Beruflich Dokumente
Kultur Dokumente
Presented by: Kevin Andrews Ebube Anizor Nasir Gondal Mohammad Shafiei-Monfared John Selvakumar Schulich School of Business July 19, 2010
Thursday, 8 September, 11
Netflix will forever change the way you watch your TV & Movies.
Thursday, 8 September, 11
Company Overview
DVDs via mail, electronic delivery via the Internet -> great consumer value 14 million+ members in USA, projected to be 16 to 17 million by the end of 2010 (>10% of US household subscribe to Netflix) 2009 Revenue: US$1.67B 2010 forecasted: US$2.05B to US$2.11B Several subscription plan choices:
3 DVDs at-a-time/Unlimited Streaming - $17/month 2 DVDs at-a-time/Unlimited Streaming - $14/month 1 DVDs at-a-time/Unlimited Streaming - $9/month 2 DVDs /2 hours streaming - $5/month
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Thursday, 8 September, 11
Financial Highlights
Average Monthly Revenue per Subscriber: $13.30
Gross Profit: $4.71 Net Profit: $0.92
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Service Overview
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DVD-by-Mail Service
58 distribution locations nationwide Netflix ships 2+ million DVDs each day 97% of subscribers receive discs in one day
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DTV
Gaming
STB
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STB Roku Tivo Western Digital Seagate On-the-Go PC/Mac WMC HP TouchSmart Apple iPad & iPhone Xbox Sony PS3 Nintendo Wii
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Netflix-ready Device UI
Instant Queue
Title Details
Streaming Playback
Optimized FF/RW
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Business Strategy
Core Business Objective:
Grow a large subscription business consisting of streaming and DVD-by-mail content
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Technology Strategy
Bowling alley approach Shift to the next S-curve
Offer Streaming
Relationship
Digitize
Whole Product
DVD by Mail
Customer Reference
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Technology Strategy
Create
Digitize customer relationship All you can use content
Deliver
Capture
Strong installed base Multiple platforms Monthly subscription fee
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Innovation Strategy
Disruptive innovation has been the hallmark of the companys success
One of the first companies to introduce DVD by mail over the web
Innovation focus has been shifting to online streaming Internal and open innovation
$1 million competition to improve recommendation engine by 10%
Investment Priorities
Web based STAs Processing and distribution of DVDs and streaming content
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Intellectual Property
Netflix uses a combination of patent, trademark, copyright and trade secrets
Patent for Online DVD Rental process (2006)
Netflix successfully sued Blockbuster for infringement
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Relationship with content providers and leveraging it to acquire licenses for online streaming content. Netflix-ready Devices
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Competition
Shifting from an industry with a few players to one with several strong players!
Traditional
DVD Rental Stores Blockbuster
Now near bankruptcy (delisted from NYSE) struggling to compete in digital and mail service space
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Competitors
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Unlimited subscription Newer TV shows, some new movies, older movies 17,000 titles and growing DVD rental
Ad-supported video TV show centric Older movie titles Free for Hulu bas and YouTube PPV Model for Hulu+
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Competitive Strengths
Brand Personalized Service Growing Scale (efficiencies, negotiations) Convenience, Selection and Fast Delivery
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Netflix augments the standard video package. Its success is based on clearly defining where and how it competes:
Segment. Consumer-paid streaming subscription Content. Library and relatively new content. Other content types not in scope. Revenue Model. Single, simple subscription based revenue model.
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Thursday, 8 September, 11
New Entrants
Independent offerings from content providers Potential for M&A amongst players Alliances with content providers (a la Hulu)
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Thursday, 8 September, 11
Outlook
Studios need to protect high margin DVD sales and value chain
Avoid iTunes-like domination by Netflix
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Outlook
Studios goal is to manage online availability (what and when) Net Neutrality
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Recommendations Focus on negotiating favourable long term content agreements Deploy to as many devices as possible Geographic expansion Expand complementary assets Leverage DVD / Streaming hybrid model Long Term: apply model to books, video games
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Thursday, 8 September, 11
In Canada Streaming only no discs English at launch, French later Public announcement July 19th Target of less than $10/month unlimited streaming
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Our Bet
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Source: Rogers
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Thursday, 8 September, 11
Source: Rogers
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Content Acquisition
Netflix focuses on getting Netflix members the highest total viewing value in our library Not striving for a specific quantity Offer the best overall library Content obtained through direct purchases, revenue sharing agreements and license agreements with studios, distributors and other suppliers.
DVD content is typically obtained through direct purchases or revenue sharing agreements. Streaming content is generally licensed for a fixed fee for the term of the license agreement.
Thursday, 8 September, 11
Thursday, 8 September, 11