Music Business

1. • Estherlin Lopez
• Lori Major
• Mariana Franco
• Trinity Broadus

2. Introduction
andoverview
 With over 158 million paid memberships in over 190
countries
 Streams TV series, documentaries and films
 Offers flexibility for members; they can watch as much as
they want, anytime, and anywhere
 It is compatible with different devices like, Smart-phones,
computers, Smart-TVs.
 Members can play, pause and resume watching, all without
commercials or commitments.
 Headquarters, Los Gatos, California. USA
Is the world’s leading streaming entertainment service
NASDAQ: NFLX
339.67
+1.05 ( 0.31% )
6,060,890
Pricing delayed
by
20 minutes
Last Updated
01/17/20
4:00 PM
Chairman & CEO
Reed Hastings

3. History ofthe
company and the
market itserves
 Netflix was founded in 1997 by Reed Hastings and
Marc Rudolph as a DVD-rental-by-mail firm; where
customers would rent movies and have them delivered
at home.
 Netflix started streaming in the US in 2007, and
internationally in 2010. The company became global in
2016.
 21 years later the $141 billion company operates on a
subscription-based model and is the primarily provider
of online streamable content including TV shows,
movies, and documentaries.
 Netflix is a focused passion brand. Offering pay-per-
view or free ad-supported content.
 The US is their largest penetrated market and it is
available virtually everywhere except in China

4. Top
Competitors
 Amazon Prime
 Hulu
 YouTube
 Starz
 Showtime
 Vudu
 Hotstar
 Sling
 NDEMAND
 NBCUniversal
Diffference from its competiros:
Netflix has boost subscriptions and beat competitors by producing Netflix
exclusive/original content and avoiding commercials. Focusing on a flat-fee
unlimited viewing commercial-free.

5. Revenue
Streams
 Netflix is a subscription-based business; which
subscriptions costs between $8.99 and $12.99 per
month and have 3 different tiers according to the
user neccesities.
 It also earns about $30 million per month through
DVD rentals.
 Creation of Netflix original content which its economic
success is measured on a cost per hour viewed.

6. Competition
structure
 Netflix is an oligopoly competitive market. There
aren’t as many dominant firms in this market,
"there’s approximately less than 5 dominate firms
that are alike such as Amazon, Amazon prime,
and Hulu. The streaming market competition has
increased significantly since Netflix was
established which may result in the structure
market to change."

7. Consumer's
income
 The position that Netflix is in compared to its
competitors will out it to keep its streaming
content prices low, so it doesn’t have any negative
impact on the profit margin. The position also
allows Netflix to remain affordable and "at the
price range in its market will be imperative for
subscriber's satisfaction and increase its
demand.”

8. Priceof related
goods
 Amazon/Amazon Prime: most people will pay either
$119 a year for the annual amazon prime membership
or just pay 12.99 a month (also has different pricing
for students and seniors)
 Hulu offers four levels of service Basic, Premium,
Basic + live TV and Premium + live Tv. Basic you pay
$5.99 per month, Premium $11.99 per month, Basic +
live TV $54.99, Premium + live TV $60.99
 Youtube TV costs about $49.99 a month for 1
membership with up to 6 accounts on it, it includes
ABC, CBS, FOX and more.
 Netflix has 3 levels Basic at $8.99, Standard at
$12.99, and Premium at $15.99 "If the price is too
high, it will deter subscribers which would affect
future production and the ability to sustain success."

9. Tasteswithin
themarket
 When it comes to what people like to watch it
seems the top three are comedy, action adventure
and classics. So in the future we need to add more
comedies, action and adventure shows/ movies
and all the classics that we watched growing up
to take us on a nice stroll down memory lane.

10. Expectations
withinthe
market
 NETFLIX is committed to customer satisfaction as it
has been a staple in the company's success. They are
focusing on customer PERSONALIZATION and has
even set aside a budget for this. Studies have shown
that, businesses that focus on personalization for a
customer experience has increased revenue by 93%.
This personalization strategy has and will be an
ongoing pursuit for the company and has changed how
the consumer engages with the brand.

11. Numberof
buyers
 With over 60 million subscribers, NETFLIX has only
seen a decrease in sales once. There was a price hike in
2011, which caused man cancellations of the service.
They have now been keeping a close eye on Disney
with its recent release. They are projecting another 7
million subscribers in its next quarter.

12. Elasticity
 Pricing power is key. NETFLIX has lots of this power
left. It is noted as the best value for its lineup and
content; that of which consumers are willing to pay.
Because of its number of loyal and vast number of
subscribers , NETFLIX is allotted to produce its
entertaining content and increase its value.

13. Factorsaffecting
supply
 With placing its self as one of the forerunners in
streaming services, it does have its number of
competitors. While they create their own series,
consumers still want live tv services. This is where
NETFLIX can stand to be contended with other
streaming services such as HULU, DirecTV Now, and
other cable companies that have now created
streaming services.

14. Inputprices
 A big input price for Netflix is the cost to supply more
original content. Since the rise of content, Netflix had
to raise its subscriptipon price. Licensing agreements
are costing them less money since it's their own
content. The amount of original content will increase
and will provide users a better overall experience.

15. Technology
 Netflix has digitized its production crew cutting down
the cost of production. With an app called Move, Netflix
is simplifying the workload of the production process.
By doing so, it decreases the cost of wages. New
algorithm patterns will increase more efficient
streaming. This will decrease the cost of marketing
expenses.

16. Expectations
 The streaming service market is expanding and
offering media competition. They are expecting to lose
licensing rights to tv shows/movies. This will cause
customers to become unsatisfied because they'll have to
pull content. This will affect Netflix's decision to
develop more original content.
 The demand for content has encouraged Netflix to
devote its time to bettering its algorithms to increase
the user's overall experience.

17. Entry/Exit
 In my opinion, it’s quite easy to enter the market but it
would take a while for the company to be considered an
actual competitor. Recently Apple released its own
streaming service, Apple Tv Plus. Would it be able to
compete with Netflix? Probably not. Netflix is one of
the biggest cord-cutting streaming services there is.
For Apple to now start its streaming service when
Netflix has so many loyal customers; the competitor
might flop.

18. Wrapup
 Netflix is until today the largest streaming
entertainment service in the world offering movies and
TV series commercial-free. Netflix is in a growing
ecosystem due to the internet getting faster and more
reliable, along with the flexibility and freedom given to
consumers to watch content on demand and on any
screen.

19. Workscited
 Beers, B. (2019, May). How Netflix Plays for Movies and Tv Show Licensing. Retrieved from,
https://www.investopedia.com/articles/investing/062515/how-netflix-pays-movie-and-tv-show-licensing.asp
 Berstein, J. (2019, November 18). How Netflix Makes Money. Retrieved from
https://www.investopedia.com/insights/how-netflix-makes-money/
 Bowman, J. (n.d.). Thinking of Buying Netflix Stock? Here's What You Need to Know. Retrieved from
https://www.nasdaq.com/articles/thinking-of-buying-netflix-stock-heres-what-you-need-to-know-2019-09-29
 Company Profile. (n.d.). Retrieved from https://www.netflixinvestor.com/ir-overview/profile/default.aspx
 Egsep. (n.d.). The market structure for Netflix is oligopoly competition structure There are: Course Hero.
Retrieved from https://www.coursehero.com/file/p6st2a9t/The-market-structure-for-Netflix-is-oligopoly-
competition-structure-There-are/
 How Netflix's Personalization Impacts Customer Expectations. (n.d.). Retrieved
from https://nextgencx.wbresearch.com/netflix-effect-commitment-extreme-personalization-customer-
expectations-ty-u
 Levy, A. (2019, January 29). Netflix Still Has a Lot of Pricing Power Left. Retrieved from
https://www.fool.com/investing/2019/01/29/netflix-still-has-a-lot-of-pricing-power-left.aspx
 Long-Term View. (n.d.). Retrieved from https://www.netflixinvestor.com/ir-overview/long-term-
view/default.aspx
 Microeconomic Analysis of Netflix. (n.d.). Retrieved from https://www.ukessays.com/essays/economics/netflix-
microeconomic-analysis-9322.php
 Nicol, W. (2020, January 13). Best Shows on Hulu Right Now (January 2020). Retrieved
from https://www.digitaltrends.com/movies/best-shows-on-hulu/

20. Workscited
continued
 Telford, T. (2019, Jan). Netflix Raises Prices to Pay for Original Content. Retrieved from,
https://www.washingtonpost.com/business/2019/01/15/netflix-raises-prices-pay-original-content/
 Trefis Team. (17 August, 2016). The significance of Netflic’s Technology & Development Expenses.
Retrieved from, https://www.forbes.com/sites/greatspeculations/2016/08/17/the-significance-of-
netflixs-technology-development-expenses/#5a11bfe73393