netflix consulting project
TRANSCRIPT
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NETFLIX CONSULTING PROJECTThe Battle to Control Entertainment in the Living Room
Kris Chamrernlaksa, Tysen Cole, Eric Le Duc, Teo Tertel
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Agenda
• Introduction• Problem Definition• Industry Analysis• Competitive Analysis• Consumer Analysis• Recommendations
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Introduction
• Launched in 1998 by CEO Reed Hastings• Originally very similar to brick and mortar• Patented its envelope delivery system and
business model• Launched ‘Watch Instantly’ in 2007• Today: More than 16 million subscribers
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Problem Definition
• Who is Netflix’s biggest competition?• How should Netflix respond to competitors?• What do customers like/dislike about Netflix?• How can Netflix convert its DVD-by-mail
customers to streaming users?• What should Netflix’s future strategy be?
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Industry Analysis
• Drivers– Distribution Channels– Platforms– The Internet– Consumer Behavior
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Industry Analysis
• Trends– Automation– Physical Stores– Complementing Hardware & Software– Instant– No late charges
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Industry Analysis
• Porter’s Five Forces– Supplier Power: High– Buyer Power: Strong– Threat of New Entrants: Low– Threat of Substitutes: High– Competitive Rivalry: Intense
– Complementors: Favorable
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Competitive Analysis
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Competitive AnalysisCURRENT COMPETITORS
Pricing Plan Archive(TV shows/Movies)
Interesting Fact
$7.99/Month, Stream$9.99/Month, Mail
100,000 20 % of bandwidth during peak hours
$7.99/Month TV Show Episodes Full Series Runs but still watching ads?
$.99 - $1.99/TV show$4.99-$9.99/Movie
75,000 Disc+ On Demand digital copy
$4.99 ($1+ HD)/ 2-day Rentals
100,000 1st TV provider with mobile app manager
$1.99 - $3.99/Rent$7.99 - $15.99/Buy
95,000 Viewable on 100 different devices
$3.99 - $4.99/Rent$7.99 - $17.99/Buy
25,000 Comcast cable box subscription= Free?
$2.99 - $3.99/Rent$9.99 - $19.99/Buy
10,000 Download content using BestBuy.com
$4.99 - $5.99/Rental,Subscription plans
400 new releases 4,000 TV shows and movies free
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Competitive Analysis
FUTURE COMPETITORS
Pricing Plan Archive Interesting Fact
Free 400 Full-length movies
2 billion people watching videos each day
Rentals:$.99/TV Show $3.99-$4.99/Movie
Extensive collection Access to Netflix, iTunes, and YouTube
Free (commission on ad sales)
Collaborating with Studios/TV networks
Netflix available on Google TV, Android Remote Control
Subscription TV shows (new/old) and movies
Bundled with Amazon Prime
$3.95/Monthly unlimited streaming
200 new releases 1 billion DVDs rented
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Consumer Analysis
• To learn about Netflix consumers– Usage and perceptions of ‘Watch Instantly’– Detractors/Enticers of ‘Watch Instantly’
• Questionnaire in– Supplemented with personal interview data
• Survey link distributed in team networks– Contacts, Facebook, Class forum– Netflix Community forum, Netflix Topix forum
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Results
• Balanced Sample, 51 responses– 43.5% Male, 56.5% Female– 61.7% of ages 26-35– 82% from CA, 80.9% have at least a Bachelors Degree– 91.5% have adequate internet connections
• Key Findings– 82% have used ‘Watch Instantly’– ‘Good Quality’ ratings, avg 4.17 of 5– Attracted to convenience, Detracted by lack of content– Average user streams 12 times per month– Average users rents 5 DVDs per month– Average users rents less than 1 Blu-Ray per month– 29% are willing to pay $10 premium for earlier releases
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Categories of Adopters
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Conclusions
• Most subscribers have used ‘Watch Instantly,’ and they use it a lot
• Nearly all subscribers have a capable device and internet connection
• Subscribers like the convenience and quality of ‘Watch instantly’
• Subscribers want fresh content, and nearly 30% are willing to pay extra for it
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Kano Map
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Recommendations
1. Premium Pricing for New and Early Releases• Content is a “must have” factor• 30% of polled subscribers are willing to pay more• Survey current customers
2. New Content• Current season television programming• Leverage existing relationships• Video games
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Recommendations
3. Cross-Promotions and Referrals• Airlines and airports• Streaming-capable devices• Scholarships to film schools and contests• Customer referral program
4. Converting DVD Users to Streaming• Only 5.28% of existing subscribers are unaware of
‘Watch Instantly;’ Laggards• Grow overall user base
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THANK YOU!
Any questions?