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Analysis of Netflix presented by Vince Wang

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1 Analysis of Netflix presented by Vince Wang

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

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

4 What is Netflix? 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 Largest online DVD movie rental service 3 million members 40,000 movie titles CEO predicts that Netflix will boast five million subscribers and one billion in annual revenue by 2007

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 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 $14.99 Limit 4 per month $11.99

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

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

9 Speedy Delivery

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

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

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

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

14 Netflix Threats 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 Lower price and promotions of competitors Cost of postal service

15 Financial Status 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 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

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

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