How can Netflix improve its growth strategy?

KLC Consulting

Louise Kendaru, Nathalie Kauz,Ashley Claw, Arbre’ya Lewis, Trent Large

The online movie market in the U.S. is an

$11 billion industry.

Source: http://selectusa.commerce.gov/industry-snapshots/media-entertainment-industry-united-states.html

This industry targets a ‘mass market.’

It is a highly competitive industry.

There are a number of key players in this industry.

Through online services they disruptively innovated the movie rental industry.

Netflix created this streaming market and became its leader.

Overall, Netflix has been very successful.

Netflix has been expanding internationally.

To deliver their content, their strategy is to build the infrastructure, rather than buying

access to pre-existing infrastructure.

Their ‘build’ strategy has incurred huge debt.

Expansion in 2011 caused their 2012 profit to plummet.

After expansion into Europe, profit increased.

Why is this?

Foreign cultures react differently to American content.

Building global infrastructure costs significantly more than buying.

Building is a high risk strategy when the country’s reaction to Netflix is uncertain.

We recommend buying before building to gauge market reaction before investing in.

infrastructure.

Netflix should build if and when their service is well

received

Netflix has high risk “build” strategy to

expansion

It is unclear how different geographical markets will react to

their service

A “buy” strategy when entering a geographical

market will limit risk

Any Questions?

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