Netflix Business Opportunity
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Netflix is the leading internet TV network with nearly 38 million members streaming over 1 billion hours of content per month across 40 countries. While expanding globally, Netflix faces threats from cable TV networks offering streaming apps, subscription competitors, and potential restrictions from internet service providers. However, Netflix believes it can continue innovating through improvements to content, streaming quality, and the user experience to engage more members and stay ahead of competitors in this growing market.
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Netflix Business Opportunity
- 1. Netflix Opportunity to Change the World Some Background For Candidates 1
- 2. Netflix Snapshot • Netflix has nearly 38 million members in 40 countries enjoying more than one billion hours of TV shows and movies per month, including original series • Domestic profits fueling global expansion • Improving choosing, content & streaming to win more share of member viewing • Streaming is the future of television 2
- 3. Successful Expansion • Netflix expanded from DVD to become leader in streaming TV shows and movies • It’s so hard that most companies fail: • AOL shrank with dialup access • Yahoo didn’t drive search or social • Kodak and Blockbuster went bankrupt • But we did it! – even if it wasn’t as pretty as we wanted… 3
- 4. Next Five Years 1. Huge improvements in choosing, content, and streaming 2. Global expansion market by market 3. Produce great exclusive original series 4
- 5. Stepping Back 70 Years… 5
- 6. First Era of Television: Linear Broadcast Networks 6 Few choices to watch at any given time ABC, CBS, NBC, …
- 7. Second Era of Television: Linear Cable Networks 7 ~200 choices at any given time ESPN, HBO, Discovery, TNT, AMC, etc. DVR adds some on-demand on top of linear networks
- 8. Third Era of Television: Internet Networks 8 Millions of Choices Pure On-demand Apps Keep Improving All Screens
- 10. Billions of people getting high-speed internet 10
- 11. TV becoming app-centric, like tablet, phone, and laptop 11
- 12. Built into TV 12 Smart TV Apps Tiny Affordable Box or Game Console
- 13. Netflix Is: Wide-ranging selection of TV shows and movies Pure on-demand choosing and viewing with the highest video quality possible Personalized, social, intuitive, evolving UI on all internet screens Inexpensive, $8/month, unlimited viewing No commercials, no commitments, no contracts 13
- 14. Netflix is Not: • Not: Pay-per-view new movies – like Apple, Amazon, Google, Microsoft, Sony, Walmart, Best Buy, … • Not: Ad-supported free content – like YouTube, Crackle, Hulu • Not: Sports, contestant, news, porn, music video, instructional, or user-gen video • Not: All movies and TV shows in one place 14
- 15. USA Market Size for Netflix • Linear HBO is about 30m USA subs • But Netflix has broader appeal: – Only $8/month and unbundled – More content including kids, anime, family, and thousands of shows and movies – Pure on-demand – On tablets, laptops, phones in addition to TV’s – Enjoyed through personalized social UI • Netflix market size: 60-90m USA members 15
- 16. Global Market Size is Large and Growing 600m broadband households 1b Facebook users 6b mobile phones 16
- 17. Big Market Means Netflix Has Many Threats 17
- 18. TV Everywhere • Great internet apps (HBOgo, etc) on all screens for all existing networks, at no extra consumer cost, could mean: – less watching of Netflix – less desire by networks to license prior- season to Netflix, because they can self- monetize 18
- 19. Other Subscription Internet Networks • Hulu+, also at $8, but with commercials • Amazon Prime Instant Video • Lovefilm Instant in UK • Large new entrants willing to invest heavily in content, marketing and technology 19
- 20. ISP Market Power Issues • ISPs can give their own video data special treatment, violating net neutrality principles • ISPs can refuse us, or try to charge us for, sufficient entry ports to their network for the video data their subscribers are requesting from us • ISPs can charge consumers per-gigabyte, even though off-peak usage has zero marginal cost 20
- 21. Piracy Growth • Piratebay.se • Cuevana.tv • Letmewatchthis • Hotfile • And 1000 more… 21
- 22. Ad-supported & PPV Video • Free ad-supported TV shows and movies are popular • Pay-per-view TV episodes ($2) and movies ($4) are widespread 22
- 23. The best way to predict the future is to invent it -Alan Kay 23
- 24. 24 Netflix is innovating at web speed to create amazing internet-video experiences on all internet-connected screens
- 25. Fantastic Customer Sat By Democratizing Innovation • Our many internal innovators constantly try to improve our service, for a random 100,000 members • Then we compare member satisfaction • Only changes that actually improve satisfaction get published to all members • A/B testing enables many people at Netflix to have ideas and learn what pleases most 25
- 26. Our Simple Strategy • Improve our service faster than competitors – Better choosing: improve and simplify personalized social UI to generate more viewing and satisfaction from existing content – Better content: license more content, and expand into original series – Better streaming: ever better audio video quality and less buffering 26
- 27. Netflix Virtuous Cycles Help Us Stay Ahead
- 28. More Content More Members & Revenue More Word of Mouth More R&D for Better Service
- 29. Innovators Needed to Drive Progress at World’s First and Leading Internet TV Network 29Updated: Nov 2012