A brief overview of Netflix’s Business Model Canvas.

1. Business Model Canvas
Miss Jacinta Hayden
Miss Annie King

2. 2
1. Introduction
2. Business model canvas
a. Customer Segments
b. Value Propositions
c. Channels
d. Customer relationships
e. Revenue streams
f. Key resources
g. Key activities
h. Key partnership’s
i. Cost structure
3. Conclusion
Contents

3. 3
Introduction
 Netflix is the world’s leading internet television
network
 With over 75 million streaming members in over
90 countries
 Its customers enjoy more than 125 million hours
of TV shows and movies per day
 Its online catalogue includes original series,
documentaries and feature films

4. 4
Introduction - SWOT
Strengths
• strong brand to differentiate from competitors
• a large catalogue
• original content
• fast forwarding functionality
• HD viewing
• ability to watch content simultaneously on multiple devices
Weaknesses
• Their international business is not yet profitable
• Investing large amounts of their revenue on original content is risky

5. 5
Introduction - SWOT
Opportunity's
- Grow its international market share
- Grow its movie catalogue in order to gain more subscribers
Threats
- Ever changing due to technology advancement’s
- Black market

6. 6
Business model canvas – Customer segments
• It has an estimated 75 million streaming members in over 90 countries
• Customer segment are that they are aged between 24-35 with annual
salaries starting at $50,000. Have at least a bachelor’s degree and have
children
• Anyone who can afford an internet connection

7. 7
Business model canvas – Value Propositions
There are three key features that attract Netflix’s
customers which add a unique value to retain them
1) Original content
2) Multiple viewing options
3) Price

8. 8
Business model canvas – Channels
• Website Netflix.com and mobile app.
• Netflix started out as a movie and television rental delivery service.
Movies and series were delivered to subscriber’s homes in exchange
of a monthly fee.
• Netflix has changed and adapted its business model to meet market
demands and obtain growth by offering a large online streaming
catalogue
• Netflix can be viewed across different devices and mediums such as
online streaming on your laptop or physical Blu-ray DVD rental

9. 9
Business model canvas – Customer Relationships
• gives their subscribers a voice to rate what they are watching on
Netflix and recommend movies of interest to other customers. This
provides an element of trust amongst the Netflix community.
• Netflix’s self-service model gives their customers a sense of control as
it is solely up to them what they watch
• They have a customer service and technical support line which is 24
hours. They also have an online form which customers can submit
when they require support.

10. 10
Business model canvas – Revenue Streams
• Netflix main source of revenue is from their online streaming membership
which comes in three different price levels.
• They also earn revenue from their DVD postal service which is only in the US
• With their Netflix original content they also make revenue on product
placement
• Also they earn revenue from print advertising on their DVD postal packaging

11. 11
Business model canvas – Key Resources
Netflix key resource are
• Physical - Netflix has a top-quality streaming IT infrastructure,
warehouses, offices, storage facilities and machinery to enable their
shipping side of the business model.
• Intellectual - To protect their strong brand Netflix use a combination of
patent, trademark, copyright and trade secret laws and
confidentially agreements to protect their intellectual property
• Human – Netflix have over 3700 employees which make their business
operate on a daily basis which includes CEO and co-founder Reed
Hastings
• Financial – Netflix revenue stream earns them a large amount of cash
which is key to keep funding their operating. Netflix also floats on the
stock market which is another source of finance which enables them to
continue their expansion plans.

12. 12
Business model canvas – Key Activities
• maintaining its online platform to ensure it its performing to a
high standard
• creating and acquiring new content to add to its online and
physical catalogue
• ensuring its key partners, vendors, operational functions
and human resource are meeting SLA’s and strategic
objectives
• continuous training, innovation and service improvement
activities to support problem solving scenarios

13. 13
Business model canvas – Key Partnerships
• Netflix have agreements with various cable, satellite and
telecommunications operators to ensure their service is
reliable and available for their customers.
• Netflix also partner with such high profile television
networks and motion picture studios such as FOX and
Universal

14. 14
Business model canvas – Cost structure
Incoming - Netflix has a fixed price cost model which they have raised in
increments over the years. As previously stated they earn other elements of
their revenue from advertising but the majority of their revenue comes
from their subscription fees.
Outgoing - As a business they would have a number of their own fixed and
variable costs to pay out such as wages, delivery costs, property rental,
machinery costs, electricity, packaging, Tax’s, content acquisition, data
warehousing storage, IT costs etc.

15. 15
Conclusion
Netflix saw a gap in the market and created a business
model to sell their service.
Then continuously innovated its model to adapt to the
ever changing environment around it.
Their expansion plans are risky but there financial
return on investment is the evidence to prove that
their strategy has been a success.

16. 16
• Alexander Osterwalder, 2013. Business Model Generation: A Handbook for
Visionaries, Game Changers, and Challengers. 1 Edition. Wiley.
• Netflix, 2015 Annual report, Available at https://ir.netflix.com/annuals.cfm
[Accessed on 06 November, 2016]
• Investazor, The Netflix Saga, Part 1: Understanding the Business model, Available at
http://investazor.com/2013/11/15/netflix-saga-part-1-understanding-business-
model [Accessed on 06 November, 2016]
• I Know first, Netflix SWOT Analysis: What is there to come in 2016?,Available at
https://iknowfirst.com/netflix-swot-analysis-what-is-there-to-come-in-2016 [Access
03 November, 2016]
• EBSCO Publishing Firm,(2016), Netflix Inc. SWOT Analysis, Available at
http://www.marketlineinfo.com [Accessed 03 November, 2016]
• Unicorn Economy, How does Netflix make money, Available at
http://unicornomy.com/how-does-netflix-make-money-business-model
[Accessed on 08 November, 2016]
References