Netflix Analysis by Gigabyes

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					Analysis of Netflix
    presented by Vince Wang




                              1
                      Agenda
 Introduction
    What is Netflix?
    How Netflix Works?
    How Much Does Netflix Cost?
    Comparing Netflix to its Competitors
 Role of IT at Netflix
    Porter’s Competitive Forces Model




                                            2
              Agenda (continue)
   Advantage of Internet
      CRM (Customer Relations Management) Strategy in
       Netflix
   SWOT Analysis
      Netflix Strengths
      Netflix Weakness
      Netflix Opportunities
      Netflix Threats
   Conclusion
      Financial Status
      The Future of Netflix
                                                         3
                 What is Netflix?
   Founded in 1997 at Scotts Valley, CA
   Founder of Netflix: CEO Reed Hastings pioneered the
    subscription movies-by-mail model from his own
    personal frustrations
   Largest online DVD movie rental service
   3 million members
   40,000 movie titles
   CEO predicts that Netflix will boast five million
    subscribers and one billion in annual revenue by 2007


                                                            4
       How Netflix Works?
•Receive selection of DVD’s from customers
•Process DVD’s at one of 30 shipping centers
•Send DVD’s straight to customers within one-day
•Return DVD’s in one of Pre-Paid Mailer




                                                   5
How Much Does Netflix Cost?
   Plan       Rental/     Price /      Free
              Month       Month        Trial
                                      Length
 3 DVDs       Unlimited   $17.99       2 Week
  at-a-time               Per month   Free Trial

 2 DVDs                   $14.99       2 Week
  at-a-time   Unlimited   Per month   Free Trial



 2 DVDs        Limit 4    $11.99       2 Week
  at-a-time   per month   Per month   Free Trial


                                                   6
Comparing Netflix to its Competitors
                     Netflix      Wal-Mart        Blockbuster

   Movie Selection
                     ●●●●●        ●●●●○           ●●●●●
   Subscription
   Plan Selection    ●●●●○        ●●●●○           ●●●○○
   Movie Search
   Interface         ●●●●●        ●●●●○           ●●●○○
   Movie
   Availability      ●●●●●        ●●●●○           ●●●○○
   Speed Of
   Delivery          ●●●●●        ●●●○○           ●●●○○
   ●●●●● best
   Statistics from: http://www.online-dvd-rental-reviews.com
                                                                7
Porter’s Competitive Forces Model

        Low Cost
        Differentiation
        Innovation
        Develop Alliances
        Promote Growth




                                    8
Speedy Delivery




                  9
        Netflix CRM Strategies
 Customers can access services through the
  web site
 Communication and feedbacks from
  Netflix’s customers
 Customer service center is open seven days
  a week
 Phone support
 Netflix Affiliates Program

                                           10
            Netflix Strengths
 Subscription style e-commerce service
 Unlimited access to world’s largest DVD
  library
 No lineups and no late fees
 Excellent customer service
 Easy website navigation
 Preview movie before renting


                                            11
           Netflix Weakness
 Customers slowly adapt to change from
  movies-by-mail model
 High quality in customer service is not
  easily achievable




                                            12
          Netflix Opportunities
   Cross promotion program
     Promotional   relationship with Amazon.com
 Allow customers to download movies
 Extend into video games rental business




                                                   13
            Netflix Threats
 Strong competitive market with other
  movie rental stores such as Blockbuster,
  Wal-Mart and Comcast Pay-per-view
 Older or newer media formats are not
  supported currently
 Lower price and promotions of
  competitors
 Cost of postal service

                                             14
            Financial Status
 Revenue up 86% from $272.2 million in
  2003 to $506.2 million in 2004
 Subscribers rose from 1,487,000 in 2003
  to 2,610,000 in 2004
 After Blockbuster and Wal-Mart went into
  the market in 2004, growth rate dropped
  from 77% to 2%
 Failure to expand to UK with a net-loss of
  $3 million
                                               15
            Conclusion

 Netflixis at its maturity
 Expanding and growing slower
  than before
 Loss in revenues from
  competition
 The diminishing future of Netflix

                                      16

				
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posted:3/9/2011
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