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
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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
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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 -
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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