer Relationships
Channels
Netflix get their customers through
• Advertising
• Word-of-mouth
• Availability through multiple devices
Netflix captures the audience with TV ads about
their new plans, accessibility, and variety of content.
Word-of-mouth occurs when existing customers
spread positive publicity about their satisfaction
with the service and the benefits provided by
Netflix. Netflix also get its customers by being easily
accessible on the internet, most mobile devices,
and gaming consoles. Many of these devices come
pre-installed with the Netflix app.
Netflix keeps their customers by
• Growing their library of content
• Producing Exclusive Netflix content
• Customization
New TV series and movies will keep the current
customers interested and coming back to watch
more. Original content such as ‘House of Cards’ and
‘Orange is the New Black’ capture user attention.
Netflix’s ability to recommend content to watch
based on user interests and preferences is a unique
customization feature.
Netflix is able to grow by
• Introducing new plans
Netflix has to constantly update their content library
with recent or in demand TV shows/movies to gain
the attention of more users. To reach different
segments, Netflix must offer different types of plans
to meet the needs of different people. For example,
Netflix will soon announce their Family Plan that
allows 4 people to share an account for $12/month.
People who already have Netflix are more likely to
upgrade their plan.
Customer Relationships
One of the most important points of the
value proposition is easy accessibility.
Netflix customers want to play and
resume their movie or show at any time
in any location from any device.
Therefore, Netflix is available on a
variety of platforms, but the original
mail rental service is also still available.
Netflix reaches their audience through
Streaming and Mail Delivery. Streaming
is available online, on mobile devices,
and game consoles such as the Wii,
Xbox, and PlayStation.
5. 5|
KeyActivities
Mail Rental Operations
Since 6 million people are still renting
Netflix content by mail, mail order
operations is a key activity for Netflix.
Netflix must manage an organized
system for sending and receiving DVDs.
Customer Service
Netflix has a tremendous amount of
customers that view or order large
volumes of content every day, so they
must provide assistance to customers
when they have questions or
complaints. Netflix has created a help
website for customers to go to for billing
and account questions, login help,
troubleshoot services, FAQ, etc.
Content Licensing
In order to keep their current audience and
gain more customers, Netflix must constantly
seek more content to add to their library.
Netflix has to form license agreements with
movie and television show producers in order
to obtain their media for the Netflix service.
Technical Development
& Maintenance
Netflix tries to provide an easy-to-use
interface for their consumers to use 24/7, so
they are constantly working to improve the
Netflix software across all platforms.
6. 6|
Resources andPartners
In order to provide seamless and top-quality streaming anywhere
at anytime, Neflix must partner with internet providers to provide
their service, television networks and motion picture studios to
increase content, and consumer electronic companies for
permission to use their consoles as a platform for their service. For
example, Netflix partnered with MGM in 2012 to start streaming
their titles in the UK and Ireland.
Partners
Resources
Netflix’s key resources consists of
their top-quality streaming media
infrastructure which allows users
to access content quickly, easily,
and without any glitches. Netflix
also needs licenses for content in
order to legally show all their
movies and TV shows. Netflix
originals have become a key
resource in drawing in new
subscribers and keeping current
members entertained and hooked
on the service.
7. 7|
Key Partners Key Activites Value Proposition Customer Relations Customer Segments
Key Resources Channels
Cost Structure Incomes
Keep
Grow
Get
Netflix’s
Business Model
We use the Business Model Canvas to represent in one visual shot this company
business model.
Internet providers
Television networks
Motion picture
studios
Consumer
electronic
companies
Content Licensing
R & D
Mail Rental
Operations
Customer Service
Top Quality Streaming
Media infrastructure
Licenses for Content
Exclusive Original
Content
Monthly Subscription Fee
(Multiple plans available for
Streaming and DVD or Blu-Ray Rental)
Technology & Development Costs
Licenses
Original content production costs
Marketing costs
Netflix is an online-
based platform
which provides a
diverse and
customizable library
of movies and
television shows
available for
unlimited streaming
or mail delivery at
low cost and user-
convenience
Streaming:
-Website
-Gaming consoles
-Phone application
Mail delivery
Mass Market
Fans of
blockbuster
movies
Avid TV Show
watchers
People that prefer
convenient
delivery
Advertisemens
Word-of-mouth
Growing Library of
Content
Offer new plans
8. 8|
The Role of Innovation
In today’s age, internet streaming is
replacing the traditional TV and apps are
replacing channels. Netflix is leading the
way to internet TV. Netflix not only
optimized their mail delivery rental service,
but were first movers in the internet rental
subscriptions market and has now become
the dominant player.
Netflix has been able to capture consumer
attention and keep it through their growing
library of shows and movies, as well as their
production of original content. With so
much content at an affordable cost, Netflix
is successful and growing.
Future
Customer Growth
Netflix strives to grow 60-90 million
members in the domestic market
over 5 years (2015-2020) based on
upon their past trajectory and
continued growth of internet video.
Domestic Margin Structure
Netflix will grow content spending
and marketing slightly slower than
they grower. Over 5 years (2015-
2020), they want to move the 30%
contribution margin close to 40%.
What makesthedifference
Original Content
Netflix will continue to grow their original
content offering as they gain scale and
confidence. The goal is to premiere a new
original show or season every two and a half
weeks (20 new shows or seasons per year).
Global Expansion
Netflix wants to expand internationally as
fast as possible while staying profitable.
Expected completion of global expansion is
2016. They should return o growing global
profits in 2017 and beyond.
Profit
Model
Network Structure Process Product
Performance
Product
System
Service Channel Brand Customer
Engagement
CONFIGURATION OFFERING EXPERIENCE
