1. Alex Blatt, Vanessa Boys Smith, Drew Fann, Brie Hunt-Augustine, Chris Mullican

3. Why Netflix? Integrated Customer Experience Good Cultural Fit
Increased Market Share
Streaming & Content Synergies

4. Apple TV – Not your typical TV
“I’d like to create an integrated television set that is completely easy to use. It would be seamlessly synced with all of your devices and with iCloud. It will have the simplest user interface you could imagine. I finally cracked it.” – Steve Jobs

5. Apple TV is Our New iOS Platform
Leveraging our Next Portfolio Product
integrated with iTunes and App Store = new monetization opportunities through capture of streaming market share
New User Experience
Fully integrated living room experience
Deeper content relationship
Leveraged synergies with a combined user base

6. *Apple TV* Streaming Contracts
Vertical Integration
Acquisition
Need
Outcome
In House: MacOSx
iPhone, iPad, iPods
Solid State Flash Storage
Acquisition 2011
Design Efficiency
Production Cost Savings
Distribution Efficiency
Competitive Edge
TV as Platform
Integrated User Experience
*Apple TV* Streaming Contracts
Design Efficiency
(Apple TV Integration)
Production Cost Savings (Contracts)
Distribution Efficiency
(Streaming & Market Share)

7. Movie Streaming on Apple TV: Capturing Market Share
23.8 million subscribers
22 million streaming
Alex – Notes for Presenter:
Why Netflix is the best choice for Apple TV:
By selecting Netflix as Apple TV’s movie streaming application, we will capture the vast majority of the existing DVD streaming market. Netflix currently serves 70% of the online DVD streaming market, with over 22 million streaming customers.

8. Pricing Model Basic Membership - $7.99 per month
Premium Membership - $14.99 per month
Conservative Year
Chris and Alex
Basic Membership - $7.99 per month
Netflix’s unlimited movie streaming model which includes all of their content such as award winning TV series, movies and upcoming original content. The streams will be available on the Apple TV as well as on all Apple devices and all existing devices that support movie streaming. However, it will not include the most recent movies nor will customers be able to watch the highest quality 1080p Blu-Ray quality streams which is in line with the current structure of this membership.
Premium Membership - $14.99 per month
This membership will include all of the content that the basic level does but it will add on the most recently released movies the day they are available, which is a synergy of combining the iTunes store with Netflix to offer these movies. This will be an unmatched service for movie fans who watch recent releases as they can rent unlimited new releases for only $7.99 more a month (Comcast charges $4.99 for one movie rental). Also, this membership level will support the 1080p Blu-Ray quality streaming on devices that can support it such as Apple TV.
At a price of [subscriptions fee] per month, this will lead to increased Netflix revenues of Between [$] between 1.35B and 1.88B by 2017.
New and existing Netflix customers will be more satisfied with their Netflix experience because they will have access to the combined content libraries of Netflix streaming, iTunes movie rental, and their personal movie libraries all in one place.
Millions
Expected
Millions

9. Comparative Value with sensitivity analysis
Chris and Alex
Because Apple TV will bring increased customers and revenue to Netflix, and many existing Netflix customers may choose to access their account through AppleTV, the two companies can benefit from becoming one and fully leveraging the combined services.
Because of the increased customers and revenue that Netflix will experience as a part of AppleTV, the value of Netflix within Apple is above the market average.

10. Added Value
Chris
As an added bonus, new and existing Netflix customers will be more satisfied with their Netflix experience because they will have access to the combined content libraries of Netflix streaming, iTunes movie rental, and their personal movie libraries all in one place.
In addition to the financial gains achieved through the ownership and leveraging of Netflix, Apple will benefit from additional financial gains related to: · Increased sales of other Apple devices and downloadable products Existing Netflix customers who choose to access their Netflix account through AppleTV will be introduced to the full range of applications and products offered on AppleTV, such as application and music rental and purchase options available on iTunes. This will lead to increased revenue as projected:

11. Netflix current value Our OFFER
$ 12.5 Billion
Divested owners Joining 50%cash/ 50% 100% cash in Apple Stock
Chris
We intend to pay the total amount of the Netflix owners that wish to be dissolved of the company in cash. The owners who wish to stay on and join Apple Inc. will be compensated 50% in cash and 50% in stock of Apple. This way the returning owners will have a stake in our future gains and successes. We assert this is the best payment strategy as confident acquiring companies generally want to pay in cash as historically cash buyouts have resulted in investor confidence and a rise in stock price. Conversely, a stock based buyout can signal investors that our stock is overvalued and in 75% of cases the acquiring company’s stock has taken a dip after announcement of the deal. The cash buyout also makes sure that its shareholders do not give up any merger gains to the acquired company’s shareholders (according to Nitin Kumar: Board of Directors at The Lattice Group (Australia) Chief Executive Officer at Aujas Inc). As for concern as to whether the dissolved Netflix will be pleased with the deal we determined that owners who prefer stock deals are few. Usually, most owners care more about the price they're getting than the form of payment and most investors prefer hard cash, says Morton Pierce, chairman of mergers and acquisitions at law firm Dewey Ballantine. Lastly, Apple Inc. can easily afford to pay in cash as we currently have $9.82 billion in cash on hand (Hoovers.com).

12. Hardware & Software Platforms
Current Value Chain
Content & Services
MobileMe
iCloud
Content Aggregation
iTunes
iBooks
App Store
Hardware & Software Platforms
MacOSx
iWorks
Appliances
Mac
iPhone
iPad
iPod
Apple TV
Retail & Distribution
Apple Store
Telecom
Competitor Hardware

13. Value Add: Vertical Integration
Content & Services
MobileMe
iCloud
Content Aggregation
Netflix Streaming Technology
iTunes
iBooks
App Store
Hardware & Software Platforms
MacOSx
iWorks
Appliances
Mac
iPhone
iPad
iPod
Apple TV
Retail & Distribution
Apple Store
Telecom

14. Apple’s Innovative Culture
Empower Employees to Make a Difference
Values, not Rules
Do What is Important
Freedom & Flexibility
Do Everything Important Internally
Control the Message
Get Marketing
Love & Cherish the Creatives
Make a Dent in the Universe
Think Different
Empower employees to make a difference. Changing the world is grandiose and far-fetched. For Apple, Steve Jobs’ "make a dent in the universe" is somehow an entirely realistic goal.
Value what's important, not minutiae. According to one associate, "It's a really fun place to work with loose rules. Employees mostly come and go as they please as long as they accomplish, not 100 percent of their goals, but 110 percent."
Love and cherish the innovators. According to a BNET report, the way Apple "reliably churns out the industrial equivalents of da Vinci paintings ... stems from the meticulous care and feeding provided to a specific group: the creatives. 
Do everything important internally. It's a throwback to the old days of vertically-integrated computer companies, but it's a good thing that Apple never bought into the whole disaggregation thing. Everything important is under one roof: industrial design, operating system, hardware design, even the sales channel. Apple manages to do that by focusing on far fewer products than conventional consumer electronics companies.
Get marketing. Marketing is the one great weakness of the technology industry. For some reason, high-tech CEOs don't get it, understand it, or value it as they should. Apple spends a great deal of effort diviningthe next big thing - figuring out what people want - even when they don't know it themselves. They don't use focus groups or research. They're their own focus group.
Control the message. Few companies truly get communications and PR the way Apple does. A big part of its formula for creating a buzz like no other company is its famous secretiveness. Considering the sheer number of people, companies, and news outlets that would give anything for a tip, virtually nothing leaks until Apple's ready to spill it - the occasional iPhone prototype left on a bar-stool notwithstanding.
Little things make a big difference. According to the Confessions of an Apple Store Employee, "During the iPhone 4 launch, they brought us food - and good food! Somebody told me that the 5th Avenue store in New York had a masseuse during one launch, and that another store had a kiddie pool full of goldfish as, like, a Zen thing." And one of my sources says the main cafeteria is serious gourmet quality.
Don't make people do things, make them better at doing things. In an interview, Steve Jobs revealed, "My job is to not be easy on people. My job is to make them better. My job is to ... take these great people we have and to push them and make them even better, coming up with more aggressive visions of how it could be." Apple employees I've known are either operating at the top of their game, or think they are. Either way, it works.
When you find something that works, keep doing it. The way Apple operates today is not some grand design by Jobs or his management team. They found their way one step at a time. The difference is that, the way Apple's organized, it can rapidly adapt to a new idea or process that works. After decades of single-digit market share, the iPod / iTunes breakthrough provided a winning formula that Apple's replicated with the iPhone and iPad.
Think different. Apple doesn't do anything according to anyone else's timetable. Its product launches and company events - like today's iPad 2 announcement - happen when it suits Apple. It even shuns the venerable Consumer Electronics Show. Apple follows the beat of its own drum. How things should be done or are done elsewhere don't count. Apple finds its own way. As Jobs said in a Stanford Universitycommencement speech, "Don't let the noise of others' opinions drown out your own inner voice."
On the same subject:

15. Do Everything Important Internally
Empower Employees to Make a Difference
Values, not Rules
Do What is Important
Freedom & Flexibility
Do Everything Important Internally
Control the Message
Get Marketing
Love & Cherish the Creatives
Make a Dent in the Universe
Think Different

16. Integration Change Management
Apple-Netflix Integration Team
Integration Change Management
Operational Synergies
COMMUNICATION
ORGANIZATION
CULTURE
Market-Based Synergies
Head of iTunes
HR, Apple
COO, NFLX
HR NFLX
Responsible for vision, direction and prioritization of all integration efforts
CEO, NFLX
R&D Apple TV
Apple CEO
Integration
Team

17. Integration Initiative
Communication
Organization
Culture
Facilitate integration effectiveness
Align Apple and Netflix to increase efficiencies and realize synergies
Minimize integration risks due to cultural differences
Organize all stakeholders
Establish 2-way feedback
Launch internal communication campaign
External PR Campaign
Maximize stakeholder buy-in and involvement
Set cross-organizational hierarchy
Monitor retention rates
Develop cultural transition strategy
Deploy cultural progress surveys
Put extra emphasis on gathering informal feedback
Goals
Actions

18. Integration Timeline Year One
Acquisition Timeline
Integration Timeline Year One
Deploy Cultural Progress Surveys
March 1
Begin integration due diligence
Feb 1
Integration Team formed
Feb 8
Set cross organizational hierarchy
Feb 8
Monitor retention rates
March 1
February | March |October | September
Communication Initiative launched
Feb 8
Netflix is acquired
Feb 1
Maximize stakeholder buy-in and involvement
March 1
Integration Completed September 1
Gather informal feedback
March - October

19. Netflix Will Benefit from the Acquisition
Fiscal Incentives
Cultural Fit
Competitive Positioning:
Streaming Advantage & User Base
Strategic Leveraging:
AppleTV as a Platform

20. Summary Digital streaming experience unlike any other Now: Future:
Netflix Digital Library & Subscribers
Seamlessly Synced Apple Platforms & iCloud Service
Now:
#1 Digital Video Streaming Market Share
Future:
Streaming Content with Untapped Market Entry