2. Netflix Snapshot
• Netflix has nearly 38 million members in
40 countries enjoying more than one
billion hours of TV shows and movies per
month, including original series
• Domestic profits fueling global expansion
• Improving choosing, content & streaming
to win more share of member viewing
• Streaming is the future of television
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3. Successful Expansion
• Netflix expanded from DVD to become
leader in streaming TV shows and movies
• It’s so hard that most companies fail:
• AOL shrank with dialup access
• Yahoo didn’t drive search or social
• Kodak and Blockbuster went bankrupt
• But we did it!
– even if it wasn’t as pretty as we wanted…
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4. Next Five Years
1. Huge improvements in choosing, content,
and streaming
2. Global expansion market by market
3. Produce great exclusive original series
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6. First Era of Television:
Linear Broadcast Networks
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Few choices
to watch at any
given time
ABC, CBS, NBC, …
7. Second Era of Television:
Linear Cable Networks
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~200 choices at
any given time
ESPN, HBO,
Discovery, TNT,
AMC, etc.
DVR adds some on-demand
on top of linear networks
8. Third Era of Television:
Internet Networks
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Millions of Choices
Pure On-demand
Apps Keep Improving
All Screens
13. Netflix Is:
Wide-ranging selection of TV shows and movies
Pure on-demand choosing and viewing with the
highest video quality possible
Personalized, social, intuitive, evolving UI on all
internet screens
Inexpensive, $8/month, unlimited viewing
No commercials, no commitments, no contracts
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14. Netflix is Not:
• Not: Pay-per-view new movies
– like Apple, Amazon, Google, Microsoft, Sony,
Walmart, Best Buy, …
• Not: Ad-supported free content
– like YouTube, Crackle, Hulu
• Not: Sports, contestant, news, porn, music
video, instructional, or user-gen video
• Not: All movies and TV shows in one place
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15. USA Market Size for Netflix
• Linear HBO is about 30m USA subs
• But Netflix has broader appeal:
– Only $8/month and unbundled
– More content including kids, anime, family, and
thousands of shows and movies
– Pure on-demand
– On tablets, laptops, phones in addition to TV’s
– Enjoyed through personalized social UI
• Netflix market size: 60-90m USA members
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16. Global Market Size
is Large and Growing
600m broadband households
1b Facebook users
6b mobile phones
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18. TV Everywhere
• Great internet apps (HBOgo, etc) on all
screens for all existing networks, at no
extra consumer cost, could mean:
– less watching of Netflix
– less desire by networks to license prior-
season to Netflix, because they can self-
monetize
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19. Other Subscription
Internet Networks
• Hulu+, also at $8, but with commercials
• Amazon Prime Instant Video
• Lovefilm Instant in UK
• Large new entrants willing to invest heavily
in content, marketing and technology
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20. ISP Market Power Issues
• ISPs can give their own video data special
treatment, violating net neutrality principles
• ISPs can refuse us, or try to charge us for,
sufficient entry ports to their network for the video
data their subscribers are requesting from us
• ISPs can charge consumers per-gigabyte, even
though off-peak usage has zero marginal cost
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22. Ad-supported & PPV Video
• Free ad-supported TV shows and movies
are popular
• Pay-per-view TV episodes ($2) and
movies ($4) are widespread
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23. The best way to predict the
future is to invent it
-Alan Kay
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24. 24
Netflix is
innovating at web speed
to create amazing
internet-video experiences
on all internet-connected screens
25. Fantastic Customer Sat
By Democratizing Innovation
• Our many internal innovators constantly
try to improve our service, for a random
100,000 members
• Then we compare member satisfaction
• Only changes that actually improve
satisfaction get published to all members
• A/B testing enables many people at Netflix
to have ideas and learn what pleases most
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26. Our Simple Strategy
• Improve our service faster than competitors
– Better choosing: improve and simplify
personalized social UI to generate more
viewing and satisfaction from existing content
– Better content: license more content, and
expand into original series
– Better streaming: ever better audio video
quality and less buffering
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