1. Netflix
Lauren J. Uphouse
November 5, 2012

2. CLICK Analysis
Online movie rentals; receive & return thru mail; no late fees.
Movies, flexibility, convenience, technology.
Lives of consumers keep getting busier. Provides a convenient way
for them to rent movies without having to worry about traveling to
a store, due dates, or late fees.
Busy consumers who rent movies.
Obtained a Masters of Computer Science from Stanford University.
Founded a software company, “Pure Software”, and grew it to be
among the 50 largest software companies in the world.

3. SWOT Analysis
Strengths Weaknesses
• Brand recognition • Older titles
• Producing original TV series ex: House of Cards, • Expired contracts with Sony & Stars, resulting in
with prominent actor Kevin Spacey lost videos
• Extensive customer data on file • Lost video provider EPIX to Amazon.
• DVD rental cost so low that competitors don’t • Competition has more money
bother trying to emulate that part of their • Damaged reputation after attempting to increase
business. fees and separate DVD & streaming video
• App is on all platforms – even the Kindle (device memberships.
made by competitor Amazon) • Revenue is still rising but streaming & subscribers
• Partnered with start-up eyeIO as their 1st are slowing = growth is slowing.
customer – using their encoding technology to
lower bitrate of their HD video streams, which
helps them in the mobile market
Opportunities Threats
• Collaborate with well-known actors to create • Competitors offering streaming video and bidding
more original series for exclusive rights ex: Amazon, HBO, TV networks
• Bid for more popular TV titles • Competitor partnerships (ex: Amazon & Epix)
• Target/market to kids & young adults • Higher licensing costs
• International expansion • Biggest competitor, Amazon, now developing
• Partner with companies to develop Netflix original programming
programs specific to their platforms that will come • Streaming video increasing; DVD rentals
pre-installed on all their devices decreasing
• Partner with cable & gaming companies to be an • Movie & TV industry less willing to make exclusive
on-demand option for video & games. deals with online video services.
• AppleTV Partnership • EPIX provides Disney videos to Amazon; Disney
recently acquired Lucasfilm (& entire StarWars
franchise).

4. Competitor Analysis

5. ADVANTAGES DISADVANTAGES
 Customers rent DVDs thru mail;  Shipping costs for DVD rentals.
Redbox – Must rent from kiosks.
 Redbox has newer titles.
 More older titles.
 Redbox offers video game rentals &
 Offers streaming video service. event ticket printing.
 Offers TV shows  Customers must make a commitment
to use service.
 Low monthly subscription costs & no
late fees attractive to customers;  Can’t profit from long-term
Redbox – DVD rental fee $1/day. rentals/late fees.
 Website has a more advanced  Customers must wait to receive DVDs;
customer rating & recommendation Redbox – Can get DVDs same day.
system.
 Company as a whole has more
 Developing original content. competition.
 More partnership opportunities.

6. ADVANTAGES DISADVANTAGES
 More titles; DVD rental service.  Charges fee for all content. Hulu.com
offers limited content for free & offers
 No ads/commercials in video content.
more content thru Hulu-Plus for
Hulu-Plus – Most videos contain ads.
$7.99/month.
 Content available on all devices.
 Older titles. Hulu offers current TV
Hulu currently doesn’t have rights to
shows – new episodes available day
make all of their video content
after airing.
available on all devices.
 No social media integration.
 Customer recommendation system.
 Developing original content.
 Available on more devices.
Hulu.com – PC environment only.
Hulu-Plus – Accessible on fewer
devices.
 Available in more countries.

7. ADVANTAGES DISADVANTAGES
 More titles; DVD rental service.  AmazonPrime membership includes
free 2-day shipping & instant access to
 Monthly subscription that can be
e-books (on Kindle).
canceled/frozen any time.
Amazon Prime - $79/year, paid in full.  Revenue only from video services.
Amazon – Business model generates
 Higher quality video playback.
revenue many ways.
 Better customer recommendation
 Losing exclusive partnerships with
system, user interface & organization.
online video distributors, some
 Growth of international expansion. directly to Amazon Prime (ex: EPIX).
 Focused solely on video services =
benefit to customers.  Amazon offers additional online
videos, including new movies & TV
 Partnership with Apple; soon possibly episodes, that can be purchased
cable companies as well. individually or as a package and are
accessed from the same location as
Amazon Prime videos.

8. Business Model Canvas
KP Key Partners KA Key Activities VP Value Proposition CR Customer Relationships CS Customer
Segments
 DVD Rent-by-Mail  Free trials/sign-up deals
 DVD Rent-by-Mail Service – Cost so  AppleTV owners
 Apple Service low not worth  Convenient sign-up thru
competing many devices  Owners of
 RADius-TWC  Online Video  Pre-installation on Windows 8
Streaming Service  Extensive customer devices devices
database, 10+ years
deep.  Aggressively working to  Adults, families,
 Twentieth improve content & kids
Century Fox  Original content playback quality
KR Key Resources  Partnership with  Recommendation  Benefits from
System
 Hasbro Studios  Experience of Apple; soon long tail: Classic
Management & possibly cable TV/Movies,
Board of Directors companies
 Warner Bros CH Channels Documentaries,
 Stockholders  Accessible on Adult Animation,
greater number of  Online, print, & direct
 Stakeholders, devices mail marketing Stand-Up
 Extensive customer
database  Pre-installation on Comedy,
such as Carl  Advanced
technology for devices Romantic
Icahn, & their better quality video  Gift subscriptions Comedies,
affiliates playback
 Offers to friends/family Action/Sci-Fi
of members
R$ Revenue Streams
DVD Rent-by-Mail Plans (per month)
C$ • 1 DVD: $7.99 or $9.99 with Blu-Ray
Cost • 2 DVDs: $11.99 or $14.99 with Blue Ray
Structure • 3 DVDs: $15.99 or $19.99 with Blue Ray
• 1 DVD (2 max per month): $4.99 or $5.99 with Blue Ray
Video Streaming Plans (per month)
 Unlimited: $7.99
 Limited: $4.99
FIXED PRICING STRATEGY; FREE TRIAL OFFERS

9. Alternative Business Models
Bundle Customers Partner Develop
services sign up for with gaming “HBO
with pay-tv service companies quality”
packages. directly on to offer on- original
Less money from AppleTV & demand content.
more customers = pay through video game Lure & retain
Revenue boost
Less competition
iTunes. services. customers with
content that’s
= Lower licensing Reach more New customer untouchable by
fees customers = segment = competitors =
Revenue boost Revenue boost Revenue boost

10. References
Roettgers, J. (2012, February 01). Eyeio: Netflix's secret weapon against bandwidth caps?. Retrieved from
http://gigaom.com/video/eyeio-video-encoding-netflix/
Martin, S. (2012, October 12). Netflix rivalry with amazon heats up. USA today, Retrieved from
http://www.usatoday.com/story/tech/2012/10/11/amazon-netflix/1621579/
Bedigian, L. (2012, October 31). Netflix lost star wars 13 months ago. Retrieved from
http://community.nasdaq.com/News/2012-10/netflix-lost-star-wars-13-months-ago.aspx?storyid=185982
Holmstrom, M. (2012, October 31). Why you should not buy netflix. Retrieved from
http://seekingalpha.com/article/964251-why-you-should-not-buy-netflix
Warren, C. (2012, March 09). Netflix's apple tv deal could signal new business model.
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www.netflix.com
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