...Wissarut Issariyakul Newbury Cohort Netflix Leading with Data Company Overview Netflix was established in 1998 as an online pay-per-rent platform by Reed Hastings, and rapidly developed into the monthly subscription platform without any additional payment. They used the lean business model that is friendly and understand the customers with the Cinematch, the recommendation software that developed by Netflix, that collected the data from the audiences, analyzed, and generated the user-friendly content individually. In addition, the lean business model and their software helped them to reduce the amount of inventory and cost of shipping to individual stores, and replaced by the cost of mailing to each customers with big amount of R&D cost. With this high usage of U.S. Postal Services, Netflix had enough power to negotiate for the lower rate and became the potential competitors of the market within a short period of time. Netflix’s revenue was $270 million as 6% market share in 2003 and increased to $1,365 million as 18.2% market share in 2008.1 Industry Overview The video rental industry started when the VCR system was developed and in 2000, the DVD technology came in to play with the reduction of the VCR video in the market. Blockbuster was the dominant player with 1 (Hacking Netflix, 2009) Wissarut Issariyakul Newbury Cohort strong customer base before Netflix entered the market with the online system. They used their technology to build the sustainable advantage...
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...NETFLIX case Summer I, 2013 Company’s status On-demand Internet streaming media and DVD-by-mail service Year founded 1997 Employees: 900 at corporate headquarters. 36 million members in 40 countries. 1 billion hours of TV shows and movies per month. Customer satisfaction score of 86% * Netflix is the world’s leading internet subscription service *According to the American Customer Satisfaction Index (ACSI), Internet Strategy GOAL: Proving the best online rental online experience for the customers. Great website: Easy access to information. Direct and attractive. Fast Privacy Policy: collect data: customer’s information Payments and communication plans. Cookies Social networks. Share information. Personalized online customer service Information Technology New and advanced technology to improve its service. Advanced technology: Cloud computing. Proprietary software Strategic partnerships Efficient operations. Fast and high quality. Measuring customer response and experiences. Building customer profile. Collecting customer Data. Netflix has changed the way you watch your TV & movies Company that revolutionized watching of movies and TV Shows Culture of Innovation Netflix is the world’s leading internet subscription service Disruptive innovation. HALLMARK of the company Innovation focus: online streaming. Instantly from multiple platforms. Future GOAL: Keeping the leading position...
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...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 reputation...
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...CIS610-Foundations of Management Information Systems Case: Netflix Leading with Data: The Emergence of Data-Driven Video Question: What advice would you give to the CEO of Netflix? Ruohua Cui, Yang Cheng, Tien-Ni Kuo, Yitian Ren Digital distribution market is undoubtedly the future of the video rental industry. Netflix has already taken a good lead in it but must have fresh ideas to keep its advantage in the industry. Beating its competitors in the domestic market is important, however, Netflix should jump out of its own circle into a new market to gain the first mover advantage. Looking at the global market, China is a good choice for Netflix’s next station. Using the Porter’s Five Forces model, Netflix can examine its advantages and disadvantages see whether entering China is good choice: * Bargaining power of customers China has a growing economy with a large group of new middle-class, who are able and willing to consume on entertainment. Nowadays, Chinese usually watch films on free websites with a low picture quality and slow Internet speed. While the number of people watching films are increasing, the picture quality is becoming more important for the viewing experience. Providing a fast, flexible and high-quality service, Netflix can persuade many customers into its subscription model. * Bargaining power of suppliers: China’s film and TV show makers have been facing a major problem: plagiarizing (including unpaid online watching), which substantially...
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...Concept review for internal secondary data A real world example I can come up with is Netflix’s production of House of Cards. http://en.wikipedia.org/wiki/House_of_Cards_%28U.S._TV_series%29 http://www.nytimes.com/2013/02/25/business/media/for-house-of-cards-using-big-data-to-guarantee-its-popularity.html?pagewanted=all&_r=0 http://www.ukessays.com/essays/marketing/netflix-case-analysis-marketing-essay.php http://www.fastcodesign.com/1671893/the-secret-sauce-behind-netflixs-hit-house-of-cards-big-data [pic] According to lots of observation and information, this TV series was produced on the basis of big data. In this presentation, we can comprehend big data as internal secondary data. It’s risky to start the production of House of Cards, because its budget is high( 50 millions dollars), and it really focus on some sensitive issues. Right now, this series, directed by David Fincher, starring Kevin Spacey and based on a popular British series, is already the most streamed piece of content in the United States and 40 other countries, according to Netflix. But it’s a not surprise to anyone in Netflix, because they had predicted a big success for House of Cards after making good use of their secondary internal data. In our presentation, we can cover all the concepts in our parts by explaining how House of Cards is produced. The data Netflix wants to use is the data of Netflix’s subscribers. This data comes from Netflix itself, so it must be internal. Also, it’s gathered for...
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...demography and interest, so the more data users share publicly the more money it can mint from ads (Nelson & Quick, 2013). Let’s say for example I don’t publish my likes and dislikes on Facebook. Then they will have to find a way to push me into doing that. The moment I go in and enter that information I will be immediately targeted as a consumer with certain needs and Facebook will be the platform that will bring them to me. 2. Being a college student you are likely a Facebook user. What is your opinion regarding how Facebook deals with privacy issues? What have you done (or decided not to do) with regard to protecting your privacy on Facebook (or other social networking sites)? =As a college student I do have a Facebook. In my opinion, if Facebook is seeking to become dominant on the internet they should follow through on providing privacy for its users and personal choice. I don’t agree that as a user, you really don’t have control of the privacy in your page. Even though I have a page, I don’t like to post all my information there or any other social networking site. I have never believed that you are totally protected. I always recommended my family and close friends not to put personal data (phone number, address, private pictures, etc.) 3. How can the availability of Facebook users’ personal data create business opportunities for Facebook and for other businesses? = The availability of Facebook user’s personal data will definitely create more business...
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...Netflix: Past, Present, and Future Innovation Entrepreneurship & Innovation Strategy: Section #2 Chuck Culp, Mike Friedman, Graham Lincoln, Quentin Reeve, and Matt Zepernick 1 Introduction Netflix is an interesting company because it sits in an ever-changing ecosystem populated by old and new economy players. On one side, you have movie and TV studios that produce feature-length movies and serialized TV shows that are, in many ways, identical to the movies and TV shows that were produced when the medium was invented. On the other side, you have a rapidly-evolving set of computer-enabled devices and data transmission systems that allow consumers to access the studios media content in virtually any location with a power source and a fast Wifi connection. As a distributor, Netflix has been forced to evolve with these changes, and changes in content consumption methods have had a major impact on the home entertainment ecosystem and the profitability and power of the players involved. The paper is organized into three sections. The first section investigates the circumstances and decisions that helped Netflix launch successfully in 1998. The second section looks at Netflix’s approach to and experience in the internet video streaming business. These sections were selected because they offer rich case studies on entering and managing an evolving ecosystem. The final section considers the future of the Company and the steps that they can take to increase value capture in the future...
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... 5 Forces Analysis of the Video on Demand Industry By offering streaming movies through its website, Netflix is entering the Video on Demand (VOD) industry. This industry, along with DVD rentals (both from online providers such as Netflix, and cable services such as On Demand and Pay-Per-View), is part of the larger industry of “watching movies in the home.” However, since Netflix is already positioned in this market, with its online DVD rentals, we will examine the smaller 5 portion of the market that is streaming online movies. This business is too closely related to the movie downloading service to be considered as a separate market. Threat of Potential Entrants Today, internet video rental industry is very profitable and still has a very good develop prospect. After Netflix’s success, the whole video industry starts to change gradually, and more and more people start to consider entering this field. However, for most of those potential entrants, this industry has some big barriers to entry. First of all, the service in this industry is already very complete. With its seven-year-development, Netflix has improved its service better and better; its customers are getting more and more satisfied. For potential entrants, it is extremely difficult to find some new service to add in its new website. Therefore, the opportunity for those potential entrants to defeat Netflix is very limited. Second, high capital requirement is a big problem for potential entrants to enter. To...
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...program. From the attached data exhibits, we can see that by giving rewards and offers, this group of customers greatly increased their number of trips to Harrah, which also make them potential loyal customers of Harrah. So the rewards program works most effectively on this group of customers. 2. Harrah’s is on quite a roll. What are the pros and cons of Harrah’s acquiring one of its competitors? Are you in favor of one or not? Pros: By acquiring one of its competitors, Harrah’s has more opportunity to expand a diverse customer base served through a variety of properties, enlarge its company size and occupy larger market shares. Cons: To make a business acquisition, Harrah’s needs to carefully check the financial situation before doing so. Since Harrah’s manages their client’s information for more than thirty years and successfully build the management of customer relationship, acquisition would bring challenge of client management. Our team perspective: we are not in favor of Harrah’s acquiring one of its competitors. First, it’s money consuming. Harrah’s competitors are mostly leaders in gambling industry in the US. Instead of acquiring a competitor, it’s better for Hannah’s to build more casinos in major traditional markets either in the United States or in international markets. In this case, Harrah’s can manage stronger brand image and better allocate its funds. 3. Who are Netflix’s major competitors today? What strengths does Netflix have compared to their major...
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...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...
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...and infrastructural technologies. According to him, proprietary technology can reap high profits but infrastructural technologies are meant to offer more value when shared than when used in isolation. After few years the infrastructural technologies become known to everyone, thus eventually becoming a commodity and losing value. The author describes IT as such an infrastructural technology that is deemed to become a commodity. He gave three reasons for it. First, the author states that IT is a method of transportation and therefore, more valuable when shared with others. The author fails to address the underlying value proportion behind the transport mechanism and how valuable it can be when used to its fullest potential. For example, Netflix went from being DVD mailing to digital streaming business and...
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...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 to...
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...content. “We’re trying to solve specific problems and think about where the business is going,” Frons says. Frons is focused on enhancing revenue, cutting costs, and increasing efficiency through process improvements and automation. The New York Times has launched a cool interactive map that shows the most popular Netflix rentals across 12 U.S. metropolitan areas: New York, San Francisco/Bay Area, Boston, Chicago, Washington, Los Angeles, Seattle, Minneapolis, Denver, Atlanta, Dallas, and Miami. If you’re a Netflix junkie and a closet Twilight fan (and you live in a major U.S. city), your rental habits are now on display. To create the map, The New York Times partnered with Netflix. The map is a graphical database of the top 100 most-rented Netflix films of 2009 laid on top of maps. With it you can graphically explore top 2009 Netflix movies based on three criteria: films that were hated or loved by critics, an alphabetical list, and most rented. For example, select most rented, and when you place the mouse over a zip code, a window pops up showing you what the top Netflix rentals are for that specific region. Some trends are not surprising: The most popular Netflix movie of 2009 was The Curious...
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...Report Case: Netflix January 19, 2016 1. To begin with, at a first glance, Blockbuster and Netflix may be considered two quite identical firms, operating in the movie rental industry. Therefore, it could be inferred that their business models have many similarities, yet, that is not the case. Their core differences are most obvious on their respective levels of value propositions, resources, and the profit formulas that each company has adopted. Firstly, Netflix’s initial idea behind their business model was to become providers of a better home movie service, which become feasible, in 1997, with the introduction of DVD technology. On the other hand, Blockbusters, a well-established company since 1980s, continued to follow the traditional retailing outlet style. A basic difference is the resources of their business models. In 1998, a year after its founding, Netflix boldly adopted a very innovative attitude by launching a website while simultaneously operating online. Thus, Netflix targeted the revolution of new age technology adopters (purchasers of DVD players), while Blockbuster’s main target group was wider, focusing on anyone who decided to watch a movie, especially last minute. The two companies’ profit formulas are different, with Blockbuster’s following the common charging system (a fixed price for every movie rental and additional charges for delayed returns), whereas Netflix, in its early uprise and foundation...
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...everybody has a theory about how to save the U.S. newspaper industry. The only consensus, it seems, is that it needs to change fundamentally or it could all but disappear. At The New York Times, tough times have elevated IT-enabled innovation to the top of the agenda. A research and development group, created in 2006, operates as a shared service across nearly two dozen newspapers, a radio station, and more than 50 Web sites. “Our role is to accelerate our entry onto new platforms by identifying opportunities, conceptualizing, and prototyping ideas,” explains Michael Zimbalist, the company’s vice president of R&D. Zimbalist’s staff of 12 includes experts in rapid prototyping, specialists in areas like mobile or cloud computing and data miners who probe Web site data for insight into what visitors do. They work within a common framework based on idea generation, development, and diffusion throughout the business. Recent projects included prototypes for new display ad concepts, as well as BlackBerry applications for Boston.com and the expert site About.com. The team’s work is intended to supplement and support innovation taking place within the business units. For example, the team is prototyping E-Ink, an emerging display technology; some business units can’t spare the resources to investigate it. At NYTimes.com, the design and product development group of Marc Frons, CTO of Digital Operations, worked with Zimbalist’s team and Adobe developers on the Times Reader 2.0 application, the next...
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