netflix case study

1. Pricing Decision 2011
Group 5
Ayush Kumar - 2211071
Ashish Kumar - 2211062
Krutika Sakhare - 2211246
Madhur Kumar - 2211156
Yashwant Maru - 2211343

2. 2
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Why was Netflix
Business Model
Successful?
Netflix was an innovative pioneer in home
entertainment, which was the first to introduce
subscription model combined online account
management with mail delivery of movie rentals on
DVD. Later, they were the first to introduce streaming
of movies on subscription model ultimately
transforming an entire industry.
Netflix with its
subscription model
played on the psyche of
its consumers as they
were paying monthly
for the service
irrespective of how
much they are ordering
movies converting
variable revenue into
fixed revenue.
Netflix was an early
pioneer in DVD rentals by
mail, offering customers a
convenient and efficient
way to access a vast library
without visiting physical
stores. It prioritized user
experience with easy
browsing, selection, and
personalized
recommendations.
Netflix expanded its DVD
catalogue with a vast
selection of movies and TV
shows, forming strategic
partnerships with major
studios for licensing deals.
Their robust technology
and logistics infrastructure
enabled efficient DVD
rental distribution and
prompt delivery to a large
subscriber base.

3. 3
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Cost Structure
Mail-order Business
Variable, depending upon the number of
subscribers & the number of DVDs
Streaming Business
Fixed, as it requires investment in content
acquisition & infrastructure.
This difference in cost structure had a
significant impact on pricing decision,
as Netflix struggled to find a proper
pricing model that can balance the
costs of content acquisition with
revenue that will be generated through
subscription.

4. 4
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Strategic uncertainties while experimenting
with the streaming business
Potential impact on the company's
DVD rental business
Customer's willingness to pay for
online streaming
Cost of content acquisition
Customer's response to free
streaming for its existing DVD
rental customers.

5. 5
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After going through all the available options, we
recommend that Netflix should go with the price bundle
of $11.99(Option 2), as per our price revenue analysis we
are getting highest revenue under this option.
• Better Integration
• Bargain Deal
• Attracting Lost Customers
• Low Operating Cost
Drawback: They will not be able to go towards achieving
100% streaming business because of offering both DVD
& stream section in one.
Evaluation of
Pricing Options

6. Thank
You