Netflix was a company that thrived during the 2008 recession due to its business model and strategy. It operated 3 business segments - domestic streaming, international streaming, and domestic DVD. In 2009, Netflix's revenue increased 26.6% to $1.16 billion from increased subscribers attracted by its compelling value proposition of streaming and DVD rentals for one low monthly fee. Key factors in Netflix's success included offering combo streaming and DVD plans, being an early entrant in internet video delivery, and expanding its available streaming devices.

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A Company That Thrived 2008 Recession
-By Amritpal Singh Bedi

2. Company that did well in 2008 recession: Netflix, Inc. (NASDAQ: NFLX)
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57.50%
36.36%
6.14%
Segment Information
Domestic Streaming
International Streaming
Domestic DVD
Business Overview:
 Founded in 1997 and headquartered in California, US
 Worldwide internet television network provider having over 93
million streaming members in over 190 countries enjoying more than
125 million hours of TV shows and movies per day
 Operates under 3 business segments:
- Domestic streaming (derives revenues from monthly
membership fees for services comprising of streaming content to
its members in US)
- International streaming (derives revenues from monthly
membership fees for services comprising of streaming content to
its members outside US)
- Domestic DVD (derives revenues from monthly membership fees
for services consisting solely of DVD-by-mail)
 Had headcount of 4,700 employees as of December 2016.
 Key competitors include multichannel video programming distributors
("MVPDs"), internet-based movie and TV content providers, video
gaming providers and DVD rental outlets
Financial Information (2016)
Revenues : USD 8.83 Billion
R&D Expenses : USD 768.3 Million
Net Income : USD 186.7 Million

3. 2
Key Financial Indicators Before, During & After the period of Recession, 2007―2011
419.2
454.4
591.0
805.3
1,164.7
786.2
910.2
1,079.3
1,357.4
2,039.9
1,205.3
1,364.7
1,670.3
2,162.6
3,204.6
- 500.0 1,000.0 1,500.0 2,000.0 2,500.0 3,000.0 3,500.0
2007
2008
2009
2010
2011
in USD Million
Revenue Cost of Revenues* Gross Profit
* Cost of revenues include subscription and fulfillment expenses
• In 2009, revenue increased by USD 305.6
million i.e. 26.6% growth than 2008 due to
increase in average number of paying
subscribers arising from increased
consumer awareness of the compelling
value proposition of streaming and DVDs
by mail for one low price
2009 % of total 2008 % of total
Free
Subscribers 376 3.10% 226 2.40%
Paid
Subscribers 11892 96.90% 9164 97.60%
Total
Subscribers 12268 9390

4. 3
Key Factors Supporting the Success of Business Operations
 Created business strategy comprising of selling combo pack of streaming and DVD-by-mail content as a part of
Netflix subscription at a low monthly subscription price which led to burgeoning in demand from end-consumers
 Became early entrant in the market of “Internet delivery of TV shows and movies” with launch of streaming service
in 2007. With this launch, the company developed an ecosystem of Internet-connected devices and began licensing
of contents to enable its consumers to enjoy their favorite TV shows and movies on-the-go on TVs, mobiles, and
computers.
 Marketing programs involved online promotions, TV and radio advertising, package inserts, direct mail and other
promotions with third parties. Created buzz by engaging consumer electronics partners to generate new
subscribers for Netflix service in exchange of free trial period.
 Other key developments include: In 2008, Netflix began offering subscribers rentals on Blu-ray disc for an additional
fee. The company revised plans as USD 8-10 per month video service, which seems more attractive than a USD 100
per month service (as from traditional cable) during economical stressful times like recession

5. 4
3 market segments
of Netflix’ Business
Model: Internet
delivered video
content
Key Factors Supporting the Success of Business Operations
Video-On-Demand
(“VOD”)
Ad Supported Subscription
Key
Competitors
– Amazon
– Apple
– Blockbuster
– Cinemanow
– Microsoft
– Hulu
– YouTube
MARKET
LEADER

6. 5
Key Growth Strategies
 Compelling value for subscribers
Unlimited access to library of movies and TV
episodes in exchange of low fixed monthly fee
 Efficient utilization of technology
to enhance subscriber experience
Internet connected distribution channel for shipping
of DVDs and partnerships with third party content
delivery networks for seamless online streaming, and
sharing agreements and license agreements with
various studios, distributors and other suppliers for
content procurement
 Rapid expansion in the number of
devices capable of streaming
video from Netflix
Allows subscribers to stream content from Netflix to
various devices such as computers and other devices,
including the Xbox 360, PlayStation3, Internet-
connected TVs and Blu-ray players, TiVo, and the Roku
video digital player.

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66.00%
68.00%
70.00%
72.00%
74.00%
76.00%
78.00%
0
50
100
150
200
250
300
350
2007 2008 2009 2010
Internet Usage and Population Growth in US (in million)
Population Internet Users %age of Population
Growth in the Internet Subscribers in the US between 2007 and 2010
Source: Internetworldstats and U.S. Census data