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Chapter 7

MKTG-UB 40 Chapter 7: HBS - Netflix
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2 Pages
58 Views
Fall 2016

Department
Marketing
Course Code
MKTG-UB 40
Professor
Narayanan Sunder
Chapter
7

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Company Overview
Offers subscription video and DVD and Blu-ray Disc rental for a monthly fee
Has 74 million subscribers as of January 2016
Employs more than 3,500 full-time employees; $6.78 billion revenues
The rise of Netflix
At time of launch, industry dominated by Blockbuster (video rental company)
Blockbuster relied on willingness of customers to go to store locations
Netflix originally launched as pay-per-rental DVD mailing service, and then as
a subscription based service in 1999
Netflix gained a lot of success, and the Blockbuster method became obsolete
Move to Internet Streaming and VOD
Netflix began to move business model away from mail-order and to internet
streaming and Video-on-demand in 2007
Company has experienced steady growth since 2011
2014 - surpassed 50 million subscribers
Business Model
Dependent on the internet
Generates revenue through its subscription system
Still generates revenue through DVD-by-mail system
Does not generate revenue from advertising services
Industry Overview
Industry very reliant on internet
Faces competition from piracy sites
Competition
Industry dominated by a small number of firms
Netflix dominates the market, but new firms (Hulu) have unique competitive
advantages
Amazon Video Service
Competes through their enormous customer base, strong brand, and
powerful infrastructure
Has 44 million users
New Strategic Initiatives
Hastings decided to pursue new partnerships and agreements to produce original
content
Decreased reliance on content providers
Developing exclusive content
House of Cards
was first exclusive series
Netflix also working towards securing exclusive rights to films
Orange is the New Black
is exclusive and is the most watched show on
Netflix
International Expansion
Netflix has been expanding aggressively since 2010
Fuelled by slow growth in saturated domestic market

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Description
Company Overview ● Offers subscription video and DVD and Blu-ray Disc rental for a monthly fee ● Has 74 million subscribers as of January 2016 ● Employs more than 3,500 full-time employees; $6.78 billion revenues ● The rise of Netflix ○ At time of launch, industry dominated by Blockbuster (video rental company) ■ Blockbuster relied on willingness of customers to go to store locations ○ Netflix originally launched as pay-per-rental DVD mailing service, and then as a subscription based service in 1999 ○ Netflix gained a lot of success, and the Blockbuster method became obsolete ● Move to Internet Streaming and VOD ○ Netflix began to move business model away from mail-order and to internet streaming and Video-on-demand in 2007 ○ Company has experienced steady growth since 2011 ○ 2014 - surpassed 50 million subscribers ● Business Model ○ Dependent on the internet ○ Generates revenue through its subscription system ○ Still generates revenue through DVD-by-mail system ○ Does not generate revenue from advertising services Industry Overview ● Industry very reliant on internet ○ Faces competition from piracy sites ● Competition ○ Industry dominated by a small number of firms ○ Netflix dominates the market, but new firms (Hulu) have unique competitive advantages ○ Amazon Video Service ■ Competes through their enormous customer base, strong brand, and powerful infrastructure ■ Has 44 million users New Strategic Initiatives ● Hastings decided to pursue new partnerships and agreements to produce original content ○ Decreased reliance on content providers ● Developing exclusive content ​ ○ House of Car
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