Netflix: Act 1: David Becomes Goliath: Crafting Killer Assets for DVD-by-Mail Dominance

ICA#3 (Part One):

ICA#3: Part One Individually (10-15 minutes): Write the answers to the questions to which you are assigned. In your groups (30 minutes): Discuss the answers to the questions as a group. Once you have come to a consensus, make a PowerPoint, Prezi, or Google Slides presentation. Email your presentation to your group members and cc me (christopher.califf@wwu.edu). Present Your Findings: When you are finished organizing your presentation with your groups, designate a presenter from your group to present to the whole class. That presenter will then present your PPT to the class, and the class and I will ask questions, etc.

Groups and Responsibilities Section 1: Overview of Chapter, Background on Netflix Section 2: The Netflix Brand Section 3: Netflix and Scale Section 4: The Big Customer Base Section 5: Leveraging the Data Asset

Overview of Chapter, Background on Netflix Section1: Overview of Chapter, Background on Netflix What is the Act 1 all about? What will we learn in Act 1 that is important? Provide a brief overview of the chapter (e.g., takeaways, important terms and concepts, etc) How do the concepts in chapter 2 relate to this chapter? Why Study Netflix? Why is Netflix a good company to learn about the key takeaways, important terms and concepts, etc. Could another company have been a better choice? Use the Internet to find some important information about Netflix that you think your fellow classmates need to know Example: CEO, Long-term view, Officers, Quarterly Earnings, Stock Information, Company timeline, management philosophies, company culture, etc. What is life like working at Netflix? Answer this question: “During his time as CEO of Netflix, Hastings has also served roles for other firms. What additional managerial roles outside of Netflix has Reed Hastings accepted? Why might these roles potentially be important for Netflix?” Basically, set the stage for the first-half of the chapter

Section 2: The Netflix Brand What is brand? How is it different than advertising? Does Netflix have a strong brand? Offer evidence demonstrating why the firm’s brand is or isn’t strong. How is a strong brand built? Give a summary of the article, The Three Tools Netflix Used to Build Its World-Class Brand: http://firstround.com/review/the-three-tools- netflix-used-to-build-its-world-class-brand/ How did Netflix distance itself from the competition in terms of brand? How did brand play a role in Blockbuster and Walmart not succeeding in the DVD-by-mail subscription service? Use the Internet to find some important information about the Netflix brand that was not mentioned in the chapter Resources: http://www.adweek.com/news/television/here-s-why-consumers-love-netflix- more-amazon-and-hulu-165547

Section 3: Netflix and Scale What is scale? In what key ways is Netflix “bigger” than the two major competitors who tried to enter the DVD-by-mail market? Discuss this in terms of the distribution network and long tail What is long tail? Do customers like the long tail? Why or why not? Discuss the Netflix automated distribution centers in terms of scale Discuss the meaning behind (1) selection attracts customers, and (2) the Internet allows large-inventory efficiencies that offline firms can’t match How can the internet help expand the scale of Netflix? What do YOU think is important to know about Netflix and scale Resources: http://www.chron.com/news/houston-texas/article/Get-glimpse-of-method- behind-Netflix-madness-1706580.php#photo-1225129 http://www.businesscloudnews.com/2015/01/28/netflix-is-upgrading-its- cloud-architecture-for-scale/

Section 4: The Big Customer Base What does the Vice President of Netflix mean by, “Anyone can replicate [our] operations if they wish. It’s not going to be easy. It’s going to take a lot of time and a lot of money.” Discuss the customer base in terms of why WalMart bailed out. When doing so, use some concepts from chapter 2. Provide an overview of the Netflix subscriber and customer base. How do powerful resources in chapter 2 play a role here? Discuss a few. Example: How many subscribers does Netflix have, what are some strategies for Netflix to attract more customers? What do you think are some challenges to growing the Netflix customer base? What do YOU think is important to know about Netflix’s customer base and them attaining a competitive advantage? Resources: http://www.forbes.com/sites/laurengensler/2015/01/20/netflix-soars-on-subscriber- growth/

Section 5: Leveraging the Data Asset What is user data? What are some examples of Netflix user data? Describe Cinematch and collaborative filtering using examples. How does Netflix use collaborative filtering? Does this technology work? How so? Discuss consumer data in terms of switching costs. Could a new competitor match Netflix’s recommendation software? If it did, would this create a threat to Netflix? Why or why not? What is the churn rate? What does it mean for Netflix. How has Netflix partnered with movie studios? What role did data play in such strategic partnerships? How does Netflix use data and analytics to drive success? Resources: http://www.smartdatacollective.com/bernardmarr/312146/big-data-how- netflix-uses-it-drive-business-success https://blog.kissmetrics.com/how-netflix-uses-analytics/

When you have finished ICA#3, SAVE YOUR WORK. We will continue ICA#3:Part 2 on Wednesday.