Online Video Distribution: Netflix, Hulu and iTunes
by Hien Le, Alex Fass, Ana Sena and Isaac Rosales
(from the Big Bang to Tomorrow)
1992: Original South Park Short Produced
2007: Netflix switched to Internet VOD
2008: Hulu was launched by Disney, NBCUniversal & News Corp
2014: 1st Golden Globe Award for an Internet show (House of Cards – Netflix)
2016: Season 20 of South Park exclusively distributed by Hulu.
A brief history of TV Streaming
Performance Comparison
50M Subscribers
63% of US Online TV market
6M Subscribers
35% of US Online TV market
800M account.
67% of digital TV download market
Financial PerformanceCompany Market Cap Revenue ROI Profit Margin
Netflix 24.42B 5.5B 7.8% 4.5%
iTunes (Apple)
659.21B 18.07B (182.35B)
26.2% 21.6%
Hulu(Private)
Est. 2B Est. 1B N/A N/A
Netflix’s Resources• Company Culture & HR approach
• Marketing Strategy
• Relationship with Content Providers
• Relationship with Device Manufacturers
Company Culture & HR Approach● Act in Netflix’s best interest:
o Rely on your own logic and common sense
o Don’t rely on formal policies
● Eliminate formal performance reviews
● Managers build their own teams
● Leaders build company culture
● HR should think like business people
Marketing Strategy● Customer service
● Customer guarantees
● User friendly website
o Category Search
o Optimized content suggestions
● Clever advertising
Relationship with Content Providers● Revenue Sharing Agreement
● Profit sharing
● Netflix to pay-per usage
● Lower overhead on content
Relationship with Device Manufacturers● Netflix-Ready Devices
● Automatically launch
● Netflix button with logo
Hulu’s Resources● User Base
● Content Supplier Relationships
● Quick Release Window Access
● Big Data
Exclusive Content • Revenue Sharing
Next Day Availability
Big Data: Hulu Originals
Big Data: Swappable Ads
● What is EST? o Transactional o Ownership o Downloadable
● iTunes as a Digital Media Collection o Establishment of EST originally as iTunes Music Store, launched 2003 o Own music and take it with you o Value-added incentives dealt blow to music pirating o Replacement of physical media collection with digital collection
iTunes: The EST Model
iTunes: Resources● The Apple Ecosystem
o Brand loyalty leads to ownership of multiple Apple Devices
o Hardware and software integrated with iTunes
● Quality and Quantityo Wide selection and downloads stay
even if media is pulledo Streaming by temporary download
● Other Advantageso Season Passo iTunes Extraso Early/Concurrent movie releases
Recommendation
EST Original Content• Original Programming
• Electronic Sell Through
Conclusion