Online Movie Rental Business

P97843012 P97843012 醫管所魏文一醫管所魏文一

Video-Video-streaming streaming

WarsWars

“Unlimited choice, anytime we want it, on any device, for a reasonable monthly p

rice”

Mail-based delivery

• On February 25, 2007, Netflix announced the billionth DVD delivery.

• On March 30, 2009 Netflix announced an increase in the monthly fee it would charge to customers who rent Blu-Ray discs, from $1 a month to $2 a month.

• About 10% of the service’s 10 million monthly subscribers pay a premium to rent Blu-ray titles.(Apr 2010)

Can disks last forever?

The battlefield

Streaming is huge potential marketStreaming is huge potential market

100millions USA households already pay for TV, plus several times that globally.

Many ways to enjoy TV shows and movies

• Cable, satellite, telco TV/DVR/VOD

• DVD sales and rentals

• Movie theatres

• Pay-per-view (PPV), cable & internet

• Free over-the-air broadcast & free online

• Piracy

Genesis level

Contentaggregationplatform

Devices

Networks

Brain/Content Production/Tech.

$

Xbox, iphone, TV decoder

billing

Internet, digital cable, satellite, 3G

Value chain of streaming market

Consumerdriven packaging

Browser/Internet

Long Tail portfolio

Possible future control points

Customer segments

DownloadMania

低價

個人化服務

便利性

臨場感

CATVMania

VOD serviceMania

Home theaterMania

MovieGoer

Competitor positioning

廣▲

目標客群

▼窄

PC based TV based

YouTubeYouTubeHuluHulu

YouTubeYouTubeHuluHulu

StarzStarzHBOHBO

SHOWTIMESHOWTIMEEPIXEPIX

StarzStarzHBOHBO

SHOWTIMESHOWTIMEEPIXEPIX

Apple TVApple TVTiVoTiVo

Other Set-top boxOther Set-top boxBlu-ray playerBlu-ray player

Apple TVApple TVTiVoTiVo

Other Set-top boxOther Set-top boxBlu-ray playerBlu-ray player

iTunesiTunesMovielinkMovielink

CINEMANOWCINEMANOW

iTunesiTunesMovielinkMovielink

CINEMANOWCINEMANOW

What’s the true KSF in Video-streaming services?

•內容種類•會員數量•低價誘因•訂戶忠誠

•通路數量•內容熱門•傳輸速度•影音效果

Let’s streamLet’s stream !!

Netflix 的 Motorcycle 戰略• At $9 a month, we augmented rather than

replace the standard video package.– We’re a motorcycle, the standard video package

is a car.– There are a few people with motorcycle only, but vast

majority have a motorcycle in a addition to car.– Our motorcycle has to be great to get car owners to

spend on us.

Ubiquitous Netflix

• Video game consoles• Set-top boxes• Blue-ray players• Television• Hand devices

• Netflix expecting to have the service on more than 100 different CE devices in 2010

What did the analyst say?

• Shares of Netflix Inc. April 21 closed down more than 6% after an analyst warned .

• Barton Crockett, analyst with Lazard Captial Markets, in a research note said the draw of Netflix’s popular Watch Instantly free streaming service could “be meaningfully eroded” in the near term as Hulu and YouTube aggressively bow free ad-supported content.

What did their subs say?

• Two-thirds of Netflix customers have used the service's "Watch Instantly" feature .(Nov 2009)

• But, over 60% of streaming movie watching is still done on a computer, Only 13% of respondents said they connect that computer to a TV.

What did their subs say?

New entry: Red box

• The best part, or at least the most interesting comes in regards to the price — $3.95 a month. In addition, it was also said that those on the monthly plan would get four free kiosk rentals per month. (Apr 2010)

New Entry: HBO

• Pay-TV juggernaut HBO has officially announced the launch of HBO Go, a video-streaming service.

• HBO Go will be able to offer access to newer titles than Netflix

• The cable industry's attempt to transfer the cable business model onto the Web.

Netflix Vs HuluNetflix Hulu

Members

13M subscribers

$8.99/mo

For free

Hulu plans to charge $9.

95 as "Hulu Plus". Titles 17,000 titles More 200 producers

Revenues Subscription fee Ad-supported

FormatNetflix app (MS silverfox)

hulu 、 hulu desktop(flash)

Market ExpansionPlan in second half of 2010

Abandoned in 2009

Distribution100 devices in 2010 XBox360, PS3

Potential competitor-Epix

• Epix is a cable channel with a streaming online companion service that looks to subsume both TV and computer-based movie-watching into one subscription.

• Netflix could also suffer if a competitor figures out a less expensive way of providing streaming movies direct to a television.

What did Hastings say?

• Netflix CEO Reed Hastings attributed his company’s decreased customer turnover and lower subscriber acquisition costs to increases in its streaming service. (Apr 2010)

• “There are a lot of competitive threats… But cable, satellite, and telcos improving their products is probably the biggest threat,”

• “We’ll see what Hulu do,” • “Redbox does many things incredibly well, but

we’re not worried about them as a streaming competitor,”

• “In the long term the iPad is a great device that has a lot of potential,”

What’s wrong withWhat’s wrong with

??

Netflix only in one content type

• User-generated

• News

• Sports

• Movie & TV shows (Netflix)

• Music video

• Adult

• Instructional

Netflix only one revenue model

• AD-paid free (YouTube, Hulu, ABC, etc)

• PPV (Amazon, Apple, Sony, Microsoft, Wal-mart, Best Buy, etc )

• Consumer-paid subscription (Netflix)

• ISP-paid subscription (ESPN3, etc)

• Free, with $ 70 cable/satellite subscription (HBO-Go)

Netflix Strategy: Stay focused and run fast

• Keep improving our services as rapidly as possible– Push streaming content spend up to get more content– Create amazing experience, especially on TV– Personalized adaptive UI to generate high satisfaction

from broad catalog content

• Avoid PPV, ad-supported, sports, news, adult, user-gen, etc

• Low operating margins to drive large growth• Expand internationally

CanCan win?win?

Can Netflix win?新加入者 ( 弱 - 中 )

HBO GO 、 RedBox

替代品 ( 強 - 更強 )

Piracy 、 VOD 、 CST 、 DVD

Rental 、 Kiosk 、 Set-top box

供應商

（弱 - 強）

內容提供者增加

向前整合（ Hulu ）

內容授權談判力

ISP 公司哄抬價格

客戶 ( 中 - 強 )

供過於求

無轉換成本現有競爭者 ( 強 - 更強 )

YouTube 、 Hulu 、 Movielink(BBI) 、 PPV

Cable/ Satellite/ Telco (CST)

• They’re improving their $70/mo service with more on-demand, better UI, more content, more HD, etc

• Compelling directly with us $10/mo probably doesn’t make sense for CST because they aren’t national web brands, and it only furthers erosion of $ 70 price point

• Netflix offer only a fraction of the content of CST, and no consumers leave CST for Netflix (CST 比 Netflix 更具內容優勢 )

• Providing broadband is hugely profitable for cable/telco because no content costs and no satellite competitors, so internet video great for cable/telco profits– CST will be the major competitor of Netflix!– 賣汽車也順便賣機車

HBO, Starz, Showtime, Epix

• They have strong brands and could go consumer over the internet

• Netflix want to make money from these premium channels by distributing them on Netflix.

• The more they value their content, the more they’re branded content producer, and Netflix are purely another valuable distributor.(與電影電視頻道既競爭且合作 )

The giants

• Amazon, Apple, Best Buy, Disney, Google, Microsoft, News Corp, Sony, Time Warner, Verizon, Wal-Mart, etc.

THANK YOUTHANK YOU

參考資料• 維基百科• http://www.nasdaq.com

• 數位時代 Beta2.0

• 1111 商搜網• MBA 智庫百科• Netflix 網站• Blockbuster 網站