Netflix - Final Presentation v2

Service Strategy class

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Netflix - Final Presentation v2

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Slide Content
  1. Netflix

    Slide 1 - Netflix

    • DVD rental & Streaming
    • 5/18/2015
    • Service Strategy - KAIST Business School
    • 1
  2. Overview

    Slide 2 - Overview

    • 5/18/2015
    • Service Strategy - KAIST Business School
    • 2
    • Netflix Presentation
    • Service wrappers
    • Competition Analysis
    • Challenges
    • Recommendations
    • Netflix Services Analysis
  3. Netflix in a nutshell

    Slide 3 - Netflix in a nutshell

    • Netflix is a subscription-based movie and television program rental service that offers media to subscribers via Internet streaming and via US mail.
    • Service Strategy - KAIST Business School
    • 3
    • 5/18/2015
  4. History

    Slide 4 - History

    • Service Strategy - KAIST Business School
    • 4
    • 5/18/2015
    • 1997
    • 2005
    • Netflix has 4.2 million members. 3.6 million more than 2002
    • 2007
    • Netflix introduces streaming allowing members to instantly follow TV shows and movies on their PCs
    • 2010
    • Netflix available on iPad, iPhone, Nintendo Wii and other internet connected devices
    • 2013
    • Netflix has 33 million members
    • Best satisfying website for the fifth time
    • 2014
    • Netflix produces its own shows with tremendous allocated budgets
    • Reed Hasting and Marc Randolph co-found Netflix to offer online movie rentals
  5. Key numbers

    Slide 5 - Key numbers

    • Service Strategy - KAIST Business School
    • 5
    • 5/18/2015
  6. Key numbers

    Slide 6 - Key numbers

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    • 6
    • 5/18/2015
  7. The services

    Slide 7 - The services

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    • Service Strategy - KAIST Business School
    • 7
  8. DVD Rental – Service Description

    Slide 8 - DVD Rental – Service Description

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    • Service Strategy - KAIST Business School
    • 8
  9. Netflix Streaming

    Slide 9 - Netflix Streaming

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    • Service Strategy - KAIST Business School
    • 9
    • A large collection of Movies and TV shows accessible through the Netflix website as well as a myriad of devices.
    • Powerful recommendation system based on user profiles under the same subscription
  10. Netflix Streaming - Pricing

    Slide 10 - Netflix Streaming - Pricing

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    • Service Strategy - KAIST Business School
    • 10
  11. DVD Rental Service Model

    Slide 11 - DVD Rental Service Model

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    • Service Strategy - KAIST Business School
    • 11
    • Funding Mechanism
    • Limited number of DVDs at the same time (Delivery buffering)
    • Provides mainly aging content (Best in each category rather than newest)
    • No physical stores
    • Predictable Revenue Stream (Monthly Subscription)
    • Employee Management System
    • Standardized procedure for handling returned DVDs (Factory like setting)
    • A-list Employees in HQ (One of the most selective companies)
    • Customer Management System
    • Customer Operators: Returning DVDs to provided envelops and sending it to center
    • Only case that incurs fees is lost or damaged DVD.
    • Service Offering
    • Unique DVD rental service: Online powered, Home Delivered, Latest Technology (Blu-Ray)
  12. Streaming Service Model

    Slide 12 - Streaming Service Model

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    • Service Strategy - KAIST Business School
    • 12
    • Funding Mechanism
    • Region based licensing (easier contract with production studios)
    • Provides mainly aging content (Best in each category rather than newest)
    • No physical stores
    • Predictable Revenue Stream (Monthly Subscription)
    • Employee Management System
    • Silicon Valley type (Exceptional corporate culture based on freedom and responsibility)
    • A-list Employees in HQ (One of the most selective companies)
    • Customer Management System
    • Customer Operators: Setting up the devices and access to internet
    • Service Offering
    • Quality Internet based streaming service with powerful customized recommendation system on various devices with extensive accessibility features
  13. Service wrapper

    Slide 13 - Service wrapper

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    • Service Strategy - KAIST Business School
    • 13
  14. Netflix – Service Wrapper Model

    Slide 14 - Netflix – Service Wrapper Model

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    • Service Strategy - KAIST Business School
    • 14
    • Internet
    • Geographically
    • based
    • Licensing
    • Netflix
    • FOX
    • HBO
    • Warner Bros
  15. Netflix – Service Wrapper Model

    Slide 15 - Netflix – Service Wrapper Model

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    • Service Strategy - KAIST Business School
    • 15
    • Information
    • Through the website and web apps Netflix keeps track of user profiles and preferences
    • Netflix communicates all the necessary information online
    • Quality
    • Netflix provides the context and uses advanced algorithms to optimize the video to adjust to different internet speeds
    • Still Netflix services quality depends greatly on the ISP
    • Relationship
    • The user cannot always tell if a problem comes from the ISP or Netflix
    • Personalized content and recommendations
  16. Competition Analysis

    Slide 16 - Competition Analysis

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    • Service Strategy - KAIST Business School
    • 16
  17. Competitors

    Slide 17 - Competitors

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    • 17
  18. Comparing costs

    Slide 18 - Comparing costs

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    • 18
    • $7.99-$11.99/month
    • $7.99/month (with ads)
    • $99/year ($8.25/month)
    • Movie rental from 5$; purchase from 15$
    • TV show episode from $1.99, season from $24.99
  19. Comparing costs

    Slide 19 - Comparing costs

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    • Service Strategy - KAIST Business School
    • 19
    • $7.99-$11.99/month
    • $7.99/month (with ads)
    • $99/year ($8.25/month)
    • Movie rental from 5$; purchase from 15$
    • TV show episode from $1.99, season from $24.99
  20. Comparing library

    Slide 20 - Comparing library

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    • Service Strategy - KAIST Business School
    • 20
    • Over 20,000 movies and TV shows
    • Over 5,000 movies and TV shows
    • Over 18,000 movies and TV shows
    • 100,000 movies and TV shows
  21. Comparing library

    Slide 21 - Comparing library

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    • Service Strategy - KAIST Business School
    • 21
    • Over 20,000 movies and TV shows
    • Over 5,000 movies and TV shows
    • Over 18,000 movies and TV shows
    • 100,000 movies and TV shows
    • But does quantity guarantee the quality of content?
  22. Comparing content availability

    Slide 22 - Comparing content availability

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    • Service Strategy - KAIST Business School
    • 22
    • Current season of TV shows available
    • TV show: the day after show airs
    • DVD: the same day as the release
  23. Comparing content availability

    Slide 23 - Comparing content availability

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    • Service Strategy - KAIST Business School
    • 23
    • Current season of TV shows available
    • TV show: the day after show airs
    • DVD: the same day as the release
  24. Comparing device compatibility

    Slide 24 - Comparing device compatibility

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    • Service Strategy - KAIST Business School
    • 24
    • Computer, game consoles, streaming players, Blu-ray players, HDTV, DVRs, kindle (ereader), mobile devices (both iOS and Android)
    • Computer, game consoles, streaming players, Blu-ray players, HDTV, DVRs, mobile devices (both iOS and Android)
    • Computer, game consoles, streaming players, Blu-ray players, HDTV, DVRs, mobile devices (both iOS and Android)
    • Computer, game consoles, streaming players, Blu-ray players, HDTV, DVRs, mobile devices (both iOS and Android)
  25. Overall…

    Slide 25 - Overall…

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    • Service Strategy - KAIST Business School
    • 25
    • Best price if the base plan is chosen
    • Not the biggest library, but Netflix makes sure to only chose the best in every category
    • Device compatibility is on par with competitors
  26. Challenges

    Slide 26 - Challenges

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    • 26
  27. Hollywood licensing issues

    Slide 27 - Hollywood licensing issues

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    • Licensing agreement with NBC Universal increase from $22m/year to $300m/year in 2011
    • Cost of subscription/licensing fees goes from ~55% to ~70% since 2012, profit margin 
    • Netflix announced subscription price hike in 2014 from $6.99 to $7.99 for new subscribers
  28. ISP Dependency: Net Neutrality

    Slide 28 - ISP Dependency: Net Neutrality

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    • Service Strategy - KAIST Business School
    • 28
  29. ISP Dependency: Netflix - Comcast

    Slide 29 - ISP Dependency: Netflix - Comcast

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    • 29
    • To ensure the quality of service Netflix now has deals with major ISP providers reducing even further their margin.
    • A deal with Comcast had been reached on February 2014
  30. Slide about challenges coming from competition

    Slide 30 - Slide about challenges coming from competition

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    • Service Strategy - KAIST Business School
    • 30
  31. Recommendations

    Slide 31 - Recommendations

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    • 31
  32. Recommendation 1: VoD platform

    Slide 32 - Recommendation 1: VoD platform

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  33. Recommendation 2: B2C to B2B

    Slide 33 - Recommendation 2: B2C to B2B

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    • Service Strategy - KAIST Business School
    • 33
  34. Q&A

    Slide 34 - Q&A

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    • Service Strategy - KAIST Business School
    • 34