Created for Corporate Strategy Course, Chapman University, MBA

1. Chris
Helvajian,
Katie
Irvine,
Vas
Kypreos,
Armen
Sarkisian
&
Charles
Vickery

2. Company
History
Founded
by
Reed
Hastings
• 1997
• Los
Gatos,
CA
DVD-­‐by-­‐mail
• No
late
fees
• Customer-­‐centric
Keys
to
success
• Managed
to
defeat
Blockbuster
&
Wal-­‐Mart
• Core
values
Background - Industry - SWOT - SFAS - Porter's 5 Forces - Tows

3. Type
of
Company
&
Size
Publically
traded
on
NASDAQ
• NFLX
• 127%
return
YTD
Strong
operations
• 50
warehouses
with
100,000
titles
each
• Shipped
2
billionth
title
in
2009
Culture
• 9
cognitive
skills
• The
Keeper
Test
• Freedom
Inc:
“If
you
put
fences
around
people,
you
get
sheep”
Background - Industry - SWOT - SFAS - Porter's 5 Forces - Tows

4. Markets
Served
Some
Facts:
-­‐
14
million
subscribers
-­‐
97%
live
within
1
day
delivery
zone
-­‐
Uses
“The
Long
Tail
Effect”
-­‐
Streams
to
game
consoles
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

5. Types
of
Products
&
Services
DVD-­‐by-­‐Mail
-­‐
Movies
-­‐
Television
Shows
Streaming
to
Game
Consoles
-­‐
Nintendo
Wii,
XBox
Services
-­‐
Recommendation
system
-­‐
Web
site,
iPad/iPhone
Apps
-­‐
Envelopes
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

6. Industry
Analysis
Market
Share
Traditional
Non
-­‐
Traditional
Niche
Web
Sites
-­‐
puritanpicks.com
(Religious),
goflicks.com
(Adult)
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

7. Describing
the
Customer
Upwardly
Time
Social
TV/
mobile
yet
availability
movie
watcher,
entertainment
offers
this
interested
in
aware
early
consumer
the
the
experience
adopter
most
viewing
of
communal
opportunities
viewing
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

8. SWOT
Analysis
Subscription
Model
Range
of
content
Strengths
Strategic
alignment
Financial
position
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

9. SWOT
Analysis
Shipping
costs
Streaming
capabilities
Weaknesses
Distribution
time
delay
Logistical
issues
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

10. SWOT
Analysis
Streaming
to
Apple
iPad
and
iPhone
game
consoles
Opportunities
Advertising
on
Netflix
Content
acquisition
of
envelopes
video
games
Background - Industry - SWOT - SFAS - Porter’s 5 Forces - TOWS

11. SWOT
Analysis
Competition
from
Competition
from
Mom
Redbox
&
Pop
shops
Threats
VOD
Programming
Studio
power
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

12. Strategic
Factor
Analysis
Summary
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

13. Risk
Analysis:
Threat
of
New
Entrants
Large
capital
expense
Moore’s
Law
Low
Complex
logistics
Streaming
costs
are
low
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

14. Risk
Analysis:
Threat
of
Competitive
Rivalry
Blockbuster,
Redbox,
iTunes,
VOD
Competitors
are
aggressive
High
Switching
costs
are
low
Price,
distribution,
inventory
differentiation
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

15. Risk
Analysis:
Threat
of
Substitutes
Consumer
behavior
treats
each
product
differently
High
Passive
Interactive
entertainment
social
media
is
a
social
norm
Kindle,
iPad,
video
games,
web
surfing
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

16. Risk
Analysis:
Bargaining
Power
of
Buyers
Tiered
pricing
strategy
Low
Blacklist
Eliminating
profit
costs
is
not
sucking
an
option
customers
Piracy
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

17. Risk
Analysis:
Bargaining
Power
of
Suppliers
Control
delivery,
content,
timing
Firms
High
Strategic
offering
VOD
alliances
in
have
close
ties
with
large
Hollywood
are
complex
studios
Litigious
industry
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

18. TOWS
Matrix
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

19. Strategic
Recommendations:
SO
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

20. Strategic
Recommendations:
WO
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

21. Strategic
Recommendations:
ST
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

22. Strategic
Recommendations:
WT
Background - Industry - SWOT - SFAS - Porter's 5 Forces - TOWS

23. Conclusion

24. Conclusion
Questions?