1. Analysis of Netflix presented by Vince Wang

2. Agenda Introduction What is Netflix? How Netflix Works?
How Much Does Netflix Cost?
Comparing Netflix to its Competitors
Role of IT at Netflix
Porter’s Competitive Forces Model

3. Agenda (continue) Advantage of Internet
CRM (Customer Relations Management) Strategy in Netflix
SWOT Analysis
Netflix Strengths
Netflix Weakness
Netflix Opportunities
Netflix Threats
Conclusion
Financial Status
The Future of Netflix

4. What is Netflix? Founded in 1997 at Scotts Valley, CA
Founder of Netflix: CEO Reed Hastings pioneered the subscription movies-by-mail model from his own personal frustrations
Largest online DVD movie rental service
3 million members
40,000 movie titles
CEO predicts that Netflix will boast five million subscribers and one billion in annual revenue by 2007

5. How Netflix Works? Receive selection of DVD’s from customers
Process DVD’s at one of 30 shipping centers
Send DVD’s straight to customers within one-day
Return DVD’s in one of Pre-Paid Mailer

6. How Much Does Netflix Cost?
Plan
Rental/ Month
Price / Month
Free Trial Length
3 DVDs at-a-time
Unlimited
$17.99
Per month
2 Week Free Trial
2 DVDs at-a-time
$14.99
Limit 4 per month
$11.99

7. Comparing Netflix to its Competitors
Wal-Mart
Blockbuster
Movie Selection
●●●●●
●●●●○
Subscription Plan Selection
●●●○○
Movie Search Interface
Movie Availability
Speed Of Delivery
●●●●● best
Statistics from:

8. Porter’s Competitive Forces Model
Low Cost
Differentiation
Innovation
Develop Alliances
Promote Growth

9. Speedy Delivery

10. Netflix CRM Strategies
Customers can access services through the web site
Communication and feedbacks from Netflix’s customers
Customer service center is open seven days a week
Phone support
Netflix Affiliates Program

11. Netflix Strengths Subscription style e-commerce service
Unlimited access to world’s largest DVD library
No lineups and no late fees
Excellent customer service
Easy website navigation
Preview movie before renting

12. Netflix Weakness
Customers slowly adapt to change from movies-by-mail model
High quality in customer service is not easily achievable

13. Netflix Opportunities
Cross promotion program
Promotional relationship with Amazon.com
Allow customers to download movies
Extend into video games rental business

14. Netflix Threats
Strong competitive market with other movie rental stores such as Blockbuster, Wal-Mart and Comcast Pay-per-view
Older or newer media formats are not supported currently
Lower price and promotions of competitors
Cost of postal service

15. Financial Status
Revenue up 86% from $272.2 million in 2003 to $506.2 million in 2004
Subscribers rose from 1,487,000 in 2003 to 2,610,000 in 2004
After Blockbuster and Wal-Mart went into the market in 2004, growth rate dropped from 77% to 2%
Failure to expand to UK with a net-loss of $3 million

16. Conclusion Netflix is at its maturity
Expanding and growing slower than before
Loss in revenues from competition
The diminishing future of Netflix