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NETFLIX & VIDEO ON DEMAND Eric, Rutao Li & Kailen Nordhausen SCAD 2012

Wednesday, May 30, 12


Wednesday, May 30, 12


NETFLIX MISSION

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

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NETFLIX HISTORY 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.

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NETFLIX THE ORIGINAL SERVICE

ONLINE SUBSCRIPTION-BASED DVD RENTAL SERVICE USED THE U.S. POSTAL SERVICE TO DELIVER DVDS 44 DISTRIBUTION CENTERS ACROSS THE COUNTRY SERVED 90% OF ALL CUSTOMERS IN 24 HOURS $7.99 A MONTH NO LATE FEES MOVIE RECOMMENDATIONS BASED ON YOUR TASTE

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CORPORATE STRATEGY VISION

Unlimited Movies and TV Shows Streaming Instantly

MISSION

OBJECTIVES

STRATEGIES

ACTIVITIES

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To revolutionize the way people watch TV shows and movies

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

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


NETFLIX MARKET: 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

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NETFLIX NAICS SECTOR

SECTOR - 454 non-store retailers SUB-SECTOR - 4541 electronic shopping and mail-order houses 454113 Mail-Order Houses

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NETFLIX MAJOR PLAYERS IN SECTOR

- ALLOY, INC - AMAZON - BLAIR CORPORATION - BLOOMSBURY PUBLISHING - OVERSTOCK.COM - EBAY INC - STAMPS.COM - IAC/INTERACTIVE CORP

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NETFLIX DIRECT COMPETITORS

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NETFLIX INDIRECT COMPETITORS

PLAYS TORRENTS AND ILLEGAL SHARING

BIG SCREEN MOVIES

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NETFLIX DIRECT COMPETITORS FINANCE

TRANSFORMATION

RADICAL

INCREMENTAL

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PROCESS

OFFERING

DELIVERY


NETFLIX KEY INNOVATIONS The Personalized Movie Recommendation System NEW

Tech (iPad, IPhone) RISK

SERVICE OFFERING Partners With Consumer Electronics Companies Subscription Service EXISTING

Tech (iPad, IPhone) Internet Video

EXISTING

NEW

CUSTOMER GROUPS

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NETFLIX BUSINESS MODEL KEY PARTNERS

KEY ACTIVITIES

Apple/iTunes

IT Strategy Design/Development

Droid Xbox

Provides access to broad range of movies

Business Strategy User testing

Promotes independent films

Managing of Content Marketing

google tv

CUSTOMER RELATIONSHIPS

User’s can stream movies direct to device

Customer Support/Service Sony

VALUE PROPOSITIONS

KEY RESOURCES

Convenient

Movie Enthusiasts

Passive (Self-Service)

Casual Viewer

Highly Customized

TV lover

Friendly

Discover movies

Easy access/exit

Allows users to receive by mail additional content

Helpful/Serendipitous

Access anywhere

CHANNELS

Database/Servers

Web Client

Community/Users

Mobile App

Media providers

Subscription

Google Analytics Employees/Managers/ Designers Managing of Content REVENUE STREAMS

COST STRUCTURE Servers

Market Research/Marketing

Salary

Facilities

Maintenance

Licensing

Equipment

Lawyers

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Subscriptions

CUSTOMER SEGMENTS

Movie Promotions


NETFLIX STRATEGY: MARKET

PRODUCT LEADERSHIP

OPERATIONAL EXCELLENCE

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CUSTOMER INTIMACY


NETFLIX BUSINESS MODEL: MARKET KEY PARTNERS

KEY ACTIVITIES IT Strategy

Businesses that enable Multi-channel distribution

Design/Development Business Strategy

Media Providers/Supplyers

User testing Customer Support/Service Managing of Content Marketing KEY RESOURCES

VALUE PROPOSITIONS

CUSTOMER RELATIONSHIPS

Provides access to broad range of content/products User’s can centered delivery ease/customized

Intimate 1:1

Brand loyals

Trust

Brand Switchers

Highly Customized

Discover things based on your personality and purchases

Friendly

Allows users to receive by mail additional content

Helpful/Serendipitous

Never leave the comfort of your home

CUSTOMER SEGMENTS

Convieniance Seakers

Easy access/exit

CHANNELS

Database/Servers

Web Client

Community/Users

Mobile App Subscription

REVENUE STREAMS

COST STRUCTURE Servers

Market Research/Marketing

Subscriptions

Online Purchases

Salary

Facilities

Rentals

Pay per view

Maintenance

Licensing

Purchase content

Pay for rental time (hour, day, week)

Equipment

Lawyers

Wednesday, May 30, 12


NETFLIX BUSINESS MODEL: MARKET CUSTOMER INTIMACY MARKET FOCUS KEY PARTNERS

KEY ACTIVITIES IT Strategy

Businesses that enable Multi-channel distribution

Design/Development Business Strategy

Media Providers/Supplyers

User testing Customer Support/Service Managing of Content Marketing KEY RESOURCES

VALUE PROPOSITIONS

CUSTOMER RELATIONSHIPS

Provides access to broad range of content/products User’s can centered delivery ease/customized

Intimate 1:1

Brand loyals

Trust

Brand Switchers

Highly Customized

Discover things based on your personality and purchases

Friendly

Allows users to receive by mail additional content

Helpful/Serendipitous

Never leave the comfort of your home

CUSTOMER SEGMENTS

Convieniance Seakers

Easy access/exit

CHANNELS

Database/Servers

Web Client

Community/Users

Mobile App Subscription

REVENUE STREAMS

COST STRUCTURE Servers

Market Research/Marketing

Subscriptions

Online Purchases

Salary

Facilities

Rentals

Pay per view

Maintenance

Licensing

Purchase content

Pay for rental time (hour, day, week)

Equipment

Lawyers

Wednesday, May 30, 12


NETFLIX BUSINESS MODEL: MARKET KEY PARTNERS

KEY ACTIVITIES IT Strategy

Businesses that enable Multi-channel distribution

Design/Development Business Strategy

Media Providers/Supplyers

User testing Customer Support/Service Managing of Content Marketing KEY RESOURCES

VALUE PROPOSITIONS

CUSTOMER RELATIONSHIPS

Provides access to broad range of content/products User’s can centered delivery ease/customized

Intimate 1:1

Brand loyals

Trust

Brand Switchers

Highly Customized

Discover things based on your personality and purchases

Friendly

Allows users to receive by mail additional content

Helpful/Serendipitous

Never leave the comfort of your home

CUSTOMER SEGMENTS

Convieniance Seakers

Easy access/exit

CHANNELS

Database/Servers

Web Client

Community/Users

Mobile App Subscription

REVENUE STREAMS

COST STRUCTURE Servers

Market Research/Marketing

Subscriptions

Online Purchases

Salary

Facilities

Rentals

Pay per view

Maintenance

Licensing

Purchase content

Pay for rental time (hour, day, week)

Equipment

Lawyers

Wednesday, May 30, 12

KEY DIFFERENCE BETWEEN COMPETITORS


NETFLIX SWOT STRENGTHS

WEAKNESSES

Low cost product

Inability for subscriber base to absorb price increase

Big customer scale

Indecisive decision over quixter

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

Lost and defective DVD’s costs Succession Instability

Provides competitive advantage to tablet makers Lack of streaming content (less then competitors) Easy to navigate website Fastest DVD Delivery among competitors World’s largest DVD Movie selection Low fixed costs Netflix - Wii partnership Market share

OPPORTUNITIES

THREATS Increasing cost to license content

International Expansion

Video on demand competition

Expansion into gaming market

Amazon breaking into movie rental

Expansion of online rental market

Block Buster

Online distribution network lowers costs

You tube to start offering movie rentals

Tiered pricing Structure

Online security

Internet Video

Technology Cost and Services Decreasing in price First release time delay Cost of internet bandwidth First sales issues for DVD’s Reached market saturation in the united states International competition on the rise Post office cutback

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MEDIA DELIVERY (SS) INNOVATION OPPORTUNITIES

What if we expand into the gaming market? PROS

- MORE CUSTOMERS - BETTER DIVERSITY - NEW OFFERING

CONS

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

What if we expand to other International markets? PROS

CONS - 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

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

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

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


MEDIA DELIVERY (SS) INNOVATION OPPORTUNITIES

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

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

CONS

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

What if we allow advertising on select programs/content? PROS

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

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

What if we introduce a Tiered pricing Structure ? PROS

CONS -

Wednesday, May 30, 12

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) INNOVATION OPPORTUNITIES What if we automated some/all customer support processes? PROS

- LESS COSTS RENT (DISTRIBUTION) - LESS STAFF

CONS

- LESS SATISFACTION - MORE FRUSTRATION - WHAT CAN BE AUTOMATED

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

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

CONS

-

ANNOYED CUSTOMERS NEW SYSTEMS SOFTWARE FINDING PARTNERS LESS CONTROL

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

CONS -

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

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

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

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-

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

CONS

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


MEDIA DELIVERY (SS) MARKET SEGMENTATION GRID

TYPE OF CONTENT

BLOCK BUSTER (NEW RELEASE) REVENUE STREAM

SUBSCRIPTIONS RENTALS (MAIL/KIOSK) PAY PER VIEW PAY FOR TIME (ACCESS) ADVERTISING

BUY CONTENT

TEIRED PRICING

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INDEPENDENT (PRO QUALITY)

USER GENERATED (&PUBLICDOMAIN)

PREMIUM TV (HBO)

BASIC TV (CABLE)

MUSIC VIDEO

GAMING


MEDIA DELIVERY (SS) NEEDS MATRIX EXPLICIT NEEDS

FUNCTIONAL NEEDS

IMPLICIT NEEDS

Way to spend time

Feel attended to

Ease of access (multi platform)

Feeling of control

Mobility

Feel untethered

To learn

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

Feel productive Share ideas Be social convenience

EMOTIONAL NEEDS

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Entertainment

Zone out

Relaxation

Me time

Sense of Discovery

Family time

Love/bonding (group entertainment)

Romantic time Combat loneliness


MEDIA DELIVERY (SS) GAP ANALYSIS FULFILLED NEEDS (EXISTING/MET)

EASE OF ACCESS (MULTI PLATFORM)

WIDE RANGE OF CONTENT ENTERTAINS

PERCEIVED NEEDS (CUSTOMER REAL NEEDS)

GAP

Feel attended to Feeling of control

GAP

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

GAP

Love/bonding (group entertainment) family time

GAP

Me time Feel as if you are being productive even though you are not

RELAXATION

SENSE OF DISCOVERY

Wednesday, May 30, 12

Netflix  

Research and concepts on netflix service

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