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Netflix Case

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Nova Southeastern University
H. Wayne Huizenga School of Business & Entrepreneurship Assignment for Course: | MGT 5170 | Submitted to: | Dr. Joel Rodgers | Submitted by: | Gabriel Behar | | | | |
Date of Submission: September 25, 2015
Title of Assignment: Netflix Case

CERTIFICATION OF AUTHORSHIP: I certify that I am the author of this paper and that any assistance I received in its preparation is fully acknowledged and disclosed in the paper. I have also cited any sources from which I used data, ideas or words, either quoted directly or paraphrased. I also certify that this paper was prepared by me specifically for this course.
Student's Signature: Gabriel Behar
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Executive Summary

Problem Statement
Competitors for Netflix are on the rise ad market share position can be on risk
Analysis
Although Netflix is the world leader on internet television, recent issues have being worrying its investors. The fall of stock prices and intensification of competitors is becoming an issue that have to be address before it becomes harder to deal. With a maturing industry, innovation becomes tougher and more difficult to achieve. For Netflix, innovation is the key to success and to continue being number one in the industry.
Alternatives
Solutions that can assist Netflix to maintain its advantage over competitors * Focus on the areas where current success is greater and expansion can be possible * Make good usage of marketing ideas and resources

Recommendation
Production and marketing of Netflix original content would be the best approach. The success shown by such original series demonstrates that that should be the way for consolidation of Netflix in the industry and possess the advantage over new competitors like Hulu and Amazon Prime.
Implementation
To implement the following plan Netflix must incentive and strengthen the development of original series and TV shows. The inclusion of the best writers, producers and actors that can put together great series such as House of Cards, Orange is the New Black, Narcos, Sense 8, among others; as well as the inclusion of independent and foreign artists.

Netflix was born to position itself as the world’s leader in internet television reaching now over 65 million members in over the 50 countries it extents. Its members currently enjoy more than 100 million hours of TV shows, movies, and documentaries among other genres. The ease of use and user friendly is a Netflix characteristic that has helps them raise the number of clients worldwide. As Netflix mission statement expresses, its core strategy now is to grow the subscription business domestically and globally while improving customer services.
With the expansion of connected devices to the internet as cell phones, tablets, computers and even watches; people can practically watch their favorite shows and movies everywhere on the go, while connected to the internet. The expansion of connected devices also carried competitors to Netflix. These competitors are trying to offer services that Netflix does not currently offer. The TV and movie industry is big and it can divide itself for everybody who wants to provide the products to people; it would only depend on who offers the best deal in order to do business. Agreements with different TV and movie producers in Hollywood and foreign countries are essential in order to offer the best shows and movies and stay on top of the market share count.
A problem Netflix is facing in 2015 is the increase of competition in the market and the innovative ideas they need to implement in order to stay at the top of the market share.
Although Netflix is still leading the market share by far, its competitors are innovating with new ideas and expanding to untouched markets. Netflix Watch Instantly dominates that market reaching 89% market share (Huddleston, 2015). The market of online TV is slowly fragmenting though. There are signs that show this fragmentation; for example Netflix shares was down 4% year over year and 13% just last week. In comparison, competitors like Hulu Plus and Amazon Prime shares are up 7% and 2% respectively. (Marketingcharts, 2013)
Some reasons why Netflix shares are in red number are explained. Last Monday, Netflix announced that the company would not renew an agreement they had with Epix cable network. This would mean that several acclaimed movies will be disappearing from the Netflix home page. Movies like The Hunger Game won’t be available anymore at Netflix with the new decision. Moreover, Netflix’s closest rival Hulu announced recently that they signed a new contract with Epix in order to bring such movies into their repertoire. Hulu has a competitive advantage over Netflix because it is owned by Disney, Fox, Comcast and NBC Universal, giving them financial stability. Netflix competitors are moving towards better and innovative ideas in order to compete. Hulu for example, is now offering commercial-free services, included to its service of current television programing of TV shows. Hulu will also boost its selection of movies with the agreement with Epix. Another competitor might be on the rising. Apple has apparently been talking to Hollywood about producing original content of its own. Apple has around $200 billion of cash on its balance sheet that could use for production of series or movies; the tech giant could be a tough competitor to Netflix.
Netflix has several alternatives in order to attack and confront such issues. Netflix is the leader on producing their own TV shows and their success is quite impressive. Such shows are differentiated among regular nationwide TV station on subject, content and characters that has given them the success they enjoy. Netflix could also expand its catalog with foreign production and languages as well as expanding and making it easier for people at other countries to acquire the service. Netflix original series are such a success, the company could sell the rights of reproducing them to TV networks so previous seasons can be shown on regular TV.
As it is expressed on Exhibit A, Netflix Original Content is still an Opportunity on the SWOT analysis. For Netflix, in order to continue being the number one provider of internet television, they must continue its strategy where they have most success, its original series. The original series has been a key to success for Netflix since they started the first ones “House of Cards” and “Orange is the New Black”. Netflix’s competitors, Amazon Prime and Hulu, are certainly not standing down; both companies are producing original content of their own. However, Netflix still seems to be the most favorite service among consumers. A recent study by Strategy Analytics Consumer Metrics revealed that Amazon Prime subscribers are more likely to watch Netflix than the Amazon service (Molofsky, 2015). Moreover, Netflix just signed an exclusive pact with Disney which allows Netflix to run new movies just months after their release in nationwide theaters. (Mueller, 2010)
Netflix should spend their capital in production, both in new series and TV shows and releasing new season of already successful series. Netflix will spend around 12 Billion Dollars in 2016 for marketing and production for its original series. (ir.Netflix.com, 2015). People’s taste is very broad and Netflix must offer wide variety in order to expand the market share. Its growing original content portfolio should also continue to attract new customers. Still, increasing competitive pressure will probably remain the biggest concern in the short and long run.
Netflix has already being implementing the alternatives provided. For it success, Netflix must bet for the success of the original content. Marketing of such shows and series is crucial so people can notice them and get hooked by them. Word of mouth is also an important ingredient to expand the audience. Give people incentives to spread the word on how good a show is, that it is worth watching it and that if the person does not have a Netflix account, they should open one.
Exhibit A
SWOT Analysis
Strengths
* Popularity and convenience. * Adapted to all form of mobile devices such as laptops, tablets, cell phones and gaming consoles. * Competitive prices
Weaknesses
* European laws make it more expensive in order to enter the market. * Content distribution is open so new competitors can enter the market
Opportunities
* International expansion. * Original content * Branding
Threats
* Increasing competition * Cable and satellite PPV * Illegal downloading of movies and series

Works Cited

Huddleston, T. (2015, Septermber 2). Here's why Netflix stock is down 13% this week. Retrieved from Fortune: http://fortune.com/2015/09/02/netflix-stock-drop-epix/

ir.Netflix.com. (2015, July 15). Retrieved from Netflix's View: Internet TV is replacing linear TV: http://ir.netflix.com/long-term-view.cfm

Marketingcharts. (2013, June 6). Retrieved from Netflix Still Dominates TV Show Consumption via SVOD, but Market Share Dips.

Mueller, J. (2010, July 1). Fool.com. Retrieved from Netflix: Strengths, Weaknesses, Opportunities, Threats: http://www.fool.com/investing/general/2010/07/01/netflix-strengths-weaknesses-opportunities-threats.aspx

Molofsky, D. (2015, April 12). itproportal. Retrieved from How original content has been the secret of Netflix’ success: http://www.itproportal.com/2015/04/12/netflix-shows-original-content-king-again-again/

TITLE OF RUBRIC: Strategy Case Study | Course: MGT 5170 | LEARNING OUTCOME/S: See attached (CC 1 and 2) | Date: | PURPOSE: Applying theory to practice and consistently using Strategy | | VALIDITY: Strategy Best Practices | Name of Student: | COMPANION DOCUMENTS: Individual Cases | | Earning maximum points in each box in ‘PROFICIENT’ column and / or points in columns to the right of ‘PROFICIENT’ meets standard. | | <<<<<<<<<< less quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . more quality >>>>>>>>>> | Performance Criteria | Basic | Developing | Proficient | Accomplished | Exemplary | Score | States Problem Effectively | Does not identify the problem(4pts) | Identifies a symptom(8 pts) | Identifies a significant problem(12 pts) | Identifies a critical problem(16pts) | Effectively identifies the crucial problem(20pts) | | Analyzes the situation | Does not present analysis(4 pts) | Vaguely analyzes material(8 pts) | Generally analyzes the situation(12 pts) | Analyzes some key factors (16 pts) | Insightfully analyzes key factors(20 pts) | | Generates Realistic alternative Solutions | Provides no realistic solutions(4 pts) | Provides ambiguous solutions(8 pts) | ProvidesSolutions(12pts) | Provides realistic solutions(16 pts) | Provides realistic solutions related to the problem(20 pts) | | Evaluates Solutions/Selects Optimal | Selects without evaluation(4 pts) | Selects with little evaluation(8 pts) | Evaluates alternatives and selects one(12 pts) | Evaluates alternatives and explains rationale for selection(16pts) | Evaluates alternatives, provides rationale, and selects optimal solution for the main problem(20 pts) | | Generates an ImplementationPlan | Provides no plan(2 pt) | Provides cursory plan(4 pts) | Provides an implementation plan(6 pts) | Provides realistic implementationplan(8pts) | Provides implementationplan considering major factors(10 pts) | | Writes at theGraduate Level | Does not use designated format or standard(2 pt) | Does not write clearly or in an organized format(4 pts) | Uses effective format, style, grammar, punctuation, and references(6 pts) | Uses effective format and writes at the graduate level(8 pts) | Uses effective format and writes at the publishable level(10 pts) | | | % |

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