NETFLIX CONSULTING PROJECT The Battle to Control Entertainment in the Living Room Kris Chamrernlaksa, Tysen Cole, Eric Le Duc, Teo Tertel
Jun 14, 2015
NETFLIX CONSULTING PROJECTThe Battle to Control Entertainment in the Living Room
Kris Chamrernlaksa, Tysen Cole, Eric Le Duc, Teo Tertel
Agenda
• Introduction• Problem Definition• Industry Analysis• Competitive Analysis• Consumer Analysis• Recommendations
Introduction
• Launched in 1998 by CEO Reed Hastings• Originally very similar to brick and mortar• Patented its envelope delivery system and
business model• Launched ‘Watch Instantly’ in 2007• Today: More than 16 million subscribers
Problem Definition
• Who is Netflix’s biggest competition?• How should Netflix respond to competitors?• What do customers like/dislike about Netflix?• How can Netflix convert its DVD-by-mail
customers to streaming users?• What should Netflix’s future strategy be?
Industry Analysis
• Drivers– Distribution Channels– Platforms– The Internet– Consumer Behavior
Industry Analysis
• Trends– Automation– Physical Stores– Complementing Hardware & Software– Instant– No late charges
Industry Analysis
• Porter’s Five Forces– Supplier Power: High– Buyer Power: Strong– Threat of New Entrants: Low– Threat of Substitutes: High– Competitive Rivalry: Intense
– Complementors: Favorable
Competitive Analysis
Competitive AnalysisCURRENT COMPETITORS
Pricing Plan Archive(TV shows/Movies)
Interesting Fact
$7.99/Month, Stream$9.99/Month, Mail
100,000 20 % of bandwidth during peak hours
$7.99/Month TV Show Episodes Full Series Runs but still watching ads?
$.99 - $1.99/TV show$4.99-$9.99/Movie
75,000 Disc+ On Demand digital copy
$4.99 ($1+ HD)/ 2-day Rentals
100,000 1st TV provider with mobile app manager
$1.99 - $3.99/Rent$7.99 - $15.99/Buy
95,000 Viewable on 100 different devices
$3.99 - $4.99/Rent$7.99 - $17.99/Buy
25,000 Comcast cable box subscription= Free?
$2.99 - $3.99/Rent$9.99 - $19.99/Buy
10,000 Download content using BestBuy.com
$4.99 - $5.99/Rental,Subscription plans
400 new releases 4,000 TV shows and movies free
Competitive Analysis
FUTURE COMPETITORS
Pricing Plan Archive Interesting Fact
Free 400 Full-length movies
2 billion people watching videos each day
Rentals:$.99/TV Show $3.99-$4.99/Movie
Extensive collection Access to Netflix, iTunes, and YouTube
Free (commission on ad sales)
Collaborating with Studios/TV networks
Netflix available on Google TV, Android Remote Control
Subscription TV shows (new/old) and movies
Bundled with Amazon Prime
$3.95/Monthly unlimited streaming
200 new releases 1 billion DVDs rented
Consumer Analysis
• To learn about Netflix consumers– Usage and perceptions of ‘Watch Instantly’– Detractors/Enticers of ‘Watch Instantly’
• Questionnaire in– Supplemented with personal interview data
• Survey link distributed in team networks– Contacts, Facebook, Class forum– Netflix Community forum, Netflix Topix forum
Results
• Balanced Sample, 51 responses– 43.5% Male, 56.5% Female– 61.7% of ages 26-35– 82% from CA, 80.9% have at least a Bachelors Degree– 91.5% have adequate internet connections
• Key Findings– 82% have used ‘Watch Instantly’– ‘Good Quality’ ratings, avg 4.17 of 5– Attracted to convenience, Detracted by lack of content– Average user streams 12 times per month– Average users rents 5 DVDs per month– Average users rents less than 1 Blu-Ray per month– 29% are willing to pay $10 premium for earlier releases
Categories of Adopters
Conclusions
• Most subscribers have used ‘Watch Instantly,’ and they use it a lot
• Nearly all subscribers have a capable device and internet connection
• Subscribers like the convenience and quality of ‘Watch instantly’
• Subscribers want fresh content, and nearly 30% are willing to pay extra for it
Kano Map
Recommendations
1. Premium Pricing for New and Early Releases• Content is a “must have” factor• 30% of polled subscribers are willing to pay more• Survey current customers
2. New Content• Current season television programming• Leverage existing relationships• Video games
Recommendations
3. Cross-Promotions and Referrals• Airlines and airports• Streaming-capable devices• Scholarships to film schools and contests• Customer referral program
4. Converting DVD Users to Streaming• Only 5.28% of existing subscribers are unaware of
‘Watch Instantly;’ Laggards• Grow overall user base
THANK YOU!
Any questions?