Netlix price change

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Netlix price change

  1. 1. Tatyana Belousov Shaun Keenan Sasha Safonovawhat Sapan ShahNetflixshould have donewhenchanging itsprices
  2. 2. Business model & Shaunpast pricingNew pricing SapanCompetitors SashaOur alternative Tatyana
  3. 3. Disadvantages of brick and Netflix’s core advantages mortar stores Worlds leading internet no late fees & a subscription service for wide availableenjoying TV shows and movies selection
  4. 4. Focused on customer experience to drive additional growth: More content Word-of-mouth marketing
  5. 5. Netflix’s revenue comes fromCustomer retention is of price It’s that high becauseimportant, yetof service.rate is – subscription its churn not quality fees.6%
  6. 6. Ways to subscribe Streaming……or DVDs by mail… both. 85% of consumers paid for only streaming or a 1-2 DVD plan in 2010
  7. 7. Old prices $10.99 $7.99unlimited streaming streaming or DVDs from $8.99 to $47.99 for others
  8. 8. New prices $7.99 No Discount for Streaming havingNetflix DVD by mail Old both plans :( 2 DVD: $11.99 3 DVD: $15.991 DVD: $7.99 4 DVD: $21.99
  9. 9. Why the split:…and to a DVD rentalto remainshift focus to license price create moredivision they can bestreaming withoutaggressivecontentproud ofsacrificing quality
  10. 10. Netflix lost one million Huge investor more subscribers than backlash they had originally expected to Reaction to Pricing ChangeAnger about dealing Stars would not with 2 separate renew its contract accounts with Netflix
  11. 11. Netflix messed up! Underestimated emotions of subscribers – unquantifiable!
  12. 12. Netflix messed up! Misinterpreted the importance of options
  13. 13. Netflix messed up! Overconfidence: Huge stock increase prior to announcement
  14. 14. Netflix messed up! Did not utilize focus groups
  15. 15. Netflix messed up! Blamed bad reaction on negative movement of the country- Occupy and the Tea Party
  16. 16. Individual show episodes $1.99 Season bundles starting at$32.99Less popular films FREE Unlimited streaming $79/year
  17. 17. Less convenient than Netflix$1/day $1.20/day Changed prices without a large backlash.
  18. 18. What should Netflix have done? Despite their clear gaffe, all is not lost
  19. 19. Maintain separate servicesPrice the bundle Streaming $7.99 DVDs by mail $7.99 at $12.99 Mixed bundling
  20. 20. Things would be different Consumers who liked the full package would keep it
  21. 21. Things would be different Consumers who only use one service would only pay for that one. Perceived discount!
  22. 22. Things would be different Netflix would reach a wider array of consumers, including those with lower WTP
  23. 23. Things would be different Profits would increase due to the increased price
  24. 24. Copyright © 2012Tatyana BelousovShaun KeenanSasha SafonovaSapan Shah
  25. 25. Appendix
  26. 26. The price of thecompanys services will not change. “Were done with that!” said Mr. Hastings.
  27. 27. Financial Results Earnings actually met expectations
  28. 28. Financial Results Revenue increase outweighed the subscriber decline
  29. 29. Financial Results Revenue 49%
  30. 30. Financial Results Both revenue and net income topped expectations

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