Netflix Presentation

Kristie Genoway, Tyler Massie, Carson Toy, Eden Watson, Alyssa Watt

Strategies:

Then, Now, and Beyond

MGMT 5333-001

CONTENTS

• History • Strategic decision

online content streaming

• Environment and Industry• Internal resource analysis• Recommendations

for sustained competitive advantage

HISTORY

• Began operations through mail distribution of DVD’s

• Goal: provide entertainment content to consumers cheaply and effectively

HISTORY

HISTORY

• Implemented online streaming of content in 2007

• Multiple non-equity alliances • Similar corporate culture to Google• Difficulties managing business and

corporate level strategies

STRATEGY

Business Level• Switch from mail distribution to online

streaming• Incorporated streaming costs into pre-

existing subscription packages• Many restrictions for customers

STRATEGY

Business Level• Implemented unlimited online streaming• Created sustained competitive advantage

STRATEGY

Corporate Level• Licensing and distribution agreements• 2008 contract with Starz Entertainment• 2011 partner became competitor• 2011 vendor contracts with Dreamworks,

Paramount, Lionsgate, MGM

ENVIRONMENT

LegalEconomic

Technological

Political

External Environment

INDUSTRY

• Entertainment content provider• Business lifecycle: Growth stage• Trends

Streaming Mobile devices Personalized

5 FORCES

• Threat of entry: low-moderate Large capital costs Extensive network development

• Threat of rivalry: high Slow industry growth Lack of product differentiation

5 FORCES

Competitors:Comparison of ‘200 Top Titles’

Amazon offers 73/200Hulu Plus offers 27/200Netflix offers 200/200

5 FORCES

• Threat of substitutes: high Wide array of entertainment options Low switching costs to substitutes

• Threat of suppliers: high Limited access to content Bottom-line challenges

5 FORCES

• Threat of buyers: low-moderate Low subscription fees Large number of individual buyers Buyers unlikely to conglomerate

• Overall: Expect profits to be slightly above average Will be difficult to develop sustained

competitive advantage

VRIO ANALYSIS

BRAND

• Valuable Yes

• Rarity Yes

• Imitability Yes

• Organization Yes

Result: Sustained advantage

CEO

• Valuable Yes

• Rarity Yes

• Imitability Yes

• Organization Yes

Result: Sustained advantage

PRODUCT DIFFERENTIATION

• Valuable Yes

• Rarity Partial

• Imitability Yes

• Organization Yes

Result: Parity / Temporary Advantage?

CONSIDERATIONS

• Strategic alliance with movie theatres• Acquisition by larger players• Discounted rates for data providers• Distribution regulations

RECOMMENDATIONS

Business Level Strategy:Improved product differentiation

• Movie trailers• Further integration of movie-match

algorithms• Managed in tandem with corporate level

strategies (risk)

RECOMMENDATIONS

Corporate Level Strategy:Backwards integration with media

production companies

• Binge viewing• Achieves product diversification• Go beyond cash financing

(House of Cards, Arrested Development)

RECOMMENDATIONS

Corporate Level Strategy:Develop partnership with data plan providers

• Discounted rates for data usage• Lobby against data caps• Provide higher quality streaming

IN CLOSING

• https://www.youtube.com/watch?v=YgaeNJDnS0w