2. Agenda
• Introduction
• Part I: SWOT Analysis
• Part II: PEST Analysis
• Part III: Porter’s Five Forces
• Summary
3. Introduction
• Started in late 90s with subscription service by mail
• In 2015 they have over 65 million members in over
50 countries
• Average 100 million hours of media consumption a
day. This equals about 10 BILLION hours a month
• Currently provide DVD-by-mail and streaming
services
• Streaming available via multiple platforms: Roku,
Smart TVs, Blu-ray Disc players, gaming systems,
tablets, smart phones and more
4. introduction
• Library includes well over 100,000 titles – or a petabyte
• Not just a content distributor – they are a content creator
• Orange is the New Black, House of Cards, Narcos
• Netflix has been nominated for and won Emmys,
Academy Awards and Golden Globes
6. Strengths
• Global Market Leader
• Strong Brand
Recognition
• High Customer
Satisfaction
• Affordable Pricing
• Large Content Selection
• Original TV Series
• Available on multiple
Platforms
• Watch Unlimited Amount
or “binge” watch
• No Commercials
7. Weaknesses
• Monthly Sign Up Fee
• Older Titles
• Share Decrease
• User Friendliness
• Password Sharing
8. Opportunities
• Original Series
• Further International Expansion
• Show More Popular Content
• Partnerships - Pre-installed Netflix
• Expand Target Market – Diversification
• Advertisements
10. Strengths
Opportunities
• Use brand name to partner with
stars and create more Original
Series
• Expand
• Bid for more content to increase
diversification
• Partner with devices soon to be
released
11. Weaknesses Threats
• Stay in tune with customer wants / needs to remain
top streaming service
• Focus on producing more original series and
promoting these to remain competitive
• Make app more user friendly
• Increase advertisements to prevent rise in
subscription cost
13. Political
• Piracy: illegal streaming of shows
• Content and licensing agreements
• Employee benefits
• Only hires “fully formed adults”
• International expansion
• Plan to operate in at least 200 countries by the end
of 2016
• $5 billion for global rights and acquisition fees and
original content development
• Anti-trust laws
14. Economic
• International expansion
• Economic condition
• Labor: work force conditions and regulations
• Exchange rates
• Dependent on changes in consumer spending
• Not a necessity
• Take into consideration unemployment rates and
interest rates
15. Social
• Applicable anywhere, anytime
• Impatience is rising: no commercials
• Fits with Millennial lifestyle
• Cord-cutting/streaming is the new social
trend/direction for consumption
• Variety of genres to fit all demographics
• Binge-watching shows
• Involved with and discussed on social media
16. Technological
• Streaming service: availability due to
millions of concurrent customers
• Need for high internet speed
• Recommended for you
• Software applications that will make
sure Netflix is perfect for any device
• Global services
• Keystone: New Data Pipeline
• Manages 8 million events and 17 GB
per second during peak
18. Supplier power
• High – They created this marketplace
• Highly recognizable brand name –
“Netflix” has become a verb
• Global coverage – 50 countries with
over 65M users. Almost 40% of users
are outside the US
• High quality entertainment – extensive
content library and creating their own
quality content
• Relationships with customers – Price
change in 2011 was HUGE PR
nightmare
19. Buyer power
• Low-Medium
• Netflix has to purchase the vast majority of its content
• In 2013 Netflix spent $2B for content in licensing rights.
Most of that went to content they did not create
• Limited number of studios – must provide what users
want
• As this space gets more competitive they will have less
leverage as content creators will have more ways to
distribute their content
• Still the leading streaming entertainment service in the
market- content creators MUST be on Netflix
20. Product & tech
development
• Strong product – high quality content over high quality
signal and picture
• Sensitive to bandwidth – as global data usage increases
Netflix will need to monitor bandwidth issues
• Alternatives – traditional TV, Hulu, Amazon, HBO Go,
other OTT are priced the same. Parity in the market
• Platform integration – must meet consumers where
THEY want to watch. Must react to tech developments
for tablets, phones, computers and more
• Legislative Changes – keeping the internet free with no
“priority pipes”
21. New market entrants
• New entrants & existing
companies meeting Netflix
in the cloud
• OTT – HBO GO/Showtime
• CBS All Access
• Pay TV – On Demand
• Hulu Plus, Amazon TV
• Relatively easy to enter
this market for existing
media companies
• High cost of content will
deter new entrants
22. Competitive rivalry
• Highly competitive environment
• OTT – HBO GO/Showtime
• CBS All Access
• Pay TV – On Demand
• Hulu Plus, Amazon TV
• Not all competitors are subscription services
• YouTube
• Crackle – Free service similar to Netflix that also has
original web content
24. Summary
Successes
• Market Creator
• Brand name recognition
• Creating content and
taking on traditional TV
format – and its working!
Looking Forward
• “New” entrants to their
marketplace
• Must keep creating content
and find ways to keep
people engaged
• Continue to provide quality
streaming service and
picture quality across all
platforms
25. summary
• How can they make more money?
• Business model works against them
• Must maintain low cost in environment where costs
keep going up
• Increase advertisements?
