Netflix power point

Netflix

1. The industry Netflix belongs to the over-the-top (OTT) media industry which is a subset of the media and entertainment industry An  over-the-top (OTT) media service is a streaming media service offered directly to viewers via the  Internet The OTT industry came into being globally on 5 th September 1995, when ESPN SportsZone broadcasted a live baseball game and marked the world’s first live streaming event Since then, the OTT industry has made remarkable progress in terms of quality, functionality and value It made an entry into India in 2008 with the first OTT platform – BIGFlix , by Reliance Entertainment

2. The i nception Reed Hasting forgot to pay video rental of ‘APOLLO 13’ for which he was fined $40 , that is when he came up with the solution for his problem.

3. A little about the past 1997 – Netflix founded to offer online movie rentals. 1999 –launches the subscription service along with rentals, offering unlimited rentals for one low monthly subscription. 2000 –launches the personalized movie recommendation system 2002 – Netflix makes its initial public offering (IPO) of 5,500,000 shares at $15.00 per share on NASDAQ 2005 - Netflix was shipping 1 million DVDs. 2007 - Netflix was shipping 1 billion DVDs 2007 - 08 - introduces online streaming on PCs, Gaming devices, Mac 2012 - Netflix entered the content-production industry 2013 - Netflix launched Netflix Originals with ‘House of Cards’ 2016– spread over 190 countries

4. Service USP T he biggest online streaming subscription based service in the world

5. Product Portfolio Basic Plan Standard Plan Premium Plan Mobile Plan ₹ 499/month ₹ 649/month ₹ 799/month ₹ 199/month Platforms: Mobile/Tablet/TV/Laptop Screens: 1 Platforms: Mobile/Tablet/TV/Laptop Screens: 2 Platforms: Mobile/Tablet Screens: 1 Platforms: Mobile/Tablet/TV/Laptop Screens: 4 TV shows | Movies | Documentaries | Genre based content |Region specific content | Personalised content suggestions

6. Business Strategy Offer something exclusive  Move with the times  Mine Audience Data for Content Marketing Create Original Content Benefit from the Bingeing Bonanza Present a Consistent Brand Identity

7. General environmental factors AT & T insisting on stricter rules to Federal Communications Commission W ith an increase in internet usage, US telecom giants, insist on stricter usage regulations.  If passed through congress, internet prices could rise threatening the business model . Class streaming services Controversial EU rulings will result class streaming services abiding under the rule that 30% of content on the platform needs to be European Changes in taxes T he company will be taxed the same 26% levy as traditional media, forcing Netflix to potentially pass the costs onto customers POLITICAL Fluctuating exchange rates NETFLIX aims its pricing around the US’s $10 fee, however, within certain markets this can be as much as $19 due to exchange rates and VAT. This moves Netflix into a luxury purchase for some customers and could potentially affect attracting a whole ‘price-conscious’ segment. Raising monthly subscriptions The monthly subscription to access Netflix has slowly increased over the years. Initially, consumers withheld backlash. Piracy Piracy is a serious threat to Netflix. Not only Netflix but other streaming media providers like Amazon, Hulu, HBO and many more are also dealing with the same issue. ECONOMIC

8. Busy work schedules Social trends are showing that many customers are moving to watch video content on their smartphones rather than traditional larger screens. This trend shows a demand for content on the move to fit into customers busy lives. Switch from traditional cable media Cord-Cutting ’ in the US is the act of customers switching from traditional cable media to online streaming services. In 2018, US Cable companies saw the steepest loss with 2.4% on record switching. Regional Sensitivity Cultural and regional sensitivities need to be taken care of during publishing content SOCIAL High-quality content and videos Netflix uses a specific system to compress videos without sacrificing quality. It reduces the amount of data you need to watch the video. And for anyone with a monthly or mobile data limit, this feature is much appreciated . UI changes Netflix’s shift in UI and algorithms confuses their customers. Recently, they changed the content voting system. Basically, how you tell Netflix you liked or didn’t like their content. Initially, the rating system was a one to five-star system. Now, it’s a thumbs up or down system Data usage The technological shift to 4K screen resolutions have created an issue for streaming services. The amount of data required to stream is a huge strain on customers broadband services. Within ‘Netflix Labs’, the company is aiming to create new patented technology which will allow for better compression of their 4K signal TECHNOLOGICAL

9. Currently rated ‘D’ for its carbon footprint An independent energy group for their lack of commitment to offset its carbon footprint.  Have to pay if carbon footprints not reduced At current usage rate t ech companies are being told by global governments to pay part of an environmental bill worth upwards of $11 trillion by 2025. ENVIRONTMENTAL PR misstep over a consumer lawsuit At the start of the year the company announced it would be raising subscription prices, however it was not clear over how current users would be affected. As a result, Netflix was issued a class-action lawsuit from customers. Copyrights on the basis of country-wise content T o meet growing demands from televisions and film studios over copyright access to content. They introduced blocking workarounds for users who access content from other countries.  LEGAL

10. Market share of video streaming services in India 2018 (by active users)

11. Competitors Hotstar Hotstar is star group's initiative, thus most of the content it provides free is its own. For the content acquired commercially like HBO originals it is charging users premium. Any television or internet content provider earns by advertisements and affiliation, which is true in Hotstar's case as well. Thus it is more or less simple business model where it spends on commercial acquisition and content development and earns by advertisements, affiliations and charging premium to customers. Hulu Hulu is a subscription service which specializes in video-on-demand services a joint venture between different entertainment giants like Walt Disney, Time Warner and 21 st  Century Fox. Hulu launched its streaming service where Hulu and its sponsors generate revenues that rely upon what number of views the content gets. HBO Now HBO’s only advantage is its large library of original shows. HBO is achieving high profits through a strategy based on differentiation and a business network built on more than 40 years in operation. Amazon Prime Videos Part of the prime membership fee goes to pay for prime video. By adding video streaming to prime services, Amazon get more people to shop more on  Amazon.com. By offering free content the increase the probability of people using Amazon prime video to buy paid movies and TV shows instead of other places. YouTube The actual product that  YouTube  sells is its users. The  company  pulls over 1.8 billion users every month. This is an advertisement-based  business model . Youtube Premium offers certain exclusive benefits to the subscribers by charging a nominal amount for the membership.

12. Growth and Profitability Hotstar is the most subscribed-to OTT platform in India, owned by Star India as of 2018, with around 150 million active users and over 350 million downloads American streaming service Netflix entered India in January 2016. It earned a net profit of ₹2020,000 (₹2.02 million) for fiscal year 2017. In fiscal year 2018, Netflix earned revenues of ₹580 million. There are currently about 40 OTT services in India In fiscal year 2018, the OTT market in India was worth ₹2,150 crore and its value grew to ₹35 billion in 2019. T he average time spent by Indian subscribers on various OTT platforms is 30–50 minutes (KPMG) The Indian OTT market is expected to grow 45 percent to reach ₹138 billion by the end of fiscal 2023 (KPMG) India will become the second-biggest market after U.S.A in 2020 (EY) Revenues are expected to reach $158.84 bn by 2024, more than double generated in 2018. Revenues have grown exponentially from 6.1 billion U.S. dollars in 2010 to over ten times that amount in 2018.

13. Organisational Structure Netflix has a functional organisational structure Segmented by the aims of its functions themselves, rather than by customer segments or regions The model of organisational structure that Netflix follows is “The mechanistic model”

14. Huge Movie Library Decent Pricing (No Late fees/ No hassle) Delivery / Watch instantly Presence in Marketplace Tailored service Multi- device compatibility Original Content Multi Lingual services STRENGTHS WEAKNESS THREATS OPPORTUNITY High Speed Internet Required High cost of productions Limited regional content Threat from other streaming competitors Government regulations can create issues for services like Netflix Other streaming services with lower subscription costs   Possibility to tie up with telecom providers to offer bundled packages to subscribers Vertical Integration with media houses and channels More local content for specific countries

15. Strategic Recommendations Increasing original content Tying up with channels to showcase their content online Diversification into deeper regional markets Optimise subscription prices Unbundling the service to reach focussed audience cost effectively Integrated marketing through Netflix Originals as a source of revenue