Netflix strategy final project
The only constant with Netflix has been its ability to adapt and change its business model in order to thrive and to keep creating value for its stakeholders. With Netflix breaking a series of technology barriers, its “any movie, any time” business is just around the corner. Netflix was the pioneer who used this business model to offer entertainment content using video streaming technology in exchange for subscription fee. They offer unlimited series and TV rentals without due dates, late fees, shipping and handling fees, or per title rental fees. One core capability is the ability for members to have control over their viewing experience.
Netflix has three business units: U.S. DVD rentals, U.S. Streaming, and International Streaming. In 2013 U.S. DVD Subscriptions constitute 16% of the price estimate for Netflix's stock, U.S. Streaming Subscriptions constitute 57% of the price estimate for Netflix's stock, and International Streaming Subscriptions constitute 21% of the price estimate for Netflix's stock.
The majority of Netflix's value is currently on its U.S. Streaming. According to Netlix’s Annual 2013 Report, the DVD subscribers are expected to decline significantly in the U.S. while streaming subscribers are expected to grow. “We named the company Netflix, not DVDs by Mail because we knew that eventually we would deliver movies directly over the Internet,” -Hastings. The home video market is growing in the U.S. and streaming is the best way to tap it given the proliferation of multiple internet-enabled devices. Secondly, the international streaming business is likely to remain a relatively lower value contributor for several years because Netflix will face high content costs as well as local competition and resistance. Moreover, markets such Latin America have lower broadband penetration and per capita income, thereby making any rapid growth in this region difficult for Netflix.
To properly understand the Netlflix Business Model we used a Canvas Model (see
Netflix has three business units: U.S. DVD rentals, U.S. Streaming, and International Streaming. In 2013 U.S. DVD Subscriptions constitute 16% of the price estimate for Netflix's stock, U.S. Streaming Subscriptions constitute 57% of the price estimate for Netflix's stock, and International Streaming Subscriptions constitute 21% of the price estimate for Netflix's stock.
The majority of Netflix's value is currently on its U.S. Streaming. According to Netlix’s Annual 2013 Report, the DVD subscribers are expected to decline significantly in the U.S. while streaming subscribers are expected to grow. “We named the company Netflix, not DVDs by Mail because we knew that eventually we would deliver movies directly over the Internet,” -Hastings. The home video market is growing in the U.S. and streaming is the best way to tap it given the proliferation of multiple internet-enabled devices. Secondly, the international streaming business is likely to remain a relatively lower value contributor for several years because Netflix will face high content costs as well as local competition and resistance. Moreover, markets such Latin America have lower broadband penetration and per capita income, thereby making any rapid growth in this region difficult for Netflix.
To properly understand the Netlflix Business Model we used a Canvas Model (see