Perform an analysis of the stand-alone fair market value (“FMV” or “value”) of Netflix’s business. Include: 1. Company and Industry Analysis & Forecast 2. Standalone Valuation using Discounted Cash Flow Methods 3. Standalone Valuation using Relative Valuation (Precedent Transactions & Comparable Companies Analysis) 4. Scenario Analysis of Recent Gaming Developments 5. M&A Analysis and Strategic Alternatives

1. By: Alicia Soetaniman, Annabel Ie, Agnes Yuwono, Larissa Gunawan

2. 1 2 3 4
5 6 7 8
Business Model
Company & Industry
Analysis
Benchmarking Analysis
Assumptions &
Forecasting
DCF
Precedent Transactions
& Comparable Analysis
Scenario Analysis
M&A Analysis &
Valuation
TABLE OF CONTENTS

3. 1997:
- World’s first Online DVD
Rentals
2007:
- Introduced Subscription-
based streaming service
2021:
- Subscription: $29 Bn
- DVD Rentals: $182 Mn
(0.58% of total revenues )
2021:
- More Original Content
(21% in 2019 à 34%)
- Launched mobile games
(stranger things)
2022:
- Introduced Ad-Supported
Tiers
- Expansion of Gaming
NETFLIX’S BUSINESS MODEL
2023:
Should Netflix expand its
Gaming Development?

4. COMPANY &
INDUSTRY ANALYSIS

5. INDUSTRY LANDSCAPE
The highest number of subscribers in 78 countries and over 220 million customers globally.
#1 Most subscribed streaming platform
53.7%Of total industry revenue are Netflix’s
They are the leader & holds the largest market share in the video streaming services industry.
9of 10Popular original series are Netflix-produced
Leads the ranking of Oscar nominations by a studio.
- 105 Emmy nominations, won 27 Academy Awards & 22 Oscar

6. PORTER’S 5 FORCES ANALYSIS
Bargaining Power of Suppliers: MED-HIGH Competitive Rivalry: HIGH
Threat of Substitution: LOW
Threat of New Entrants: LOW
Bargaining Power of Buyers: LOW
- Some content are only available for limited time
- Starting to decrease with its own production division
- Has the most personalized & advertised content
- Offers wide range of content for various age groups
- 60% of population prefers online streaming services
- Viewers have freedom to choose preferred content
- Competitors creating its own original content
- Others offering competitive pricing & moving series to
their own platform
- Requires large sum of initial investment
- Challenging to grow platform & get higher-rated
content licensing

7. MARKET POSITION, PERFORMANCE, OUTLOOK
Revenue-Based
United States
Canada
Subscriber-Based
Europe
Middle East
Africa
Market Position Performance Forecast Outlook
A leading company
however, increased
competition resulted
in market share
decline from 46% in
2020 to 33%.
Netflix may keep
their position in the
industry given their
diversification efforts
in order to gain a
competitive
advantage.

8. BENCHMARKING
ANALYSIS

9. WARNER BROS (HBO) BENCHMARK

10. AMAZON (PRIME VIDEO) BENCHMARK

11. DCF ANALYSIS

12. WACC

13. ASSUMPTIONS
• Cancellation rate at 3% each year
• 16% of new gross joins for the first 3 years & down to 13%
• Ad revenue growth at 3.2%
• 3.8% annual subscription price increase
• Expenses growth rates
- Marketing at 11%
- R&D at 23%
- G&A at 23%
• Constant capex at $17B

14. REVENUE BUILD

15. FREE CASH FLOW PROJECTIONS

16. DCF RESULTS

17. SENSITIVITY ANALYSIS – GORDON GROWTH

18. SENSITIVITY ANALYSIS – EXIT MULTIPLE

19. FOOTBALL FIELD

20. COMPARABLE
COMPANIES

21. COMPARABLE COMPANIES

22. IMPLIED EV OF NETFLIX FROM COMPS

23. M&A Precedent
Transactions

26. SCENARIO ANALYSIS

27. BULLISH SCENARIO (ASSUMPTIONS)

28. BULLISH SCENARIO EFFECT ON DCF

29. BEARISH SCENARIO (ASSUMPTIONS)

30. BEARISH SCENARIO EFFECT ON DCF

31. M&A ANALYSIS &
VALUATION

32. STRATEGIC ALTERNATIVES
I. II.
IV.
III.
Invest and focus more on
original content by finding
local authors/directors to
bolster their production.
Monetize Netflix’s best shows
and IPs by holding special events
and selling merchandises based
on their characters.
Focus on acquiring the right
gaming companies &
capitalize on their family-
friendly image to develop
multiplayer, interactive games
Create a community-like
environment by enhancing its
social features which allows
people to share their thoughts
and favorite movies.

33. POTENTIAL STRATEGIC BUYERS
COMCAST
• Already strong relationship with Netflix (from deal on its X1 platform)
• COMCAST: Since it struggles to make streaming impact, it can leverage Netflix, penetrating mkt.
NETFLIX: In 2022, experienced subscriber loss, by being acquired, could gain access to not only
large and previously untapped platform, but (most likely) new content from Comcast as well.
TENCENT
HOLDINGS
• In 2020, Tencent acquired Iflix (’Netflix of Asia’) in hopes of becoming a streaming giant
• TENCENT : Gain access to its original content, enhancing WeTV content, global expansion
• NETFLIX : Capitalize Tencent’s Experience in the video game industry for future gaming expansion

35. APPENDIX: REVENUE BUILD ASSUMPTIONS

36. APPENDIX: AMORTIZATION SCHEDULE DCF

37. APPENDIX:COMPS MULTIPLES DATA

38. APPENDIX: FOOTBALL FIELD

39. APPENDIX: AMORTIZATION SCHEDULE
BEARISH

40. APPENDIX: AMORTIZATION SCHEDULE
BULLISH