dustferg Dustin Ferguson 4:30 Soloway eecs441 fall

1. Company Report
Dustin Ferguson-(dustferg)

2. Product
• Rental by mail DVDs/Blu-Rays, no late fees or due dates, no shipping
and handling fees, and unlimited rentals with a subscription
• On-demand movies and TV shows on multiple platforms (Phones,
tablets, web browser, most major video game consoles, Smart TV’s,
etc.) with a monthly subscription
• More than 50 million streaming subscribers, 36 million of those in US

3. History
• 1997-Founded in California by Marc Randolph and Reed Hastings
• 1999-Introduced monthly subscription, soon drops single rentals
• 2000-Offered to Blockbuster for $50,000,000, Blockbuster declines
• 2002-Initiates IPO, selling 5.5 mil shares for $15 each
• 2007-Introduces video on demand via the Internet
• 2010-Biggest source of Internet traffic in North America in the evening
• 2011-Backlash due to separating streaming and DVD subscriptions
• 2012-Forms a political action committee called FLIXPAC, intent to
“engage on issues like net neutrality, bandwidth caps, usage-based
billing, and the Video Privacy Protection Act

4. Financials
Stock Price ($)
Seperation of DVD and
streaming subscription costs,
Qwikster announcement
Monthly Subscription
fees raised from $8 to $9

5. What’s Hot
• Netflix Originals and continuations of previously canceled
series, House of Cards helped the company post a billion
dollars in quarterly earnings
• International Markets, operating in 41 countries and
expanding

6. Secret Sauce
• Video streaming is preferable to cable for many people
• They were willing to disrupt sales of their DVD rental service by
introducing video streaming, giving them a massive share of the
market and loyal customers by bundling the service automatically
with their DVD rentals
• Largest catalog of movies and TV shows in comparison to other
similar services (6-8 times many TV episodes and movies as Amazon
Instant Video and Hulu Plus)

7. Story – The Netflix Prize
• In 2006, Netflix’s CEO offered a $1,000,000 prize for anyone who
could develop an algorithm that was at least 10% better than their
algorithm at the time, Cinematch, released data
• The team “BellKor’s Pragmatic Chaos” won the prize in September
2009, submitting their results only 20 minutes before a team with the
same score on the test data set
• Two researchers used the data released for the prize to identify
individual users, prompting a lawsuit from 4 Netflix users due to
privacy concerns

8. Competition
Netflix currently has 32.3% video streaming market share
Competitors
• Amazon Instant Video is bundled with Amazon Prime, subscription
cost is cheaper, and has a growing content library
• Hulu Plus has lots of TV shows, updated almost as soon as show airs,
however they have advertisements even for paying users
• HBO GO, an established media company with lots of spending power,
but currently only has HBO shows
• Epix, Vudu, Crackle, Cable companies (not a direct competitor)

9. Buy or Sell?
Cons
-Content providers are charging more due to streaming popularity
-Potential bandwidth cap legislation
Pros
-Everyone has Netflix and all devices run it
-Aggressively expanding into international markets
-Since the start of 2013, stock has raised 300%
-Transitioning to a true media company
-Willing to stay on the cutting edge of technology

10. Questions?