Chris  Helvajian,  Katie  Irvine,  Vas  Kypreos,  Armen  Sarkisian  &  Charles  Vickery  

Company  History  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - Tows

Founded  by  Reed  Hastings  •  1997  •  Los  Gatos,  CA  

DVD-­‐by-­‐mail  • No  late  fees  • Customer-­‐centric  

Keys  to  success  • Managed  to  defeat  Blockbuster  &  Wal-­‐Mart  • Core  values  

Type  of  Company  &  Size  Publically  traded  on  NASDAQ  • NFLX  •  127%  return  YTD  

Strong  operations  •  50  warehouses  with  100,000  titles  each  •  Shipped  2  billionth  title  in  2009  

Culture  •  9  cognitive  skills  •  The  Keeper  Test  •  Freedom  Inc:  “If  you  put  fences  around  people,  you  get  sheep”  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - Tows n d -

Markets  Served  Some  Facts:  -­‐  14  million  subscribers  -­‐  97%  live  within  1  day  delivery  zone  -­‐  Uses  “The  Long  Tail  Effect”  -­‐  Streams  to  game  consoles  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

Types  of  Products  &  Services  DVD-­‐by-­‐Mail  -­‐  Movies  -­‐  Television  Shows  

Streaming  to  Game  Consoles  -­‐  Nintendo  Wii,  XBox  

Services  -­‐  Recommendation  system  -­‐  Web  site,  iPad/iPhone  Apps  -­‐  Envelopes  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

Industry  Analysis  

Niche  Web  Sites  -­‐  puritanpicks.com  (Religious),  goflicks.com  (Adult)  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

Market  Share  

Traditional  Non  -­‐  Traditional  

Upwardly  mobile  yet  

entertainment  aware  early  adopter  

Time  availability  offers  this  

consumer  the  most  viewing  opportunities  

Social  TV/movie  watcher,  interested  in  the  experience  of  communal  

viewing  

Describing  the  Customer  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

SWOT  Analysis  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

Subscription  Model   Range  of  content  

Strategic  alignment   Financial  position  

Strengths  

SWOT  Analysis  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

Shipping  costs   Streaming  capabilities  

Distribution  time  delay   Logistical  issues  

Weaknesses  

SWOT  Analysis  

Background - Industry - SWOT - SFAS - Porter’s 5 Forces - TOWS

Apple  iPad  and  iPhone  Streaming  to    game  consoles  

Advertising  on  Netflix  envelopes  

Content  acquisition  of  video  games  

Opportunities  

SWOT  Analysis  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

Competition  from  Redbox  

Competition  from  Mom  &  Pop  shops  

VOD  Programming   Studio  power  

Threats  

Strategic  Factor  Analysis  Summary  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

Risk  Analysis:  Threat  of  New  Entrants  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

Low  

Large  capital  expense  

Complex  logistics  

Streaming  costs  are  

low  

Moore’s  Law  

Risk  Analysis:  Threat  of  Competitive  Rivalry  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

High  

Blockbuster,  Redbox,  

iTunes,  VOD  

Switching  costs  are  low  

Price,  distribution,  inventory  

differentiation  

Competitors  are  aggressive  

Risk  Analysis:  Threat  of  Substitutes  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

High  

Consumer  behavior  treats  each  product  differently  

Passive  entertainment  is  a  social  norm  

Kindle,  iPad,  video  games,  web  surfing  

Interactive  social  media  

Risk  Analysis:  Bargaining  Power  of  Buyers  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

Low  

Tiered  pricing  strategy  

Eliminating  costs  is  not  an  option  

Piracy  

Blacklist  profit  sucking  

customers  

Risk  Analysis:  Bargaining  Power  of  Suppliers  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

High  

Control  delivery,  content,  timing  

Strategic  alliances  in  Hollywood  are  complex  

Litigious  industry  

Firms  offering  VOD  have  close  

ties  with  large  studios  

TOWS  Matrix  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

Strategic  Recommendations:  SO  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

Strategic  Recommendations:  WO  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

Strategic  Recommendations:  ST  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

Strategic  Recommendations:  WT  

Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

Conclusion  

Conclusion  

Questions?