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Globalization
- 2. Article Overview • Netflix expanded in 130 additional countries last year • Goal is to takeover global market for streaming television • Baines results show an increase in reaching its goal, even with Hulu and Amazon Prime growing as well
- 3. Article Overview • Netflix has a total 93.8 million members • Added 5.1 million international members • Now has 44.4 million members outside of the U.S. which is more than 47 percent of its total membership
- 4. Article Overview • Profits are rising steadily, net income increased 56 percent to $67 million in the quarter from the same time period in 2015 • Streaming television is a competitive industry and remains a challenge for Netflix • Amazon has recently announced global expansion and YouTube which leads online viewing time online. Including television companies are adding more streaming resources. • After increasing 135 percent in 2015, they only increased 8 percent in 2016. https://www.nytimes.com/2017/01/18/business/netflix-profit- rises-56-percent-to-67-million.html?_r=0
- 5. Globalization • The globalization movement has lead to practices such as outsourcing, which businesses move manufacturing and and service centers to countries where labor is cheap • In a global economy, many organizations have multinational and international presence, with employees of a single organization found in many locations worldwide Miller, Katherine. Organizational Communication: Approaches and Processes. Stamford, CT: Cengage Learning, 2015. Print.
- 6. Globalization in Netflix • Netflix is now available almost anywhere in the world with blind spots being China, Syria and Crimea. • 2010 was the first time they started steaming outside of the U.S. • CEO Reed Hastings is working on bringing his company into the largest world market but may take time to gain approval from the Chinese government. https://www.statista.com/chart/4205/ne tflixs-global-expansion/
- 7. How Netflix Competes with Expanding Markets • Netflix Business perspective • Identify what customers want • Wide Range of Movies/TV shows • Free & Fast Shipping • No Late Fees or Due Dates • Easy/Fast to Watch Movies • No Cancellation Fees • Blu-ray substitution free
- 8. Netflix Business Perspective • Multi Channel Offering • Rent-by-Mail service • Online streaming
- 9. Marketing Expenses • Advertising • Promotional activities – Television & online advertising • Allocated cost of revenues in relation to the free trial period (1st month free) • Payments to Affiliates & Consumer Electronic Partners and payroll Related Expenses • Fixed fee or revenue sharing paying
- 10. Technology & Development • Payroll & Related Costs incurred in making improvements to Netflix’s Service Offering & Telecommunication Systems • Testing, maintaining and modifying user interfaces, recommendation & merchandising technology • Computer Hardware & Software's
- 11. Netflix Polices • Guaranty Efficiency, Quality, & Great Customer Service • One0day delivery & Same day processing • 95% of DVDs are delivered in a day • Inspection of DVDs upon return • When a customer receives a damaged DVD or does not receive any DVD (theft) Netflix immediately sends a new one • 93,000 different choices from movies and TV shows • Keep the movie as long as you want • https://promo.dvd.com/q1-2017-lp-g2/
- 12. Netflix Services • Streaming Service Plan Options: • $8 basic, 1 screen • $10 standard, 2 screens • $12 Premium, 4 screens • DVD Service Plan Options: • Prices built into streaming plans http://www.digitaltrends.com/movies/netflix-cost-pricing-plan- breakdown/
- 13. Weakness of Services • Monthly fee can discourage membership vs. one time or yearly fee • Causing non frequent movie/TV show watchers from purchasing • Lack of control over DVD return time • DVDs can arrive scratched or broken from mail processing
- 14. Suggestions/Opportunities Netflix Could Take • Product line expansion – video games • Expand movie offerings • Expand partnerships with content providers and technology providers
- 15. How Expansion has Benefited Netflix • The benefit of Netflix's approach for this expansion is the cost of entering each new market will be a lot lower. • Because Netflix owns global rights to its original content • Will not have to spend money upfront for content licensing • Adds support for new languages https://www.fool.com/investing/general/2016/01/10/netflix-inc-completes- its-global-expansion-with-on.aspx
- 16. Why Expansion Could Hurt Netflix • Limited amount of local content • Markets abroad have more localized content for similar competitors • Language barriers • Most content is English – Russia only has 5% of people that speak English • Expensive price point in certain markets • Has the same price point across the board – makes it expensive compared to local competitors, many have lower price points • Underdeveloped payment processing and broadband infrastructure • Netflix has been plagued by payment issues even in the US, where it claimed the switchover to “chip” credit cards caused people to accidentally cancel their subscriptions. • http://www.businessinsider.com/4-challenges-to-netflixs-international- expansion-2016-7
- 17. Competitive advantage in Global Markets • First mover advantage in online rental • Patented method of web based DVD selection • Customer centric, monthly subscription based service
- 18. Expanding in Global Market Learning Outcome • To reach an international market you need to take risk • Partnerships can be beneficial to help grow your company • Give you a competitive advantage with global markets even if the outcome is not the greatest in other markets • Not all markets are equal so you will have more beneficial areas than other, need to decide the places you will benefit the most from after trying a myriad of places • Do not be afraid to take risks
- 19. Questions • Will there be more cable service provider offers? • How will the most recent expansion help the goal of continuing their service in other countries? • Will you have to invest in other countries local content to be successfully internationally? • Are you still profiting from DVDs or will you eventually switch over to all online streaming? • Will costs change depending on certain markets to increase business in other markets?
- 20. Sources • Steel, E. (2017, January 18). Netflix Goes Global and Its Profit Soars. Retrieved March 28, 2017, from https://www.nytimes.com/2017/01/18/business/netflix-profit-rises-56-percent-to-67- million.html?_r=0 • Miller, Katherine. Organizational Communication: Approaches and Processes. Stamford, CT: Cengage Learning, 2015. Print. • Richter, F. (2016, January 07). Infographic: Netflix's Global Expansion. Retrieved March 28, 2017, from https://www.statista.com/chart/4205/netflixs-global-expansion/ • Rent Movies and TV Shows on DVD and Blu-ray. 1-month free trial! Fast, free delivery. No late fees. (n.d.). Retrieved March 28, 2017, from https://promo.dvd.com/q1-2017-lp-g2/ • Grozanick, R. (2016, August 25). How much does Netflix cost these days? Here’s the lowdown. Retrieved March 28, 2017, from http://www.digitaltrends.com/movies/netflix-cost-pricing-plan- breakdown/ • Levine-Weinberg, A. (2016, January 10). Netflix, Inc. Completes Its Global Expansion (With 1 Big Asterisk). Retrieved March 28, 2017, from https://www.fool.com/investing/general/2016/01/10/netflix-inc-completes-its-global-expansion- with-on.aspx • McAlone, N. (2016, July 06). 4 things that could hurt Netflix in its quest to take over the world. Retrieved March 28, 2017, from http://www.businessinsider.com/4-challenges-to-netflixs- international-expansion-2016-7
Editor's Notes
- https://barefigur.es/companies/netflix/cost-and-operating-expenses/