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  • 1999- Netflix was founded
  • 1999 - reported losses of $29.8 million on revenues of only $5 million
  • September 1999 introduced new service, the Marquee Program
  • In February 2000, NetFlix introduced a new service, CineMatch
  • In December 2000 revenue sharing agreements were reached
  • In February 2002 - subscription figure of 500,000
  • In March 2002, the company revived its plans for an initial public offering, in late May it raised $82.5 million.
  • In February 2003 they hit 1 million subscriber
  • January 16, 2007 - introduction of streaming video

How did Netflix gain this subscription base of 1,000,000

?

and the decision is

Success

  • Customer Service
  • Timeliness
  • Alliances
  • Great Product

Integrity

  • Constant Improvement
  • Promotion with High Integrity Partners

Lessons Learned

  • Timeliness (if you see a window take it)
  • Ability to see the next big thing
  • Continuously evovle

SWOT Analysis

Competitive

Analysis:

  • Mom and Pop Movie Rentals
  • Corporate Video Rentals:Blockbuster, also started their own online DVD rental in 2002
  • Online Rentals: Magic Disc, DVD Express and Reel.com
  • Walmart and Colombia House also tried to amass large volumes of DVD titles to compete with Netflix

Weaknesses

Strengths

Company

Analysis

  • Ability to provide enough copies
  • Customers have to wait for movie
  • Low Brand Recognition

First Mover Advantage

Unique selection of DVDs

  • E-Commerce website - during a time when people were skeptical
  • Had large inventory of movies
  • Focused on customer satisfaction

Opportunities

Threats

Environmental

Overview

  • Not enough capital
  • Low exposure
  • Brick and mortar stores - Heavy Competition
  • Industry Leaders Replication
  • Going Public
  • Partnerships & Strategic Alliances
  • DVD was new - only 1 percent of U.S. households owned the devices.
  • Worldwide internet was just beginning
  • 9/11 cause people to say at home and watch movies

With an increasing competition from:

Strategic Response:

Leverage

  • Already established rental companies entering the online movie rental market
  • Free movies online

Create

Valuable Partnerships!

  • 1st Mover Advantage + Strategic Alliances
  • Unique Service + New Technology

What steps has Netflix

taken to maintain customer loyalty?

Pricing

  • Unlimited plans (Unlimited DVDs each month with unlimited streaming) -1 DVD out at-a-time for $8.99
  • Limited plans - 1 DVD out at-a-time for $4.99 - Limit 2 DVDs each month with 2 hours of streaming to their PC. No streaming to TV ready devices.

Product

  • Watch movies and keep them as long as you like, no due dates, no late fees
  • Instantly watch online on your PC or Mac.
  • Instantly watch right on your TV via a Netflix ready device – xbox 360, PS3, Tivo etc.
  • Choose from a growing library of movies & TV episodes.
  • Recommendations based on ratings

Current

Marketing

Mix

Promotion

Distribution

  • TV and Theatre ads
  • Regular and Pop up internet banners
  • Iphone apps: 6 degrees of Netflix
  • Co-branding: i.e Best Buy
  • Gift Certificates
  • Retail Partnership
  • Direct e-mail
  • Word-Of-Mouth
  • Over 50 distribution centers and over 95% of their subscribers live withinone-day delivery zones
  • Netflix distributes most of their products via regular mail, although streaming video is a growing part of their distribution channels
  • New alliances deliver the ultimate streaming experience
  • Any electronic devise that is capable of streaming movies

Marketing 479 Case Analysis

  • Mike Flynn
  • Drew Irons
  • Gustav Ponten

Strategic Issue: How to gain a base subscription and maintain customer loyalty

Brief History

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