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1 Analysis of Netflix presented by Vince Wang. 2 Agenda Introduction Introduction What is Netflix? What is Netflix? How Netflix Works? How Netflix Works?

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Presentation on theme: "1 Analysis of Netflix presented by Vince Wang. 2 Agenda Introduction Introduction What is Netflix? What is Netflix? How Netflix Works? How Netflix Works?"— Presentation transcript:

1 1 Analysis of Netflix presented by Vince Wang

2 2 Agenda Introduction Introduction What is Netflix? What is Netflix? How Netflix Works? How Netflix Works? How Much Does Netflix Cost? How Much Does Netflix Cost? Comparing Netflix to its Competitors Comparing Netflix to its Competitors Role of IT at Netflix Role of IT at Netflix Porter’s Competitive Forces Model Porter’s Competitive Forces Model

3 3 Agenda (continue) Advantage of Internet Advantage of Internet CRM (Customer Relations Management) Strategy in Netflix CRM (Customer Relations Management) Strategy in Netflix SWOT Analysis SWOT Analysis Netflix Strengths Netflix Strengths Netflix Weakness Netflix Weakness Netflix Opportunities Netflix Opportunities Netflix Threats Netflix Threats Conclusion Conclusion Financial Status Financial Status The Future of Netflix The Future of Netflix

4 4 What is Netflix? Founded in 1997 at Scotts Valley, CA Founded in 1997 at Scotts Valley, CA Founder of Netflix: CEO Reed Hastings pioneered the subscription movies-by-mail model from his own personal frustrations Founder of Netflix: CEO Reed Hastings pioneered the subscription movies-by-mail model from his own personal frustrations Largest online DVD movie rental service Largest online DVD movie rental service 3 million members 3 million members 40,000 movie titles 40,000 movie titles CEO predicts that Netflix will boast five million subscribers and one billion in annual revenue by 2007 CEO predicts that Netflix will boast five million subscribers and one billion in annual revenue by 2007

5 5 How Netflix Works? Receive selection of DVD’s from customers Process DVD’s at one of 30 shipping centers Send DVD’s straight to customers within one-day Return DVD’s in one of Pre-Paid Mailer

6 6 How Much Does Netflix Cost? Plan Rental/ Month Price / Month Free Trial Length 3 DVDs at-a-time Unlimited$17.99 Per month 2 Week Free Trial 2 DVDs at-a-time Unlimited$14.99 Per month 2 Week Free Trial 2 DVDs at-a-time Limit 4 per month Limit 4 per month$11.99 Per month 2 Week Free Trial

7 7 Comparing Netflix to its Competitors NetflixWal-MartBlockbuster Movie Selection ●●●●● ●●●● ○ ●●●●● Subscription Plan Selection ●●●● ○ ●●● ○○ Movie Search Interface ●●●●● ●●●● ○ ●●● ○○ Movie Availability ●●●●● ●●●● ○ ●●● ○○ Speed Of Delivery ●●●●● ●●● ○○ Statistics from: ●●●●● best

8 8 Porter’s Competitive Forces Model Low Cost Low Cost Differentiation Differentiation Innovation Innovation Develop Alliances Develop Alliances Promote Growth Promote Growth

9 9 Speedy Delivery

10 10 Netflix CRM Strategies Customers can access services through the web site Customers can access services through the web site Communication and feedbacks from Netflix’s customers Communication and feedbacks from Netflix’s customers Customer service center is open seven days a week Customer service center is open seven days a week Phone support Phone support Netflix Affiliates Program Netflix Affiliates Program

11 11 Subscription style e-commerce service Subscription style e-commerce service Unlimited access to world’s largest DVD library Unlimited access to world’s largest DVD library No lineups and no late fees No lineups and no late fees Excellent customer service Excellent customer service Easy website navigation Easy website navigation Preview movie before renting Preview movie before renting Netflix Strengths

12 12 Netflix Weakness Customers slowly adapt to change from movies-by-mail model Customers slowly adapt to change from movies-by-mail model High quality in customer service is not easily achievable High quality in customer service is not easily achievable

13 13 Netflix Opportunities Cross promotion program Cross promotion program Promotional relationship with Amazon.com Promotional relationship with Amazon.com Allow customers to download movies Allow customers to download movies Extend into video games rental business Extend into video games rental business

14 14 Netflix Threats Strong competitive market with other movie rental stores such as Blockbuster, Wal-Mart and Comcast Pay-per-view Strong competitive market with other movie rental stores such as Blockbuster, Wal-Mart and Comcast Pay-per-view Older or newer media formats are not supported currently Older or newer media formats are not supported currently Lower price and promotions of competitors Lower price and promotions of competitors Cost of postal service Cost of postal service

15 15 Financial Status Revenue up 86% from $272.2 million in 2003 to $506.2 million in 2004 Revenue up 86% from $272.2 million in 2003 to $506.2 million in 2004 Subscribers rose from 1,487,000 in 2003 to 2,610,000 in 2004 Subscribers rose from 1,487,000 in 2003 to 2,610,000 in 2004 After Blockbuster and Wal-Mart went into the market in 2004, growth rate dropped from 77% to 2% After Blockbuster and Wal-Mart went into the market in 2004, growth rate dropped from 77% to 2% Failure to expand to UK with a net-loss of $3 million Failure to expand to UK with a net-loss of $3 million

16 16 Conclusion Netflix is at its maturity Netflix is at its maturity Expanding and growing slower than before Expanding and growing slower than before Loss in revenues from competition Loss in revenues from competition The diminishing future of Netflix The diminishing future of Netflix


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