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Moujoud Ahmed, Plaisant Antonio, Puleo Camilla, Ricca Edoardo

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Introduction

Worldwide Vod market

Netflix global and US

Company history

Vision and mission

Revenues

Profit

Sales volume

Brand portfolio

Service value chain

Vertical integration

Responsability and sustainability

SWOT analysis

Netflix’s success

Future strategy

Around Netflix 1

Around Netflix 2

R&D

References

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▪ Video Streaming (SVoD) : Subscription-based Video-on-Demand services. Payment for annual or monthly subscription.��▪Video Downloads (EST) : Video content that is purchased and downloaded in a one-time transaction ��▪ Pay-per-View (TVoD) :Transactional Video-on-Demand services or Pay-per-View offers. Access to the premium content is available only for a limited time period.�

WORLDWIDE VoD MARKET

74.1%

TOTAL	32,731
SVoD	24,248
EST	4,293
TVoD	4,189

PERIOD	VoD	SVoD
2017-2019	11.8 %	10.2%
2019-2024	24.4%	21.9 %

Revenues in milions us $

GROWTH %

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NETFLIX GLOBAL AND US MARKET

49.9 %

13.9%

Due to a constant market growth and a positive economic profit more and more corporations are entering the market of SVoD.

However Netflix still leads the market with a market share of 15.6%. According to Digital TV Research in 2025 Netflix will still have the lead but the competition is high and Netflix has to keep its revenues constant since the relative market share with Amazon Prime Video is only 1.12

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THE PRICE INCREASE

Netflix is currently the leader in this market segment. Due to increases in costs and investments Netflix increased its subscription price by 18%. This decision is a double-edged sword that on one hand caused a subscriber growth slowdown. On the other hand this manuvre led to an increase in revenue and in addiction Netflix subscription’s price corresponds to 1/3 of the demand for VoD

ECONOMIC

AROUND

NETFLIX

POLITICAL AND LEGAL

CENSORSHIP

The theme of censorship became more and more relevant as the firm increased its size expanding its services worldwide. Different policies, regulations and laws forced Netflix to censor some of its major and minor contents in Vietnam, Germany, Saudi Arabia, Singapore and others leading to a partial decrease of the growth rate in those states.

In some countries like China, North Corea and Crimea Netflix is banned by the US government

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Socio-cultural

CORONAVIRUS PANDEMIC

The pandemic caused by COVID19 completely changed consumers habits and lifestyle. The quarantine is expected to increase Netflix’s revenue in both short-run and long-run. Even if SVoD is not the sector that’ll experience the greatest growth, Netflix increased its subscriptions in the short-run and , since people will try the service offered by the firm, also in the long-run

Technological and environmental

RENEWABLE ENERGY

Netflix’s technological development keeps it at the top of the market. However Netflix was recently in the spotlights due to the huge amount of carbon emission caused by data traffic. The company has already switched its entire direct energy supply to renewable energy and is now trying to convert also the energy from its partners

AROUND NETFLIX

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Company history

1997: Netflix is founded

1999: Subscription based model

2002: first public offering

2007: streaming is introduced

2009: Netflix is available across almost all devices

2012: Netflix launches in Europe

2016: Netflix is available worldwide

2019: 37% of internet users use Netflix

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VISION

To be the world’s leading internet entertainment service

MISSION

We want to grow our streaming membership globally in doing so we are strive to improve our subscribers’ experience, focusing on improving the user interface, increasing the number of streaming devices and by having a good mix of content

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Revenue

UCAN

10.05 B

International market

20.16 B

(in millions of USD)

EMEA

5.54 B

LATAM

2.80 B

APAC

1.47 B

FY 2019 SALES:

2019:

Sales growth in value + 27.62%

Sales growth in volume + 5.53%

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Profit

(in millions of USD)

2019:

Profit decreased in the third to the fourth quarter of 2019 due to heavy spending on content and marketing.

EPS (in USD)

ROI

Debt to equity ratio

2012:

While consolidated revenues for 2012 increased due to growth in streaming subscriptions, operating income and net income both declined reflective of increases in both cost of revenues due to streaming content investments and marketing to support our launch into new international markets.

Profit to sales

(in percentage)

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Sales volume

APAC

16,233

EMEA

51,778

UCAN

67,662

LATAM

31,417

Target market:

The target market includes people of both genders between the ages of 17-60. The product is aimed at the lower-middle class and up, more precisely at households with an income level of more than $30,000. Netflix wants to meet the needs of people who are too busy to go out to buy their favorite titles and it offers a variety of foreign and international films that appeal to many ethnic groups.

The company also provides a service of DVD delivery for those film lovers who are frequent movie renters.

Netflix allows people to make the most out of their money, watching unlimited content at a fixed subscription fee

2019:

The decision to set higher prices at the beginning of 2019 led to a decrease in the growth of the number of subscribers both in the domestic and international market. However this increase in prices boosted the average revenue per subscriber by 16%, which will finance future investment to reinforce the value proposition of the company.

32%

41%

27%

Countries entered:

190

Employees:

8,600 full-time workers

(In millions)

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International

streaming

Domestic

DVD

Relative market share

Market growth

Netflix portfolio

Business units:

Domestic streaming
International streaming
Original content
Domestic DVD

BCG matrix

Domestic

streaming

Domestic streaming

Market share - high

Market growth - low

International streaming

Market share - high

Market growth - high

Domestic DVD

Market share - low

Market growth - low

Original

content

Original content

Market share - low

Market growth - high

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Service Value chain

A good technology for a good service

Learn to learn (R&D)

Cable tv, a traditional way of watching tv:

Over time cable tv, became more expensive and less exiting, since they had too much channels and nothing really interesting to watch.

ISSUES

Lack of possiblity for binge-watching
Low care of consumer experience

SOLUTION

Streaming video (Binge culture) :

Instead of airing episodes weekly you can consume an entire season in one go at a high quality, satisfying your content creator and your users

EXECUTION

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Vertical integration

Netflix ,the second evolution , from streamer of content to creator of content.

Shepperton studios,UK

03 july 2019

Multi-million dollar investment

“It turns out that not all interesting stories come from Hollywood”

LA CASA DE PAPEL, the most watched non-English language show worldwide.

Albuquerque,mexico

8 october 2018

Madrid, spain

24 July 2018

An investment of 1B

Emmy-winning Western series: “Godless”, “Longmire” “Chambers”etc..

Albuquerque was also one of the location of THE AVENGERS (WALT DISNEY STUDIOS)

Investment of 10,3B

Netflix’s UK Original titles include Black Mirror

Documentary series including Our planet

Known for a lot of movies as STAR WARS of DISNEY

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Research & �Development

Machine learning:

They use it to personalize content and enhance user experience (A/B test)

Reach more segments that are not satisfied from other entertainment companies that don't have all this information of data (Market development by ANSOFF MATRIX).

Recommendation:

80% of what peopel see comes from algorithm reccomendation.

Different languages in different country for different culture.

Understanding the taste of consumers in order to predict what they could like and what not (Deep learning )

Encoding:

Responsible for generating the video stream

Neflix users watch it in a wide variety of devices (improvment of compression video research )

Delivering videos around the world (not every member (different countries different environment) of the neflix community have high bandwidth)

Experimentation:

All their ideas are tested in order to make sure that data, not opinion (on what users should like),is used to make decisions.

Every netlfix user is on everage in 20 experiments, and each one has three different variants,with a tot amount of 3,5B experience (each consumer has a unique netflix experience)

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Responsibility

Sustainability

Netflix culture

In order to take care of all the employees inside the company netflix created a unique culture where the workers are encouraged in their growth inside the company, with power to act and a good environment where you learn to take responsibility of your action.

Blind an app that provides an anonymous forum and community for verified employees to discuss issues, noticed that 86% of those who were working at Netflix were happy.

Netflix and happy employees

CULTURE INSTEAD OF CONTROL

RESPONSABILITY

TAKE YOUR OWN DECISION WITHOUT TOO MUCH BUREAUCRACY.

SELF-DISCIPLINED PEOPLE WHO DISCOVER AND FIX PROBLEM.

HIGH SALARY

RETAIN THE BEST EMPLOYEES.

REAL VIRTUES

COMPANY‘’S VALUES MUST BE NOT ONLY GOOD BUT BE TRUE

DIRECT

INDIRECT

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