Its peer critique 1. Are the recommendations supported by information from the case and/or internal research? 2. What components do you feel could be more fully supported? Answer these questions and
15
Netflix Report
Netflix Report Analysis
New Proposal for a Vision and Mission of Netflix
Netflix is the best service available for streaming content. In addition to the well-known content offered by other networks, it also boasts a greater number of original series, films, documentaries, and specials than any of its competitors. Because of its extensive library of content that is always being updated as well as its user-friendliness across a range of platforms, the streaming service that was the first major one of its kind in the world remains our top choice (Rayome, 2022). In 2021, Netflix was awarded a total of 44 Emmys, which was more than the two media companies that were in second and third place combined. When looking for anything new to watch, you should begin your search on Netflix because it is an excellent resource (Rayome, 2022). Talking about the customer reviews, Netflix has an overall score of 8.2 out of 10 and 4.4-star rating over best company website. Where, 57% rated 5-star and 32% people rated Netflix 4-star (Best Company, n.d.). As compared to other entertainment service providers such as Amazon Prime, YouTube and Hulu Plus, Netflix has the highest score as seen it is loved by people. Netflix has more than 3600 movies and has TV series that are almost around 800 (Best Company, n.d.). It has a huge selection for viewers as with easy usage. Mission Statement of Netflix is “To entertain the World” (Rivera, 2019) but the proposed and new mission statement can be “To allocate the globe with best cinematographic entertainment”. This describes Netflix’s Mission statement better because it specifies Netflix provides cinematic content that is the best to entertain people around the globe. As people love watching movies and review specifies that.
Talking about the prices of subscription included in Netflix. For the basic account the price is $ 9.99 a month (Buchi, 2022), that is same as Amazon Prime Video. But, looking at standard plan which is $ 15.49 a month and Premium plan is $ 19.99 a month. As for Netflix, one can’t use more than 4 screens simultaneously which is in Premium account. Whereas, in Amazon just under one subscription as many people can use it. So, Netflix with such vast range of movies has a deal with subscription as it wants people to buy more of it whereas Amazon lets people use the screens. Looking deep into this, Netflix is just a streaming platform and amazon is an E-commerce that escalated to streaming services. Which is why the price is fair as per it being the ruler in the market with such good content. It sis well known as people use the phrase of “Netflix and Chill” which is not the case with any other platform. Netflix can allocate the people with other stuffs rather than movies which is live streaming of sports which can cut out all the other cable services. Netflix can sponsor the sports which will let sports channels such as Espn and Ten Network out of the competition. This would create a more big market for Netflix. But as talking about the vision statement of Netflix “To continue being one of the leading firms of the internet entertainment era.” (Rivera, 2019). But as new proposed Vision of company would be considering the analysis done. The new Vision that would better represent the company would be “ Providing the best content and being the ruler of OTT Platform”. This describes that the company is at the top of all cinematic entertainment providers and continuing the legacy of being on the top. The price might be more than other platforms but the services provided by Netflix are far more better as it is best among all the other OTT platforms.
IFE and EFE Matrix analysis of Netflix
Netflix is undoubtedly one of the most well-known and highly regarded streaming service providers in the entire world. Only in the first three months of 2021 does the platform have around 208 million paid customers. The carefully selected content that Netflix provides puts them light years ahead of the competition. The streaming service is responsible for eight percent of all time spent watching films around the world.
Netflix has had phenomenal expansion over the course of its history, as evidenced by the company's current 222 million member user base. It is one of the most popular online entertainment services in the world, boasting paid subscriptions in more than 190 countries around the globe.
Seventy percent of Netflix users watch entire seasons of television shows in a single sitting. It is more than simply a television series; it also provides movies, documentaries, and full-length features in a wide variety of styles and languages.
Netflix was established in 1997 by Reed Hastings and Marc Randolph. Initially, the company focused on selling and renting DVDs through the mail; but, after a year, they shifted their attention to providing an online DVD rental service. Netflix began offering streaming media online in 2007, while simultaneously keeping its DVD rental business available. In 2010, they began expanding their online streaming operations into overseas markets. The rise in Netflix's revenues can be attributed to the company's expanding international presence.
| Strengths | weight | Rating | Weighted score |
| Netflix has a strong brand. Every day, Netflix streams around 140 million hours of programming. | 0.09 | 0.30 | |
| A large community of content creators and consumers Netflix's brand value grew 105% to $21.2 billion. | 0.06 | 0.18 | |
| Original content creation capacity Netflix's high-quality programming and original series are key to its success. Thrillist's list of top TV programmes included almost 25% Netflix content. | 0.05 | 0.20 | |
| Customer Driven Approach Netflix tracks client activity. Netflix has been streaming original programming since 2018. As of now, they have more than 700 original television shows and 80 feature-length films to their credit. | 0.04 | 0.15 | |
| Maintaing brand consistency While Netflix now employs over 5000 people, the company's voice can be heard across all social media platforms. | 0.04 | 0.18 | |
| Award winning brand positioning Netflix is outnominating HBO and NBC. Netflix has 160 Emmy nominations in 2020 compared to these traditional TV networks (.Martínez-Sánchez et al, 2021) | 0.05 | 0.15 |
| Weakness | Weight | Rating | Weighted Score |
| Issue with the business model Short interest has increased by 20% in the past month as the company's Q2 results fell short of subscriber expectations, resulting in a 15% drop in the stock price. (Forbes, 2019) | 0.03 | 0.26 | |
| Insufficient Subscriber Growth Due to Content Spending The marketing and streaming content investment per new member has increased from $308 in 2012 to $581 through the conclusion of the current fiscal year. (Forbes, 2019) | 0.05 | 0.18 | |
| High internal expenditures Each year, the company's additional expenditures outpace its incremental revenue by almost 50%. | 0.04 | 0.15 | |
| Increasing Debt Netflix adds debt to fund new content. Netflix has $14.17 billion in debt and aims to raise $1 billion more. Growing debt is a serious weakness. (Forbes, 2019) | 0.05 | 0.18 | |
| Raising Prices Netflix has hiked its costs, whereas Disney+ ($6.99 per month) and Apple TV+ ($4.99 per month) offer lower prices. | 0.06 | 0.18 |
| Opportunity | Weight | Rating | Weighted Score |
| Low-cost mobile streaming Netflix can offer a lower-priced option to overseas subscribers. In India, Netflix is piloting a $3/month mobile-only package. | 0.06 | 0.24 | |
| Alliances It can also partner with telecom companies to offer bundle packages. Netflix benefits from alliances and collaborations. Netflix teamed with Channel 4 previously. (Onyusheva, and Baker, 2021) | 0.06 | 0.18 | |
| Help Black Schools Netflix has donated 2% of its holdings, or $100 million, to Black communities. It's CSR-focused. | 0.05 | 0.20 |
Quantitative Strategic Planning Matrix
| QSPM Matrix | | Devolp Marketing strategy that directly affects global users | Identify expenses of expansion and identify countries where investment makes the most revenue stream | Expansion into global markets allows Netflix to set standards |
| Key factors | Weights | Strategy 1 | Strategy 2 | Strategy 3 |
| Strength | | AS TAS | AS TAS | AS TAS |
| Aggressive pursuit of new content | 0.15 | 4 .60 | | 4 .60 |
| Proprietary technology | 0.15 | 4 .60 | 4 .60 | 4 .60 |
| Uniquely customized experience | 0.1 | 4 .4 | 1 1 | 4 .4 |
| Customer Satisfaction recommendation | 0.1 | 4 .4 | 2 .2 | 4 .4 |
| Decline, subscriber Acquisition cost | 0.05 | | 3 .15 | 1 .05 |
| Weakness | | | | |
| Global expansion | 0.05 | 4 .2 | 4 .02 | 4 .02 |
| Timing of content release is always 12:00 am pacific time(Netflix,2022) | 0.1 | 4 .4 | 3 .3 | 4 .4 |
| Getting late to deal with competitors.(wired, 2017) | 0.05 | 2 .2 | 4 .4 | 4 .4 |
| Never Paid a cash dividend | 0.05 | | 4 .2 | 3 .15 |
| Content Delivery | 0.15 | 4 .60 | | 3 .45 |
| Opportunities | | | | |
| On Demand for consumer streaming videos | 0.2 | 4 .8 | 3 .6 | 3 .6 |
| Liibrary of movie and television titles that pay TV can not offer | 0.1 | 4 .4 | 4 .4 | 3 .3 |
| Multiple marketing channels | 0.05 | 4 .2 | 4 .2 | 4 .2 |
| Proprietry technology | 0.1 | 4 .4 | 4 .4 | 4 .4 |
| Market segmentation | 0.05 | 4 .2 | | |
| Threats | | | | |
| 10 year restriction on access to content of movie and television titles | 0.1 | 2 .2 | 4 .4 | 4 .4 |
| Cost of pursuing current season TV shows | 0.1 | 2 .2 | 4 .4 | 4 .4 |
| Brand recognition | 0.1 | 4 .2 | 4 .2 | 4 .4 |
| Not a top ten provider of internet video content | 0.1 | | | |
| Minimal industry entry barriers | 0.1 | | 4 .4 | 4 .4 |
| Total | | 6.0 | 6.43 | 5.49 |
New content:-
The company's online streaming business is based primarily on a platform business model. Rather than directly reaching consumers, the company's platform filters content to some extent. Users are able to access the content they prefer as well. As a result of the ability to reduce costs through information technologies for global digital content distribution, Netflix's generic strategy is most relevant to the platform business model. By contrast, the company's content production operations are based on the pipeline business model.
Proprietary technology:-
Over 75,000 micro-genres have been classified by Netflix as part of the content library. For Netflix to be successful, the company needs to be able to support tens of millions of connected devices simultaneously around the world. The company faces significant challenges in providing seamless streaming of high quality videos because it must deliver a large amount of data across the internet. Streaming content is delivered by Netflix's proprietary Open Connect content delivery network, which exchanges traffic directly with ISPs and can be cached on ISP networks. It is essential for Netflix to optimize this, since it distributes multiple terabytes per second and can account for up to a third of the North American internet traffic at peak times.
Uniquely customized experience:-
Customers' viewing, search, scrolling, and ratings data, as well as the time, date, and device being used, are utilized by Netflix's new recommendation engine to suggest movies and shows based on what they watched previously. These are layered on top of the metadata that has been attached to the content in order to find similarities between pieces of content. According to Netflix, there were 76,897 different genres for movies and shows as of 2014. (the atlantic, 2019)With the tagging, Netflix personalizes your homepage with a mix of content the company believes you'll enjoy based on what you've watched before. (wired, 2018)
Subscriber acquisition cost:-
The company had forecast an increase of 2.5M paid subscribers, but they only added half of that amount. Over the same timeframe last year (Q1 ending in March), they added approximately US$500M in marketing spend to add around 3.98M paid subscribers. Competition, the economy, and all the factors above affect Customer Acquisition Cost (CAC). (MW, April 28,2022)
Weakness
Global Expansion:-
Netflix announced in January 2016 that it would expand and offer its services to 190 countries worldwide, thus covering almost all of the world's markets. Expanding internationally has not been easy. It also had to contend with regulatory compliance issues in its target markets, domestic competition, and customer preferences in local markets. Harvard Business Review & Brightline Initiative conducted a global executive survey that found that only 20% of strategic targets set by organizations are achieved. 80 percent of the strategic targets are not met due to insufficient planning, inadequate resources, and poor implementation.
Never Paid a Cash Dividend:-
A dollar-per-share increase of $0.43 from 2016 to 2021 has driven earnings-per-share upwards. In light of these high growth rates, investors might expect Netflix to pay a dividend to shareholders, but Netflix hasn't done so. The company still isn't consistently profitable, which may explain this. Netflix is expected to earn an earnings yield of 6.4% in 2022, according to consensus estimates.(Quinn, 2022)
Content Delivery:-
158 countries are served by 17000 servers, based at internet service providers. Depending on their predictions of viewer demand, they ship multiple copies of their shows to these servers. It is the company's intention to get its content, such as movies and shows, to distributors as quickly as possible to minimize the amount of strain on networks."(Gene Marks,2021)
References
Rayome, A. D. N. (2022, January 20). Netflix review: Still the Best Streaming Service. CNET. Retrieved from-
https://www.cnet.com/reviews/netflix-review/
Netflix - real customer reviews. Best Company. (n.d.). Retrieved from-
https://bestcompany.com/streaming-tv/company/netflix
Buchi, C. (2022, May 24). Netflix Review 2022: Is it still the best? Reviews.org. Retrieved from-
https://www.reviews.org/tv-service/netflix-review/
Rivera, A. (2019, November 10). Netflix's Mission Statement & Vision statement: A strategic analysis. Rancord Society. Retrieved from-
https://www.rancord.org/netflix-corporate-vision-statement-mission-statement-strategic-analysis
Forbes, (2019) All The Reasons Why Netflix Is Doomed https://www.forbes.com/sites/greatspeculations/2019/08/20/all-the-reasons-why-netflix-is-doomed/?sh=1ebc5704465e
Martínez-Sánchez, M.E., Nicolas-Sans, R. and Díaz, J.B., 2021. Analysis of the social media strategy of audio-visual OTTs in Spain: The case study of Netflix, HBO and Amazon Prime during the implementation of Disney+. Technological Forecasting and Social Change, 173, p.121178. https://www.sciencedirect.com/science/article/pii/S0040162521006119
Onyusheva, I. and Baker, A.S., 2021. NETFLIX: A CASE STUDY ON INTERNATIONAL BUSINESS STRATEGY DEVELOPMENT. The EUrASEANs: journal on global socio-economic dynamics, 6(31), pp.40-52. https://euraseans.com/index.php/journal/article/download/288/327
Fagerjord, A., & Kueng, L. (2019). Mapping the core actors and flows in streaming video services: What Netflix can tell us about these new media networks. Journal of Media Business Studies, 16(3), 166-181. https://www.tandfonline.com/doi/abs/10.1080/16522354.2019.1684717
Hadida, A. L., Lampel, J., Walls, W. D., & Joshi, A. (2021). Hollywood studio filmmaking in the age of Netflix: a tale of two institutional logics. Journal of Cultural Economics, 45(2), 213-238. https://link.springer.com/article/10.1007/s10824-020-09379-z
Adner, R., Ruiz-Aliseda, F., & Zemsky, P. (2016). Breaking Trade-Offs: When is Dominating from the Middle a Winning Generic Strategy? In Academy of Management Proceedings (Vol. 2016, No. 1, p. 16580). Briarcliff Manor, NY 10510: Academy of Management.
Hussain, S., Khattak, J., Rizwan, A., & Latif, A. (2014). Interactive effects of Ansoff growth strategies and market environment on firm’s growth. British Journal of Business and Management Research, 1(2), 68-78.
https://digital.hbs.edu/platform-rctom/submission/netflix-behind-the-scenes/#:~:text=Netflix%20uses%20its%20proprietary%20Open,ISP%20networks%2C%20to%20deliver%20content.
https://www.wired.com/2013/08/qq_netflix-algorithm/https://www.theatlantic.com/technology/archive/2014/01/how-netflix-reverse-engineered-hollywood/282679/
https://thelowdown.momentum.asia/its-not-just-netflix-customer-acquisition-costs-are-getting-expensive-for-everyone/
https://www.wired.com/story/netflix-ddos-attack/
https://www.suredividend.com/netflix-dividend/#:~:text=Given%20this%20growth%2C%20investors%20might,is%20still%20not%20consistently%20profitable.
