1. View Consulting
Jared Jacobs / Gillian Griffin / Yi-Wen Liu / Yen-Yu Chen

2. Agenda
● Company Overview
● Competitive Analysis
● Target Market
● Key Issues
● Strategic Alternatives
● Recommended Strategy

3. Company Overview
Background
 Founded in 1997
 Headquartered in Los Gatos, California
Products
 Movie and TV streaming subscriptions – including original
and syndicated content
 DVD by Mail
2015YE Financials
 Revenue: $6.78B
 Net income:$122.64MM
 Subscribers: 75 million and growing

4. Company Overview
Strengths
 Dominant market share
 Original content
Weaknesses
 Delayed release of streamed
movies compared to DVD
 Cost of content
Opportunities
 Cheaper, faster, and more
accessible internet
 Cord cutters
 Global market
Threats
 Deep pocket competitors
 Pirating websites
 Maturing US market

5. Competitive Analysis
US Household Penetration

6. Competitive Analysis
Market Share: 13% of households
Strengths
 Large customer base
 4K streaming at reduced cost
 Original Content
Weaknesses
 Market follower not leader
 High subscription fee
 Inflexible cancellation policy
Primary Strategy
 Rely on customer base and ecommerce platform to leverage
growth and savings

7. Competitive Analysis
Market Share: 3% of US households
Strengths
 Content partners are owners of business
 TV series available 24-hours after broadcast
 Streaming software as a service
Weaknesses
 No original content
 Low quality and limited library
 Frequent commercials
Strategies
 Rely on partners for exclusive and cheaper access to content

8. Target Market
Value
Oriented
Cord
Cutter
College
Education
Age
25-54
Entertainment
Seeking
Minimum
Income $30,000
(per household)
Reliable and
Fast Internet
Access

9. Target Market
Global Broadband Speeds
http://www.vox.com/2015/1/31/7952321/world-broadband-speed-map
Where is Netflix
http://static5.businessinsider.com Netflix / Business Insider / Statista

10. Key Issues
Critical issues facing Netflix
 Domestic market maturation
 Consumer demand for original content
 Limited capital available for content production
 Lack of access to adjacent markets

11. Key Issues
Domestic market maturation > focus int’l
 Low short-term margins internationally
 Licensing cost and availability
 Consumer behavior – VPN access
 Local competition
Secure Thoughts (Netflix vs VPN)
“84% of respondents said they would pirate more content
because of the new Netflix [VPN] restrictions, and 61% said the
new policy would affect whether they kept their Netflix
subscription.”

12. Key Issues
Consumer demand for original content
 Original content has higher cost
 Needs to grow library to attract customers
 Plan to release 600 hours of content for 2016

13. Key Issues
Limited capital available for content production
 Needs cash to provide more attractive original content
 Sacrifice memberships for lower margins
 Hour of Walking dead was $1M
Lack of access to adjacent markets
 Visibility and exposure to target markets
 Increase the value that it offers customers

14. Alternatives to growing internationally
 Develop the domestic market by serving over and
underserved customers
Strategic Alternatives
1
2
3
Expand the studio franchise
Create a streaming media device
Develop Netflix TV

15. Expand the studio franchise
 Builds on original content
 Creates a competitive advantage
 Able to simulcast to new markets
 High risk, low reward
 Full commitment
 Lack of loyalty, unlike TV series
 Projected: $186MM over 3 years
Strategic Alternatives
 Simulcast in theatres
 Most watched Netflix content in first week

16. Create a streaming media device
 Targets low-income consumers
 Upsell opportunities
 Adds to cord cutting
 Gateway product
 High cost of R&D
 Finding the right partners
 Slow rate of adoption
 Brand dilution
 Projected $50 price tag plus upsell, $136MM over 3 years
Strategic Alternatives

17. Develop Netflix TV
 Multi-billion dollar advertising space
 Little cost to customer, in their TV plan
 Win-win for Cable and Dish providers
 Control programming and costs
 High brand dilution and cannibalization
 Commercials
 Projected: $1B from advertising (0.5% of annual spend)
Strategic Alternatives

18. Recommended Strategy
NETFLIX TV

19. Strategic objectives & Value creation
 Compete with cable and satellite
 Improve on accessibility to competition
 Additional revenue for original content
 Exposure to underserved markets
Recommended Strategy

20. Implementation & Tactics
 Differentiate itself from competitors in the channel space
 Generate ad revenue to offset original programming
 Capture new customers for streaming service
 Maximize market share of viewers
Recommended Strategy

21. Metrics
 Advertising revenue
 Subscription revenue
 Number of subscribers
 Acquisition cost
 Hours of content
 Gross margin
Recommended Strategy

22. Risks
 Cost of confusion
 Trying to be too many things
 Brand dilution
 Unrecoverable costs from production
Recommended Strategy

23. Thank You