Free Essay

Netflix

In: Business and Management

Submitted By bjzent
Words 2224
Pages 9
Netflix

Rebecca Zent

Managerial Finance

December 15, 2015

Company & Industry Overview
Netflix is the world’s leading Internet television network with over 69 million members in over 60 countries enjoying more than 100 million hours of TV shows and movies per day, including original series, documentaries and feature films. Members can watch as much as they want, anytime, anywhere, on nearly any Internet-connected screen. Members can play, pause and resume watching, all without commercials or commitments.
The DVD-by-mail is where DVD’s and Blue-ray disks are sent via permit reply mail. The company was established in 1997 and is headquarters are in Los Gatos, California. It started its subscription-based service in 1999. By 2009, Netflix was offering a collection of 100,000 titles on DVD and had surpassed 10 million subscribers. People love TV content, but they don't love the linear TV experience, where channels present programs only at particular times on non-portable screens with complicated remote controls.
Linear TV was a huge advance in entertainment over radio, just as fixed-line telephone was an advance in communications over the telegraph. Now Internet TV - which is on-demand, personalized, and available on any screen - is maturing and will eventually replace the linear TV experience.
The world's leading linear TV networks now offer their programming on-demand through apps that run on phones and smart TVs. These apps, such as CBS All Access, BBC iPlayer, and HBO Now, enable binge viewing and catch-up viewing. Existing linear networks that offer compelling Internet TV apps will generate more viewing and become more valuable. Those networks that fail to develop first-class apps will lose viewing and revenue.
Internet TV is expanding rapidly because of:
• Ecosystem Growth: The Internet is getting faster and more reliable, while penetration of smart TVs and adapters is also rising
• Freedom and Flexibility: Consumers can watch content on demand, on any screen, and the experience is personalized to individual tastes
• Rapid Innovation: Internet TV apps have frequent improvement updates and streaming is the primary source of UHD 4K video content.
Eventually, as linear TV viewing falls in viewing and value, the spectrum it now uses on cable, fiber, and over-the-air will be reallocated to expand Internet data transmission. Satellite TV subscribers will be fewer and more rural. In a few decades, linear TV will be seen as a great transitional technology that gave way to Internet TV, like fixed-line telephone gave way to the mobile phone.
SWOT Analysis
Strengths
* Netflix is the leader in market share of online rentals. * Netflix went into the marketplace for DVD leasing at a point in time while there were hardly any other contestants in the marketplace, permitting them to set up their product given name and image for providing an inimitable tune-up. * Netflix has low fixed costs. * Netflix has the world’s largest selection of DVDs * Netflix was the primary to proffer DVD leasing through mail and this permitted them to proffer a superior assortment of DVD’s to clients as evaluated to their participants at the time, as DVDs were comparatively new-fangled to the marketplace. * Netflix has the fastest delivery time of any online DVD rental company. * Netflix has a quick service: over 90% of DVD's are received by customers within one day of ordering

Weaknesses * Netflix can't control the most important expense, which is shipping expenses. * The older demographic has a hard time understanding Netflix’s concept. * Netflix’s Watch Instantly feature only allows for a small selection of DVD's * Netflix frequently has problem providing sufficient copies of new, well liked movies from the theaters. * Cost of Content: The cost of mass licensing packages and the in-house original content production has the company undertaking a large amount of debt. * Raising Subscription Prices: Netflix has a difficult time raising subscription prices. The last attempt to raise monthly subscription prices left currently subscribers upset and Netflix stock tumbling * DVD Subscribers: DVD and Blu-ray subscribers have dramatically declined in 2013.

Opportunities * Word-of-Mouth Campaigns: Marketing expenses have steadily decreased due to word-of-mouth campaigns based on original content. * Distributing movies directly to computers of clients is possible to be the after the uprising in how customers watch movies in their homes. * International Expansion: The ability to create original content will enhance international growth. * Expanding to Video Game rentals or educational videos.
Threats
* The rising cost of postage. * Content Price: The price of licensing and renewing those license agreements remain to be the largest threat to the company’s ability to operate at a profit. * Competition (Amazon Prime, YouTube): Both, Amazon Prime and YouTube has announced their own original content productions and aim to be a direct competitor to Netflix. * Redbox * Blockbuster allowing the rental of games in addition to movies * Netflix often has trouble providing enough copies of new, popular movies. * Google already owns YouTube, which it has successfully monetized. Google has also put the industry on notice that it plans to add premium content channels, having forged deals ranging from the Hollywood elite to the Wall Street Journal. The company has put a $200 million arrow behind the venture and could easily pull eyes away from Netflix.
Ratio Analysis

Financial Analysis
Global membership grew 3.62 million to 69.17 million members compared to prior year growth of 3.02 million, and a forecast of 3.55 million. Operating income was $74 million, compared to prior year of $110 million and a forecast of $81 million. Seven quarters ago Netflix moved to providing their internal forecast for the quarter ahead. Netflix strives for accuracy in this projection and, when it comes to global net additions, Q3 was their most accurate to date: they were within 2% (3.62 vs. 3.55) and within 10% on operating income ($74m vs. $81m).
While global growth was as they expected, their forecast was high for the US and low for international. They added 0.88 million new US members in the quarter compared to 0.98 million prior years and a forecast of 1.15 million. Our over-forecast in the US for Q3 was due to slightly higher-than-expected involuntary churn (inability to collect), which they believe was driven in part by the ongoing transition to chip-based credit and debit cards. In terms of US net additions, through the first nine months of 2015, they are slightly ahead of the prior year, and are expected to finish 2015 at about 2014 levels. This would mark the 4th consecutive year they’ve added about 6 million members in the US.
Netflix’s US contribution margin in Q3 expanded 375 basis points year over year to 32.4%. This was inclusive of acceleration in the amortization of some of their licensed content. The effect of this change was a $13 million decrease in US streaming contribution profit in Q3. For Q4, Netflix anticipates 1.65 million US net adds and US contribution margin of 34.0% vs. 28.0% in the year ago quarter. Netflix continues to target a 40% US contribution margin by 2020.
International net added growth totaled to 2.74 million compared to 2.04 million in the prior year and a 2.40 million forecast. Excluding the impact of foreign currency ($96 million on a year over year basis), international ASP improved 6% vs. Q3 ‘14, helped by plan mix. In August, we raised our high-definition 2-screen monthly price plan in Europe by one Euro without negatively impacting growth.
International contribution losses will grow sequentially in Q4 as they launch Spain, Italy and Portugal. They have announced their expansion to South Korea, Hong Kong, Taiwan and Singapore in early 2016. Their plan remains to run around break-even through 2016 and to deliver material profits thereafter.
They increased prices in several countries including the US, to improve their ability to acquire and offer high quality content, which is the number one member request. The US pricing is now $7.99 for our standard-definition 1-screen-at-a-time plan (unchanged), $9.99 for our high-definition 2-screen plan (up $1), and $11.99 for ultra-high-definition 4-screen plan (unchanged). Members who were paying $8.99 for the high-definition plan are grandfathered at that price for one year.
Free cash flow in Q3 totaled -$252 million, down from -$229 million in Q2, due to the working capital intensity of their investment in originals, which results in higher cash spent upfront relative to content amortization. Investing in originals remains the right strategy for Netflix. Exclusive first-window “only on Netflix” content differentiates their service, allows them to leverage their global platform, reduces their dependence on third parties, and adds positive brand halo. Moreover, as more of their content spend is devoted to producing and owning their originals, they are building long term library value.
At the end of Q3, gross debt totaled $2.4 billion, which represents a debt to total cap ratio of about 5%, and they ended the quarter with $2.6 billion in cash & equivalents and short term investments. Netflix is likely to raise additional capital next year to fund their continued content investments.
Compared to its closing price of one year ago, Netflix's share price has jumped by 149.97%, exceeding the performance of the broader market during that same time frame. Although Netflix had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
Netflix's revenue growth trails the industry average of 38.2%. Since the same quarter one year prior, revenues rose by 23.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
The gross profit margin for Netflix Inc. is currently very high, coming in at 84.59%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 1.69% trails the industry average.
Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Internet & Catalog Retail industry and the overall market, Netflix Inc's return on equity is below that of both the industry average and the S&P 500.
Net operating cash flow has significantly decreased to -$195.97 million or 423.43% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Recommendations:
Netflix latest news of using Adam Sandler’s latest film, The Ridiculous 6 which premieres on December 11, 2015, may be just the ticket to make it easiest way to go global for them. The saying goes, if you want it done right, you have to do it yourself. That’s exactly what Netflix is doing. They found great success with the TV shows House of Cards and Orange is the New Black. Netflix is looking to do the same with original films instead of navigating expensive global licensing deals. Netflix maintains that Sandler’s slapstick has the international appeal to make a four-film deal a worthy investment—and that it has the data to back that claim up. “He is one of the most bankable, dependable stars on Netflix around the world,” Sarandos said earlier this week. Any Sandler movie from the last 20 years immediately make the top 10 in any country when Netflix makes it available, he said. If your style of investment doesn’t like a bumpy ride then investing in Netflix isn’t for you. The short-term returns are far from guaranteed to be positive. The stock may set a lot of all-time highs, but it crashes back down in a hurry quite often. Over the past five years, Netflix shares have closed at least 10% higher in a single day on 19 occasions. On the other hand, the stock also fell more than 10% overnight on nine occasions. Many investors prefer a slow and steady climb to higher value, but Netflix stock spends only 6% of its time within 10% of recent highs and lows. The rest of the time, you're looking at dramatic swings -- sometimes up, sometimes down, but almost always wild.
Don't invest money here that you might need to use on short notice. Share prices may dip steeply at any time and don't always recover quickly. That's the nature of the investing game in general, only more so for a volatile ticker like Netflix.

REFERENCES
Netflix; http://ir.netflix.com/long-term-view.cfm
Wikipedia; http://en.wikipedia.org/wiki/Netflix
Greenberg, J (2015, Decmeber); Netflix is Using Adam Sandler to Beat Hollywood and Rule the World; http://www.wired.com/2015/12/netflix-ridiculous-six-adam-sandler-to-beat-hollywood-and-rule-the-world/
Napoli, M., (2014, December) Netflix: A Short SWOT Analysis; http://www.valueline.com/Stocks/Highlights/Netflix__A_Short_SWOT_Analysis.aspx#.Vmrpr2flthE
Davies, R. (2013, May) Netflis: SWOT Analysis; http://prezi.com/6gilut2g6h7b/netflix-swot-analysis/
Stan SWOT Analysis, Wiki Wealth; http://www.wikiwealth.com/swot-analysis:nflx
Market Watch; http://www.marketwatch.com/investing/stock/NFLX/profile
Netflix; Financial Statements; http://ir.netflix.com/financials.cfm?CategoryID=282…...

Similar Documents

Premium Essay

Netflix

...Assignment 1- Entrepreneurship case Netflix 1. Describe the elements of the exchange process as they occur between Netflix and its customers. Netflix allows customers to pick from a verity of subscription plans, then they send out three DVD’s from the top of the customers list. After the customers views the DVD’s, the customer simply sends the DVD’s back to Netflix, and the process repeats itself. 2. Which marketing management philosophy does Netflix subscribe to? Marketing orientation, they focus on what the customer wants; they distinguish themselves in the marketplace by cost, convenience, and service. They listen to what their customers want. They provide superior customer value. They do not have an aggressive sales force; the customer decides to purchase the product. They understand the competition; Wal-Mart couldn’t match their value. Netflix is looking to the future by adding high definition DVD rentals. 3. How does Netflix’s approach to relationship marketing increase customer satisfaction? It increases customer satisfaction, because Netflix can meet needs for customers that other companies cannot. Thus making the customers more satisfied with Netflix. 4. Have you been exposed to Netflix advertising?  If so, did it have a positive or negative effect on you? Yes, I have been exposed to Netflix advertising and to be honest I took the advertising as a positive reaction. 5. Netflix tried a different sales tactic over the......

Words: 296 - Pages: 2

Premium Essay

Netflix

...success of Netflix? Contrast the pricing in relation to traditional Video rental stores and describe how it evolved over time in support of Netflix’s changing business strategy. The pricing strategy had a huge hand on the initial success of Netflix. It used a market-oriented pricing approach and set its price based on analysis and research of the target market. Some of the factors incorporated by Netflix into its pricing strategy that contributed to its success were: i. Rent 3 movies at the cost of one VOD rental ii. Eliminated Late Fees / penalty pricing approach adopted by Blockbuster and other rental stores iii. Transitioned from market-oriented pricing to value-based pricing through the introduction of unlimited rentals iv. Movie recommendations to everyone whether / not they subscribed to Netflix services Netflix captured the market for initial DVD player adopters by providing customers with DVD formats that weren’t available in traditional movie rental stores yet. Netflix offered 3 movies for a month at $17.99 while rental stores offered a single hit movie at $18. The approach Netflix took to eliminate late fees and have a movie with the customer at all times helped Netflix capture market share instantly. As the stocking for DVD’s grew more complex, the pricing remained the same but they provided an unlimited rental policy that greatly appealed to customers that were concerned with late fees and limited rentals. Hence as the market share grew Netflix......

Words: 1480 - Pages: 6

Premium Essay

Netflix

...Netflix is an American company that provides video rental and on demand video streaming by way of either the mail or streaming through the internet. The company was founded in 1997 in Silicon Valley California by Marc Randolph and Reed Hastings. The idea for this DVD rental service came about when Reed Hastings was charged with a late fee when renting a movie and he questioned why he should have a time restriction on how long he is able to rent the movie. In April of 1998, the Netflix website was launched and they developed the concept of unlimited rentals with no shipping fees or late fees. In September of 2002, an article in The New York Times article stated that Netflix had around almost 670,000 subscribers. At the end of 2002, the company had one million subscribers and in 2006 they had close to 5.6 million subscribers. After these first important milestones, the company’s growth became exponential. In the fall of 2004, a consumer filed a class action law suit against Netflix in Frank Chavez v. Netflix, Inc. The lawsuit was due to claims of false advertising in which the company said they provided “unlimited rentals” within a “one day delivery.” Netflix denied making any mistakes within their advertising. A month later, Netflix decided to give anyone who was a member before January 15, 2005, a membership renewal with one free month included. The final settlement came to around 4 million dollars. This caused a change in the Terms of use which went into effect in January......

Words: 1586 - Pages: 7

Premium Essay

Netflix

...A SWOT analysis of Netflix inc Netflix provides agricultural products for farmers in the United States and offers its subscribers access to a library of television, movie and other filmed. Nowdays,Netflix reinvented the home video rental model by employing innovative customer service and new technologies. And this gives the company a serious first mover advantage. The outlook of external market conditions is positive. If Netflix decides to stay and compete it needs to (1) keep innovating to maintain its advantage, (2) use subscriber acquisition momentum and build larger customer base and (3) move fast to plant roots into next-generation models of content delivery based on digital technologies. SWOT Analysis Strengths Relationships with studios. Netflix maintains strategic relationships with studios, which is the basis of its rich catalog. Deep and wide library. Netflix currently offers around 25,000 film titles, (arguably all feature films ever published on DVD) spread over 12+ Million disks. Average depth (number of copies of each film) is 480 copies. Recognizable brand. Netflix is the largest “on-line subscription DVD rental service” in the US. It has a well recognizable brand, which helps in marketing by decreasing customer acquisition costs. Logistical expertise. Launched in 1998, Netflix has developed and fine-tuned its logistical processes for 6 years with the help of internally developed logistical software. Widest delivery network. With 30+ distribution......

Words: 457 - Pages: 2

Premium Essay

Netflix

...Prior to 2008, Netflix had successfully dominated the DVDs-by-mail industry by developing an effective network of distribution centers that made delivery of over 120,000 titles across the United States in one business day possible. In recent years, technology has advanced to the extent that household are rapidly shifting from renting physical DVDs to watching movies and TV shows streamed over the Internet to over 700 different devices. While the company has benefited from a phenomenal increase in the stock price, revenue and the amount of subscribers, a series of strategy changes and new initiatives in July of 2011 led to a downward spiral for Netflix. The major strategic issue facing Netflix is how to recover from its strategic mistakes that resulted in a significant plummet in stock value and revenues, disgruntle consumers and reduced customer loyalty in addition to a whopping amount of canceled subscriptions and deterred potential customers. Not to mention the deterioration of brand image and reduced operating profits. If Netflix does nothing to address the strategic issue at hand, it can be detrimental to the future of the company. In the worst case, in light of the intensely competitive nature of the industry and the oversaturation of movie rental and instant streaming rivals, Netflix may in fact become a thing of the past. Unsatisfied consumers can be very unfavorable to a company when there are numerous substitute services. It is likely that Netflix will continue......

Words: 319 - Pages: 2

Premium Essay

Netflix

...Netflix Iva Flores Excelsior College Business Finance What is Netflix? Is it worth it to gamble your money on this stock? One may wonder should I invest in this company or just walk away. You would have to analyze the company's financial background and ensure they are financial health to invest in this company. To find information on Netflix you would have to search online and look at the stock market websites like NASDAQ, AMEX, and NYSE to review their past financial statements. Netflix is one of the largest leading internet television network company in the world today with over 50 million members in more than 40 countries. Reed Hastings and Marc Randolph started Netflix in 1997. In 2002, Netflix makes its initial public offering of 5,000,000 shares at $15.00 per share on NASDAQ under the tickler “NFLX”. (pr.netflix.com) They started streaming service in 2007 and made it easier for people to watch and enjoy TV shows and movies anywhere, any place, and anytime as long as they have internet connection, TV, computers, and mobile devices. This type of market is very competitive especially with all the changes that are going on in the future. There are many competitors that Netflix has to compete with like Redbox, Hulu, and other companies. Netflix core strategy is to grow their streaming subscription business domestically and internationally. Also, their goal is to expand streaming content, focus on programing an overall mix of context to satisfy......

Words: 720 - Pages: 3

Premium Essay

Netflix

...Netflix Assets We classify our streaming content obtained through a license agreement as either a current or non-current asset in the consolidated balance sheets based on the estimated time of usage after certain criteria have been met, including availability of the streaming content for its first showing. We amortize licensed streaming content on a straight-line basis generally over the term of the related license agreements or the title’s window of availability Content is obtained through direct purchases, revenue sharing agreements and license agreements with studios, distributors and other suppliers. DVD content direct purchases or revenue sharing agreements. Streaming content is generally licensed for a fixed fee for the term of the license agreement but may also be obtained through a revenue sharing agreement. DVD library is its non current asset. The Company amortizes its direct purchase DVDs, less estimated salvage value, on a “sum-of-the-months” accelerated basis over their estimated useful lives. The accounting method for backlog DVD’s was changed after 1994. Our recent survey work suggests that NFLX streaming offering is compelling and should get more so as it acquires additional streaming content. In turn, this is creating a virtuous cycle whereby NFLX sub base grows, leading to greater financial resources to acquire more content to improve the user experience and continue to grow the sub footprint. Additionally we believe DVD costs may fall......

Words: 2677 - Pages: 11

Free Essay

Netflix

...Netflix Case Analysis Key Strategic Issue This article is about the past business history and current business situation Netflix company is in. The case begins talking about how Netflix started with a bang making positive profits and revenues, but has recently hit some trouble due to strategic mishaps negatively affecting the company. The article then begins to describe the industry and various competition within it, and how they do business. There is some information on market trends in home viewing of movies, but most importantly the meat of the article discusses Netflix’s business model and strategy in detail. The one primary problem/key issue facing Netflix is how it will continue to remain the subscription-based leader in the instant movie streaming/DVD delivery industry. There are many rival competitors emerging offering a wide variety of services and options to consumers, and it is important Netflix modifies its business model/strategy and uses its brand recognition/positive traits efficiently. The best-case scenario is Netflix modifies its strategy to once again differentiate itself from competition. Also, it would be ideal that for the global markets targeted to generate massive revenue/profits. The likely scenario is that Netflix will steadily improve internationally, but retain a firm hold of those markets before anyone else has. Also, it is likely that Netflix will remain prominent but will be in tough competition with rivals such as Amazon Prime and......

Words: 1954 - Pages: 8

Free Essay

Netflix

...Netflix strategy has no brick and mortar stores, big stores with a large variety of movies in stock. Netflix relies on the internet for customers’ orders and mail system for the delivery. The company does not have late fees, fluctuating monthly fees, predetermined rental periods, instead has a flat fee. Netflix, allows its customers to view unlimited streaming of movies and TV shows for a monthly fee, and has also developed platforms to deliver its titles for Nintendo Wii, Xbox 360, PlayStation 3, and TiVo. Netflix also supports decks from Panasonic, Insignia, and Seagate, and a number of Android and Apple mobile devices including the iPad. Though Netflix has faced some challenges in previous years because of changes it made to its pricing strategy. Netflix has a strategy that would sustain its competitive advantage for many years to come. Netflix does not have to do or perhaps little marketing to rise to the top of the online marketing. A few well-placed ads will do the trick. Simplicity is the idea, so customers do not feel the pressure. Although, the numerous choices overall, makes Netflix an outstanding company to stay to watch the customer’s preference. During the company's rebranding strategy, there was much confusion with the customers. Some of the customers felt betrayed by Netflix and switched to other services such as, Hulu and Blockbuster. This being said, most of their customers stayed and went along with it. Though they lost some customers during this time, it...

Words: 516 - Pages: 3

Premium Essay

Netflix

...NETFLIX Introduction F.R.I.E.N.D.S! Breaking Bad! And the latest House of Cards episodes! Some of the finest TV shows that I’ve adored and enjoyed for many years. Having one centralized place where signing up and paying 8 bucks or so a month for sitcoms and movies from all production houses is just fabulous! That’s Netflix for me. So how popular is Netflix? Netflix accounted for 34.2% of all downstream usage during primetime hours, up from 31.6% in the second half of 2013, according to reports. That means almost a third of North America was watching some TV series or movie on Netflix between 7-11pm! Business Model and Strategy Netflix is the world’s leading Internet television network with more than 48 million streaming members in more than 40 countries. Starting from a simple DVD by mail model and shifting to online video-on-demand, Netflix has been the pioneer with more than $1.5 billion in digital revenue. Netflix was founded in 1997 in Scotts Valley, California by Marc Randolph and Reed Hastings. Hastings invested $2.5 million in startup cash for Netflix. The so-called “Apple falling” moment of Hastings’s life came when he was forced to pay an exorbitant $40 in overdue fines for returning ‘Apollo 13’ past its due date. That’s where Netflix was born! Learning from his own experiences, Hastings introduced the monthly subscription concept in September 1999, and then dropped the single-rental model in early 2000. Since that time, the company has built its......

Words: 1509 - Pages: 7

Premium Essay

Netflix

...COMPANY CASE Netflix: Disintermediator or Disintermediated? PRESENTED BY: DANIEL RICARDO ORDOÑEZ 201312625 MARIA LUCIA PACHON 201311104 YALILE KATHERIN ROA 201313192 THE SABANA´S UNIVERSITY BUSSINESS ADMINISTRATION MARKETING GROUP 1.2 2015 1. BACKGRAUND Netflix is a company that was created from the need generated by getting movies to watch from the comfort of the house, although at that time the companies who led this market were Blockbuster and Redbox , but to get them you had to approach a local Blockbuster or go a supermarket or store nearby where a dispenser Redbox addition these had a specific time to be returned, if not met you could have a fine is found, Netflix identify these weaknesses in them and became its advantages as well when you wanted to watch a film could access the internet make your Netflix account and solicitabas the list of movies you wished to see them received and send you the movies , these could be the time you wished and return , so Netflix quickly gained the lead. But with technological advancement and different devices that were created Netflix realized that people prefer to search online movies so they should not leave home or wait for them to arrive , so the company decided to create direct platform on which there are not only movies but also get series , plus Netflix decided also be associated with the different technological advances for these Netflix had already built into the device as we see when we buy a......

Words: 2422 - Pages: 10

Premium Essay

Netflix

...Netflix Executive Summary: This paper represents an overall analysis of Netflix (http://netflix.com). Netflix is one of the leading internet television networks with over 62 million subscribers in 52 countries (Netflix, 2015). It provides customers with online streaming for movies, TV shows, documentaries, songs, other digital media, and offers DVD and Blue ray rentals (Wessel). This paper will review the negative and positive points that Netflix is facing in the industry through: 1- Industry analysis (Macro analysis) 2- Competitive Analysis (Porter’s model) 3- Alternative considerations 4- Strategic recommendations Industry Analysis (Macro Analysis) Netflix is focusing on three major points regarding its industry: a- Shifting demographics within the United States b- Expanding its market to other countries like Brazil, Russia, India & China (ResearchOmatic). The shifting in demographics in the United States focused mainly on age distribution and racial diversity (ResearchOmatic). There was approximately 13.5% increase in the population of age 65 or higher, the Hispanic population increased by 15.8%, & Asian population went up to 10% within the years 2004-2008 (ResearchOmatic). On the other hand, Netflix has expanded and still expanding into other countries in the world: “Canada became the first foreign country to have live streaming on demand in 2010. Netflix entered the Dutch market in 2013; Latin and South America and......

Words: 846 - Pages: 4

Free Essay

Netflix

...Netflix Raises Price Again 1) Do you think that the increase in price is going to hurt Netflix? Why or why not? 2) What other options to increase revenues, if any, would Netflix have other than to raise prices? 3) Given the huge customer base of 65 million, has the market saturated? Do you think the stock of Netflix is a strong buy given the growth they have been experiencing, or would this soon bottom out? Please explain your thoughts. Mathew, I think you chose a great topic do to majority of people now-a-days having Netflix, so you will get a lot of feedback and different opinions. My opinions on your questions are followed: I do not think the increase in price is going to hurt Netflix. Like you mentioned, cable along with satellite are quite expensive. I became a Netflix customer earlier this year, and since then I have used Netflix more than our satellite TV. The $1 increase does not bother me, especially since it will not affect me until next year. Nor do I think new customers will be bothered with it. As long as they use that extra revenue to their advantage to be ahead of their competitors and provide more for their customers then their customers will not mind paying for it. It’s obvious that one best way Netflix can increase their revenue other than raising their prices is to add advertisement, however, I believe this would cause a down fall in customers. So possibly taking another route would be best for them. Maybe they can lock their customers in by......

Words: 381 - Pages: 2

Premium Essay

Netflix

...Background Netflix, Inc. is an American provider of on demand Internet streaming media available to North and South America, the Caribbean, United Kingdom, Ireland, Sweden, Denmark, Norway, Finland, the Netherlands, etc. and flat rate DVD-by-mail in the United States, where mailed DVDs are sent via permit reply mail. Netflix occupies a unique place in the media industry - aggregating, distributing, and recently creating its own content through an online platform that lets viewer choose when and where they want to watch television shows or movies. Subscribers pay US $7.99 per month for this right. Its disruptive business model has proven popular among younger users, whose lives are increasingly spent on their personal computers. Online streaming service and DVD delivery service are two main product lines for Netflix. History Netflix was incorporated in Delaware in August 1997 and started its subscription-based digital distribution service in 1999. It made its initial public offering on May 22, 2002 on NASDAQ under the ticker NFLX. Netflix introduced instant streaming in 2007, by 2009 Netflix was offering a collection of 100,000 titles on DVD and had 12.3 million subscribers. In September 2010, they began international operations by offering streaming service in Canada, and now offer streaming service in Latin America, the United Kingdom, Ireland, and the Nordic countries of Finland, Denmark, Sweden, Norway and others. Beginning the fourth quarter of 2011, Netflix......

Words: 1346 - Pages: 6

Free Essay

Netflix

...ST 4 April 5th In 1998, Netflix started an American, DVD- through mail service, where they rented and sold DVD’s one at a time. It was founded by Marc Randolph and Reed Hastings. The company then acknowledged that this business was in very high demand and then switched to a subscription model that would allow a customer to rent a precise number of DVD’s per month. This only lasted six months, when Netflix realized what the customers really wanted was an unlimited subscription model. In 2007, Netflix began streaming movies. Netflix has placed itself as a convenient, great choice of content and affordability entertainment option for customers who are interested in movies and TV-shows. It is now considered one of the biggest provider of streaming movies and TV-series. In 2013, Ted Sarandos, Netflix’s Chief Content Officer told GQ “The goal is to become HBO faster than HBO can become us”. Netflix has indeed been implementing diverse multi-product by creating very popular TV series and Award winning shows like Orange is the New Black and House of Cards. What is truly setting them apart is their new focus on creating movies that their customers can watch at their convenience at their own home without having to go the theaters and pay for the ticket, the popcorn, a drink among other food items Netflix is now hoping to win an award for its new original movie “Beast of No Nation “staring Idris Elba will begin running in a few of the United......

Words: 300 - Pages: 2