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Netflix - Strategy management


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A strategic approach on Netflix and the impact of their adopted strategies from time to time.

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Netflix - Strategy management

  1. 1. Group D10 Gabriela D’cunha – 14052 Genevieve Nora Dias – 14053 Jovita Francy Dcosta – 14056 Manisha Kumari – 14058 Mario Allen Clement – MODULE 2 NETFLIX 1
  2. 2. CONTENT Netflix – An Intro Mission, Vision and Value Presence Netflix Business model and Pricing Subscription based business model Strategy Adopted & Market Trends Technology Channels & Subscribers Qwickster and Netflix PEST analysis, Five forces analysis & SWOT Analysis Financial Summary Is Netflix Attractive??? 2
  3. 3. NETFLIX – AN INTRO An American provider of on-demand Internet streaming media North America Australia New Zealand South America Parts of Europe Flat rate DVD-by-mail in the United States DVDs and Blu-ray are sent via Permit Reply Mail. 3
  4. 4. MISSION, VISION AND VALUE Netflix referred to its brand promise as a Values - Judgment, Productivity, Creativity, Intelligence, Honesty, Communication, Selflessness, Reliability, Passion. At Netflix, we seek to be the highest quality subscription business that offers Internet streaming and DVD by mail content (2). We believe in offering the best customer service possible by teaching our employees to be honest, respectful and ethical (6) while also valuing every customer’s individual needs. Our employees (9) are provided with the latest technologies, excellent benefits, and the safest working conditions in the industry. We provide outstanding customer service and in return, our customers (1) in our North American and Mexican markets (3) recommend their friends to Netflix (5). Our vast library of DVD’s and streaming service (4) provides a competitive advantage (7) as compared to offering only streaming. At Netflix, we strive to be a good corporate citizen (8). 1.Customers 2.Products or services 3.Markets 4.Technology 5.Concern for survival 6.Philosophy 7.Self-concept 8.Concern for public image 4
  5. 5. PRESENCE 5
  6. 6. NETFLIX BUSINESS MODEL AND PRICINGDVD and Video Game Model Online Streaming Model 6
  7. 7. SUBSCRIPTION BASED BUSINESS MODELThe DVD-by-Mail option: Netflix website Select one or more movies Received DVDs by first class mail 2004-10 added more distribution channel The streaming option Instant watching capability Licensing increasing amount of digital content Netflix took a “metered” approach to streaming Switched to an unlimited streaming option 2011- No single subscription plan 7
  8. 8. STRATEGY ADOPTED  A comprehensive library of movies & TV episodes.  New content acquisition.  Convenient & easy-to-use movie selection software.  A choice of mail delivery vs. streaming.  Marketing & advertising.  Transitioning to internet delivery of content.  Expanding internationally. 8
  9. 9. MARKET TRENDS Renting movies & TV content - streaming movies & TV shows Strategic initiatives: The owners of Hulu offered a free online video service TV everywhere concept & program offerings Google TV Apple TV Reasons Introduction of new technologies & electronic products Increasing number of devices Wide variety of distribution channels & providers Experimenting Movie Studios with shortened release periods 9
  10. 10. 10
  12. 12. SUBSCRIBERS 12
  13. 13. QWICKSTER AND NETFLIX In September 2011, split off the DVD rental business. Into a new company called Qwickster. NetFlix loses 800,000 customers. Stock prices falls from $295 to $108/share. In October 2011, decides to NOT split off the DVD business. 13
  14. 14. PEST ANALYSIS Political Piracy. Content licenses and copyright. Economical Unlimited market size. Social Wish to watch on tv screen.  Applicable everywhere. Technological VOD increased popularity. 14
  15. 15. FIVE FORCES ANALYSISThreat of new entrants – high (Apple, Amazon, Hulu, Youtube) Threat of substitutes – high (Apple TV, Hulu) Bargaining power of customers – high (a lot of substitutes) Bargaining power of suppliers – high (content is key) Intensity of rivalry – high (HBO, low entry barriers) Complementors – high (Microsoft, Wall-Mart, Roku, Vizio, LG) 15
  16. 16. SWOT ANALYSIS Strengths User Experience Streaming Capability Very competitive prices Weakness Pricing power Content Distribution Competitors Opportunity Branding Distribution Expansion Threats Internet pipe providers Competition Streaming Offerings NETFL IX 16
  17. 17. FINANCIAL SUMMARY Fit for Purpose Balance Sheet 40% of assets are content related High cash balances / Bank revolver capacity Investment in Technology Other Considerations Cost pressure (competition, streaming video and international expansion) Investors have significant expectations Ability to monetize subscriber growth Average subscriber growth 40% Manage churn rate below market average Focus on internal cost management Maintain healthy gross margins 17
  18. 18. IS NETFLIX ATTRACTIVE??? Global Expansion. Australia to be more attractive. Expected to make profits from 2017.  Flexibility in Business  Marketing Opportunity if Apple acquires Netflix.  Innovation.  Strong Alliances.  Quality, Brand and Size.  Cost Management. 18
  19. 19. THANK YOU 19