Netflix

NETFLIX & VIDEO ON DEMANDEric, Rutao Li & Kailen Nordhausen SCAD 2012

Wednesday, May 30, 12


NETFLIXMISSION

“NETFLIX REVOLUTIONIZES THE WAY PEOPLE WATCH TV SHOWS AND MOVIES”


NETFLIXHISTORY

1997 – Founded Reed Hastings

1999 – Netflix Launches The Subscription Service, Offering Unlimited Rentals For One Low Monthly Subscription.

2000 – Netflix Launches The Personalized Movie Recommendation System That Uses Netflix Members’ Ratings To Accurately Predict Choices For All Netflix Members.

2002 – Netflix Goes Public

2007 – Netflix Introduces Streaming, Which Allows Members To Instantly Watch Television Shows And Movies On Their Personal Computers.

2008 – Netflix Partners With Consumer Electronics Companies To Stream On The Xbox 360, Blu-ray Disc Players, TV Set-top Boxes And The Apple Macintosh Computer

2010 – Netflix Is Available On The Apple IPad, IPhone And IPod Touch, The Nintendo Wii, And Other Internet Connected Devices.


NETFLIXTHE ORIGINAL SERVICE

USED THE U.S. POSTAL SERVICE TO DELIVER DVDS

44 DISTRIBUTION CENTERS ACROSS THE COUNTRY

SERVED 90% OF ALL CUSTOMERS IN 24 HOURS

ONLINE SUBSCRIPTION-BASED DVD RENTAL SERVICE

$7.99 A MONTH

NO LATE FEES

MOVIE RECOMMENDATIONS BASED ON YOUR TASTE


CORPORATE STRATEGY

VISION

OBJECTIVES

STRATEGIES

ACTIVITIES

MISSION

-online subscription-based DVD rental service-used the U.S. Postal Service to deliver DVDs-44 distribution centers across the country-no Late fees

Unlimited Movies and TV Shows Streaming Instantly

To continue to be the world's leading internet subscription service for enjoying movies and TV shows

-target movie lovers-Target young people-Use suggestions to stop over rent-ease of access ease of exit

To revolutionize the way people watch TV shows and movies


NETFLIXMARKET: DISCRETIONARY INDUSTRY

The consumer discretionary industry includes companies whose sales come from consumer discretionary income

purchases

Discretionary income = gross income less taxes and necessities such as rent, mortgage and food


NETFLIXNAICS SECTOR

SECTOR - 454 non-store retailers

SUB-SECTOR - 4541 electronic shopping and mail-order houses

454113 Mail-Order Houses


NETFLIXMAJOR PLAYERS IN SECTOR

- ALLOY, INC

- AMAZON

- BLAIR CORPORATION

- BLOOMSBURY PUBLISHING

- OVERSTOCK.COM

- EBAY INC

- STAMPS.COM

- IAC/INTERACTIVE CORP


NETFLIXDIRECT COMPETITORS


NETFLIXINDIRECT COMPETITORS

PLAYS

BIG SCREEN MOVIES

TORRENTS AND ILLEGAL SHARING


NETFLIXDIRECT COMPETITORS

FINANCE

TRANSFORMATION

RADICAL

INCREMENTAL

PROCESS OFFERING DELIVERY


NETFLIX

NEW

NEW

EXISTING

EXISTING

SERVICE OFFERING

CUSTOMER GROUPS

RISK

KEY INNOVATIONS

The Personalized MovieRecommendation System

Tech (iPad, IPhone)

Subscription Service

Partners With ConsumerElectronics Companies

Internet Video

Tech (iPad, IPhone)


NETFLIXBUSINESS MODEL

REVENUE STREAMS

CHANNELS

CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTSVALUE PROPOSITIONSKEY ACTIVITIESKEY PARTNERS

KEY RESOURCES

COST STRUCTURE

Movie Enthusiasts

Casual Viewer

TV lover

Convenient

Passive (Self-Service)

Highly Customized

Friendly

Easy access/exit

Helpful/Serendipitous

IT Strategy

Design/Development

Business Strategy

User testing

Customer Support/Service

Managing of Content

Marketing

Database/Servers

Community/Users

Media providers

Google Analytics

Employees/Managers/Designers

Managing of Content

Provides access to broadrange of moviesUser’s can stream movies direct to device

Promotes independent !lms

Discover movies

Allows users to receive by mailadditional content

Access anywhere

Apple/iTunes

Droid

Xbox

Sony

google tv

Web Client

Mobile App

Subscription

Subscriptions Movie PromotionsServers

Salary

Maintenance

Market Research/Marketing

Facilities

Licensing

LawyersEquipment


NETFLIXSTRATEGY: MARKET

CUSTOMER INTIMACY

OPERATIONAL EXCELLENCE

PRODUCT LEADERSHIP


NETFLIXBUSINESS MODEL: MARKET

REVENUE STREAMS

CHANNELS


KEY RESOURCES

COST STRUCTURE

Brand loyals

Brand Switchers

Convieniance Seakers

Intimate 1:1

Trust

Highly Customized

Friendly

Easy access/exit


IT Strategy

Design/Development

Business Strategy

User testing


Managing of Content

Marketing

Database/Servers

Community/Users

Provides access to broadrange of content/productsUser’s can centered deliveryease/customized

Discover things based on your personality and purchases


Never leave the comfortof your home

Businesses that enableMulti-channel distribution

Media Providers/Supplyers

Web Client

Mobile App

Subscription

Subscriptions

Rentals

Purchase content

Online Purchases

Pay per view

Pay for rental time (hour, day, week)

Servers

Salary

Maintenance


Facilities

Licensing

LawyersEquipment



REVENUE STREAMS

CHANNELS


KEY RESOURCES

COST STRUCTURE

Brand loyals

Brand Switchers


Intimate 1:1

Trust

Highly Customized

Friendly

Easy access/exit


IT Strategy

Design/Development

Business Strategy

User testing


Managing of Content

Marketing

Database/Servers

Community/Users







Web Client

Mobile App

Subscription

Subscriptions

Rentals

Purchase content

Online Purchases

Pay per view


Servers

Salary

Maintenance


Facilities

Licensing

LawyersEquipment

CUSTOMER INTIMACY MARKET FOCUS



REVENUE STREAMS

CHANNELS


KEY RESOURCES

COST STRUCTURE

Brand loyals

Brand Switchers


Intimate 1:1

Trust

Highly Customized

Friendly

Easy access/exit


IT Strategy

Design/Development

Business Strategy

User testing


Managing of Content

Marketing

Database/Servers

Community/Users







Web Client

Mobile App

Subscription

Subscriptions

Rentals

Purchase content

Online Purchases

Pay per view


Servers

Salary

Maintenance


Facilities

Licensing

LawyersEquipmentKEY DIFFERENCE BETWEEN COMPETITORS


NETFLIXSWOT

STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS

Low cost product

Big customer scale

Multi Platform delivery (wii, xbox, ps3, iPhone and web)

Provides competitive advantage to tablet makers

Easy to navigate website

Fastest DVD Delivery among competitors

World’s largest DVD Movie selection

Low fixed costsNetflix - Wii partnership

Market share

Inability for subscriber base to absorb price increase

Indecisive decision over quixter

Lost and defective DVD’s costs

Succession Instability

Lack of streaming content (less then competitors)

International Expansion

Expansion into gaming market

Expansion of online rental market

Online distribution network lowers costs

Tiered pricing Structure

Internet Video

Increasing cost to license content

Video on demand competition

Amazon breaking into movie rental

Block Buster

You tube to start offering movie rentals

Online security

Technology Cost and Services Decreasing in price

First release time delay

Cost of internet bandwidth

First sales issues for DVD’sReached market saturation in the united states

International competition on the rise

Post office cutback


MEDIA DELIVERY (SS)INNOVATION OPPORTUNITIES

What if we expand into the gaming market?

PROS CONS

What if we expand to other International markets?

PROS CONS

What if we add Internet Video searching and content (user generated)?

PROS CONS

- MORE CUSTOMERS- BETTER DIVERSITY- NEW OFFERING

- NO EXPERIENCE IN NEW MARKET- IN COMPETITIONS WITH PARTNERS- MORE SOFT/HARDWARE & SUPPORT

- MORE CUSTOMERS- BETTER DIVERSITY- MORE ACCESS EXISTING CUSTOMERS

- NO EXPERIENCE IN NEW MARKET- NEW COMPETITIONS WITH IN FORIGN MRKT- MORE SOFT/HARDWARE & SUPPORT- MORE DISTRIBUTION CNTRS

- NEW OFFERING FOR CUSTOMERS- BETTER DIVERSITY- MORE ENGAGING OFFERING

- LESS CONTENT CONTROL- NEW COMPETITIONS IE YOUTUBE- MORE SOFT/HARDWARE & SUPPORT


What if we eliminate by mail dvd rental market in the next 2 years?

PROS CONS

What if we allow advertising on select programs/content?

PROS CONS

What if we introduce a Tiered pricing Structure ?

PROS CONS

INNOVATION OPPORTUNITIES

- LESS COSTS RENT (DISTRIBUTION)- LESS STAFF- MRKT OF DVD DIEING ANYWAY

- LESS CONTENT AVAILABLE - LOSS OF SOLE MRKT OWNERSHIP - NEED A STRGY TO COMPENSATE FOR LOSS

- NEW REVENUE STREAM- POSS. MORE AVAILABLE CONTENT- ALLOWS POSS TIERED PRICING

- ANNOYED CUSTOMERS- WHAT CONTENT GETS ADDS?- CORRUPT PERCEPTION (SELL OUT)

- NEW OFFERINGS FOR CUSTOMERS- MORE PROGRAMS/MEDIA- MORE ENGAGING OFFERING- NEW REVENUE STREAMS

- WHAT ARE THE BENEFITS OF PAYING MORE- NEED NEW/BETTER CONTENT- WHAT CAN BE FREE (COMMON IN TIERD)

MEDIA DELIVERY (SS)


What if we added additional content that was pay per view ie HBO?

PROS CONS

What if we partnered with current an existing gaming subscription service?

PROS CONS

What if we partnered with more tv channels or media providers?

PROS CONS

INNOVATION OPPORTUNITIES

What if we automated some/all customer support processes?

PROS CONS- LESS COSTS RENT (DISTRIBUTION)- LESS STAFF

- LESS SATISFACTION- MORE FRUSTRATION- WHAT CAN BE AUTOMATED

- NEW REVENUE STREAM- POSS. MORE AVAILABLE CONTENT- ALLOWS POSS TIERED PRICING

- ANNOYED CUSTOMERS- NEW SYSTEMS SOFTWARE- FINDING PARTNERS- LESS CONTROL


- NEW SYSTEMS- COMPETE WITH PARTNERS- WHO DO WE PARTNER WITH


- LESS CONTROL- COMPETE WITH PARTNERS- WHAT ARE WE GOING TO HAVE TO DO

MEDIA DELIVERY (SS)


MARKET SEGMENTATION GRID

BLOCK BUSTER(NEW RELEASE)

INDEPENDENT(PRO QUALITY)

USER GENERATED(&PUBLICDOMAIN)

PREMIUM TV(HBO)

BASIC TV(CABLE)

MUSIC VIDEO GAMING

SUBSCRIPTIONS

RENTALS (MAIL/KIOSK)

PAY PER VIEW

PAY FOR TIME(ACCESS)

ADVERTISING

BUY CONTENT

TEIRED PRICING

TYPE OF CONTENT

REVENUE STREAM

MEDIA DELIVERY (SS)


NEEDS MATRIX

EXPLICIT NEEDS IMPLICIT NEEDS

Way to spend time

Ease of access (multi platform)

Mobility

To learn

Feel productive

Share ideas

Be social

convenience

FUNCTIONAL NEEDS

EMOTIONAL NEEDS

MEDIA DELIVERY (SS)

Entertainment

Relaxation

Sense of Discovery

Love/bonding (group entertainment)

Feel attended to

Feeling of control

Feel untethered

Feel as if you are being productive even though you are not (type of content documentary educational)

Zone out

Me time

Family time

Romantic time

Combat loneliness


GAP ANALYSIS

EASE OF ACCESS(MULTI PLATFORM)

WIDE RANGE OF CONTENTENTERTAINS

RELAXATION

SENSE OF DISCOVERY

Feel attended toFeeling of control

Feel as if you are being productive even though you are not (type of

content documentary educational)

Love/bonding (group entertainment)

family time

Me timeFeel as if you are being productive

even though you are not

MEDIA DELIVERY (SS)

FULFILLED NEEDS (EXISTING/MET)

PERCEIVED NEEDS(CUSTOMER REAL NEEDS)

GAP

GAP

GAP

GAP


Documents

Netflix