Netflix Case Study Notes [Ignore this]
- Netflix provides content that enable consumers to enjoy TV shows and movies directly on their TVs, computers and mobile devices over the internet.
- Suggestion for payment system- Provide vouchers in local stores for cash purchases in countries where card payments are seen as a barrier (financial inclusion). Also, maybe lose the mail delivery system of DVD’s since technology and internet services are improving by the day and becoming more dominant. Instead focus the resources on better technology developments than on delivery services. Provide better rated content. Buy exclusive rights over certain projects to create demand (and to fight potential threats like Amazon which has more resources). Maybe offer other subscription models providing alternatives to the ones already existing. Combat piracy, its biggest threat, tooth and nail. International expansion requires production of local content, for example, acquisition of competitor hotstar in India or Alibaba (better than Netflix in the Chinese market because of content offered in Mandarin Language) in China which offers similar content. Allow offline viewing in underdeveloped economies because of internet speed.
- Reduce the complexity in the differing subscription plans. Focus more on attracting customers to the combined mailing and streaming plans. According to the case, the most popular plan is at the 3 rental stage. This will protect the churn, provide two combined options for the price of one for the customers and help protect the contribution margin of the rentals. Offering the combined subscription meets both needs.
- Look for Current Market Conditions in 10K (Risk Factors) and at the Strategy Analysis PDF.
- Possible Question- Is there an exit strategy available for Netflix? Since, one on the main controversies related to the discontinuity of DVD by mail services was the increase in price of Netflix subscription, the best way to make an exit strategy would be to make the proposition of streaming services more attractive by lowering subscription prices temporarily to subside the hullaballoo associated with it and also offer simple switching benefits (compensations) to current subscribers of DVD services.
- Also, in order to gain market share would be to provide customers with new releases on their platform right away! In order to avail these services, customers might have to pay a premium over the subscription which could generate additional sources of revenue as well as attract new customers.
Shivam Saraogi
Management and Organizations
Professor Dorota Joanna Bourne
Individual Project: Netflix Case Study
Company Overview
Netflix, an online platform which started its operations in 1997 as a DVD rental business, is now one of the world’s leading Internet television networks. It, not only delivers DVD’s at the doorsteps of its customers by free-of-charge mail, but also provides internet streaming services of TV shows, movies, feature films and documentaries to its members. Netflix provides content that enable consumers to enjoy TV shows and movies directly on their TVs, computers and mobile devices over the internet (anywhere and at any time).
It has racked up over 57 million customers via its online subscription model and continues to grow beyond the boundaries of United States, where it began its operations, into Latin America, Caribbean, Europe and now, even emerging markets such as India and China. It has strengthened its business in the entertainment industry over time by collaborating with other studios, production houses, consumer electronic companies and by starting its own production company.
Current Market Conditions [Porter’s five forces]
Netflix faces heavy competition from existing rivals like Hulu, Amazon Prime Instant Video, Walmart’s VuDu and ITunes Apple Store who provide similar streaming services over the internet.
It further faces the threat of substitutes in the form of various media channels such as cable and television networks, movie theatres, and the internet (especially Bit torrent).
There certainly exists a certain threat from potential new entrants with major studios and production houses having the resources and contacts to build their own streaming networks.