Company ReportDustin Ferguson-(dustferg)

Product• Rental by mail DVDs/Blu-Rays, no late fees or due dates, no shipping

and handling fees, and unlimited rentals with a subscription• On-demand movies and TV shows on multiple platforms (Phones,

tablets, web browser, most major video game consoles, Smart TV’s, etc.) with a monthly subscription • More than 50 million streaming subscribers, 36 million of those in US

History• 1997-Founded in California by Marc Randolph and Reed Hastings• 1999-Introduced monthly subscription, soon drops single rentals• 2000-Offered to Blockbuster for $50,000,000, Blockbuster declines• 2002-Initiates IPO, selling 5.5 mil shares for $15 each• 2007-Introduces video on demand via the Internet• 2010-Biggest source of Internet traffic in North America in the evening• 2011-Backlash due to separating streaming and DVD subscriptions• 2012-Forms a political action committee called FLIXPAC, intent to

“engage on issues like net neutrality, bandwidth caps, usage-based billing, and the Video Privacy Protection Act

FinancialsStock Price ($)

Seperation of DVD and streaming subscription costs, Qwikster announcement

Monthly Subscription fees raised from $8 to $9

What’s Hot• Netflix Originals and continuations of previously canceled

series, House of Cards helped the company post a billion dollars in quarterly earnings• International Markets, operating in 41 countries and

expanding

Secret Sauce• Video streaming is preferable to cable for many people• They were willing to disrupt sales of their DVD rental service by

introducing video streaming, giving them a massive share of the market and loyal customers by bundling the service automatically with their DVD rentals• Largest catalog of movies and TV shows in comparison to other

similar services (6-8 times many TV episodes and movies as Amazon Instant Video and Hulu Plus)

Story – The Netflix Prize• In 2006, Netflix’s CEO offered a $1,000,000 prize for anyone who

could develop an algorithm that was at least 10% better than their algorithm at the time, Cinematch, released data• The team “BellKor’s Pragmatic Chaos” won the prize in September

2009, submitting their results only 20 minutes before a team with the same score on the test data set• Two researchers used the data released for the prize to identify

individual users, prompting a lawsuit from 4 Netflix users due to privacy concerns

CompetitionNetflix currently has 32.3% video streaming market shareCompetitors• Amazon Instant Video is bundled with Amazon Prime, subscription

cost is cheaper, and has a growing content library• Hulu Plus has lots of TV shows, updated almost as soon as show airs,

however they have advertisements even for paying users• HBO GO, an established media company with lots of spending power,

but currently only has HBO shows• Epix, Vudu, Crackle, Cable companies (not a direct competitor)

Buy or Sell?Cons -Content providers are charging more due to streaming popularity -Potential bandwidth cap legislationPros -Everyone has Netflix and all devices run it -Aggressively expanding into international markets -Since the start of 2013, stock has raised 300% -Transitioning to a true media company -Willing to stay on the cutting edge of technology

Questions?