All About Netflix - The Rise and Rise

Craze of the Hour
 What is it that we so love to watch?
 Western movies & T.V Series.
 How come?
 The dot-com boom
 Globalization
 Ever-increasing tech-friendly populace

Netflix: To The Rescue
 Everyone’s answer=Online Streaming=Netflix.
 The pioneer in the field of live streaming and online entertainment.
 Started its journey by revolutionizing the industry of DVD-on-rent with its current sales figures
surpassing a billion.
 It is the answer to our prayers of weekend-long movie marathons scripted with a customized
playlist.
 Free to watch as many times as we wish.

Netflix: The Ultimate Entertainer
 It is very cheap with a monthly subscription of only Rs.500 with a free first-month subscription and no late
fees.
 It has the largest online library of movies and T.V series.
 It has the best video recommendation algorithm.
 Available anywhere and anytime, given only internet facility.
 It is very much legal and now also in India.
 Gives access to content not yet available on TV.
 As of June 2016, it has 83 million subscribers over 190 countries.
 Its closest worldwide competitor, Amazon Video has a market share value of only 13% compared to
Netflix’s 36%. All other competitors are inconsequential.
 One of a kind exclusive content.

A Glimpse of Netflix Original Productions

Why Netflix, when we have free
torrents?
 “Just because its free, doesn’t mean it won’t cost you”. – Giovanni Elmore.
 Unlike torrents, Netflix has No viruses, no malware & no risk of Identity theft.
 Netflix is totally ad-free and legal.
 Key Reason: Laws of Anti-Piracy and Copyright Infringement and Ethics.
 Live example: World’s largest torrent site, kickass-torrent’s domain seized,
alleged owner arrested.

Strategic Planning
 Filling the gap:
Every successful business is based on satisfying some currently unmet need in the market.In 1998
the business started with mail order DVD rentals and sales also known as DVD-by-mail operation.
 Online Video Streaming:
Netflix then came up with online streaming. By entering licensing agreements with major film
studios Netflix is able to distribute movies and TV shows online. Based on a low monthly
price,subscribers can watch as much as they want from the content library, as far as they have an
Internet connected screen.
1998

Resources and Competencies
The VRIO model is an optimal solution for analyzing Netflix’s resources and competencies; the model
consists of organizational value, rarity offered for the customers, inimitability and organizational support.
 Value: The value that Netflix offers is a vast content library that contains around 100,000 movies and
series, which creates a big value and variable options to their customers.
 Rarity: In online streaming industry, several firms offer similar products such as Hulu and Amazon.
However, Netflix invested $400 million to produce its own show in order to reduce the licensing cost
 Inimitability: Netflix is expanding its business in the international market and is available in over 40
countries.
 Organizational support: The activities providing rich content and excellent customer service are
supported by the organization.

PESTEL Analysis
Political and legal:
In terms of political and legal landscape, Netflix is affected by any change in copyright laws. Such
changes can make distribution of movies and TV shows to members problematic. Moreover, problems can
arise from current tax differentials between online service and brick-and-mortar DVD sales as new
regulations seek to reduce this gap.
Economic:
The customer’s income is a crucial factor for the industry that Netflix operates in. Revenue is highly
sensitive to economic conditions as consumers may consider online streaming a luxury item. Therefore,
the improvement in economic conditions since the financial crisis could increase future revenue.
Importantly, the ability of Netflix to sustainably offer Netflix at a low monthly cost gives Netflix a competitive
advantage

PESTEL Analysis
Social:
In terms of social landscape, demographic changes and changes of the way that people consume
traditional media versus digital media are challenging factors for Netflix to adjust the content for all ages.
Furthermore, increased access to electronic devices is affecting Netflix’s access to each market.
Technological
Netflix’s ability to stay relevant in the online streaming market is highly affected by developments in
technology.
Environmental:
The environmental factor is not a significant one for Netflix as most of its production facilities happen
online. It is furthermore a good sign for Netflix that the transition of Netflix from physical DVD’s to online
streaming is less wasteful for the environment
"OUR CHALLENGES ARE EXECUTION CHALLENGES"

How NETFLIX changed the face of CONTENT
MARKETING?
 Give the customers what they want- They identified the target audience and gave audience what
exactly they need
 Audience Engagement- Replies to people in social media making them feel connected to the
brand
 Anticipate And Innovate- Netflix has had a lot of highs and lows, but they wouldn’t be where they
are today if they didn’t take risks and stay ahead of the curve
 High Quality content matters

What we can learn from NETFLIX’s Marketing
Strategy?
 Year 2007- Netflix sold their Billionth DVD and then they adopted a different marketing strategy-
Video Streaming Service via Internet
 Making it available to customers- They started offering their streaming service across so many
platforms and operating systems that the majority of households in their target market will be able
to subscribe if they wish
 User Experience: Netflix personalizes movies and TV shows according to the customer needs
 One of the most successful techniques that Netflix has employed when growing their user base is
the use of the 1 month free trial
 Content Marketing- In 2011 Netflix announced that they were funding the production of a political
drama series entitled ”House Of Cards”

6 Market Domination Strategies From NETFLIX
 Fill the Gap
 Think Strategic Partnership
 Be Prepared
 Think Recurring income
 Learn From Others
 Add value for the customers

Netflix’s Model of Corporate Teamwork
• Highly Aligned
– Strategy and goals are clear, specific, broadly understood
– Team interactions focused on strategy and goals, rather than tactics
– Requires large investment in management time to be transparent and articulate and perceptive
• Loosely Coupled
– Minimal cross-functional meetings except to get aligned on goals and strategy
– Trust between groups on tactics without previewing/approving each one – so groups can move
fast
– Leaders reaching out proactively for ad-hoc coordination and perspective as appropriate
– Occasional post-mortems on tactics necessary to increase alignment

Context, not Control
 Top-down decision-
making
 Management approval
 Committees
 Planning and process
valued more than results
 Strategy
 Metrics
 Assumptions
 Objectives
 Clearly-defined roles
 Knowledge of the stakes
 Transparency around decision-
making
Context (Embrace) Control (Avoid)

The Rare Responsible Person
• Self motivating
• Self aware
• Self disciplined
• Self improving
• Acts like a leader
• Doesn’t wait to be told what to do
• Picks up the trash lying on the floor
18

Hiring Fully Formed Adults
 The best thing you can do for employees – a perk better than foosball or free sushi – is hire only ‘A’
players to work alongside them.”
 Imagine a workplace where the employee handbook was cut in half and mostly demanded
“adultlike behavior” on the part of employees? Imagine a company travel policy was a mere five
words long: “Act in (the company’s) best interests”?
 Netflix believes in taking care of managing their employees at the grassroot level by hiring the
right people – candidates whose ambitions are aligned with the company’s goals and will serve the
interest of organization – takes care of creating an efficient work place.
 If you’re careful to hire people who will put the company’s interests first, who understand and
support the desire for a high-performance workplace, 97% of your employees will do the right
thing.

The Truth About Performance
 Netflix has eliminated formal performance reviews.
 When an employee is performing poorly, it is much more effective to sit down with the employee and
have a conversation rather than funnel the individual into a Performance Improvement Plan (PIP), which
tracks performance over time.
 When Netflix stopped holding formal reviews, informal ‘360-degree reviews’ took their place. People are
asked to identify things that colleagues should stop, start, or continue. In the beginning we used an
anonymous software system, but over time we shifted to signed feedback, and many teams held their
360s face-to-face.
 In principle, Netflix ensures that all its employees receive outstanding severance packages when they are
let go from the company because it breeds a more positive business culture.

Creating Great Teams
 Netflix encouraged managers to imagine watching a documentary about what their team would look like
in six months. Which goals would the team accomplish in the future? What skills would the team need to
accomplish these goals?
 If you’re in a fast-changing business environment, you’re probably looking at a lot of mismatches, “In that
case, you need to have honest conversations about letting some team members find a place where their
skills are a better fit. You also need to recruit people with the right skills.
 If you see a better opportunity elsewhere, you should be allowed to take what you’ve earned and leave. If
you no longer want to work with us, we don’t want to hold you hostage.
 Netflix continually told managers that building a great team was their most important task. We didn’t
measure them on whether they were excellent coaches or mentors or got their paperwork done on time

Netflix – The HR Innovator
 Netflix doesn't distribute performance-based bonuses—they're unnecessary if you hire the right
people.
 Salaried employees were told to take whatever time they felt was appropriate. Bosses and employees
were asked to work it out with one another. While hourly workers have a more structured system,
salaried employees are merely guided by HR on how to take time off.
 The Netflix parental leave policy allows new parents up to one year of paid leave, more than any
other company in the U.S., including Google, Facebook, LinkedIn, and Apple.
 At Netflix results are prized over hours. There is no 9-5 but rather, by enabling truly flexible working
Netflix shows that it understands that for today’s employees the “desk” can be anywhere and,
provided it fits within the overall business structure, results can be achieved at anytime

At A Glance
Netflix Stock Price (NASDAQ:NFLX) $91.41 $3.75 (4.28%)
Netflix, Inc.
100 Winchester Circle,Los Gatos,
California 95032
Phone 1 4085403700
Industry Specialty Retail
Sector Retail/Wholesale
Fiscal Year-end Dec-16
Profit Margin 1.85%
Operating Margin (ttm) 3.32%

Financial Facts
 What is important to note about Netflix is the lack of inventory and production costs. As most of
their tangible titles are either rented or bought in mass quantities at a significant discount, profit
margin appears to be tremendously healthy.
 Their primary costs lie in the packaging and shipping of titles, as well as servers that monitor
subscriptions. Their high sales growth can be attributed to the fact that Netflix is a relatively new
company still in the high growth model of the business cycle
 As Netflix’s business model is more dependent on subscription growth rather than managing
operation expenses, sales growth, gross profit margin, and return on equity are the key ratios to
monitor to determine the health of Netflix

Revenue Health
Efficiency
Revenue/Employee 1,832,300.00
Income Per Employee 33,146.00
Total Asset Turnover 0.79
Total revenue for Netflix has increased each year from
2012 to 2015. Revenue was $6,786,661,000 for 2015 versus
$6,364,340,000 for 2014, which was a 23.2% increase. As
revenue increases, expenses and income increase along
with it.
Revenue $6.78B
Net Income $122.64M
2015 Sales Growth 23.20%
Employees 3,700

NETFLIX – The Journey The Destination
 Netflix’s New Year’s resolution for 2016 was to become truly global, and it pretty much fulfilled the
goal before the year was even a week old. As Reed Hastings, the company’s chief executive, was
giving his keynote address at CES, Netflix flipped the switch on 130 countries. Netflix is now
worldwide, with China being the only notable exception.
 Netflix is betting it can make a handful of programs with universal appeal and license some
local content, with an eye to building a single, global library rather than a bunch of regional ones.
 Netflix will have to prioritize making original shows with the widest possible reach, which means it
will end up pushing shows tailored to its biggest market on users in smaller ones.

References
 http://www.ceo.com/human_resource_management/5-reasons-netflix-is-spearheading-the-hr-revolution/
 https://www.peoplematters.in/blog/strategic-hr/5-hr-strategies-you-should-learn-netflix-12320?
 http://www.eremedia.com/ere/recruiting-great-talent-is-the-core-of-the-netflix-hr-revolution/
 http://www.hcamag.com/hr-news/how-netflix-reinvented-hr-202049.aspx
 http://www.fastcompany.com/3027124/lessons-learned/netflixs-major-hr-innovation-treating-humans-like-people
 https://www.zenefits.com/blog/netflix-parental-leave-more-than-smart-hr/
 Netflix in India: Here’s everything you need to know | The Indian Express
 The Ultimate Netflix Guide: Everything You Wanted To Know About Netflix But Were Afraid To Ask
 www.makeuseof.com
 Who Are Netflix's Main Competitors? (NFLX) | Investopedia
 www.investopedia.com
 Hotstar Vs Netflix: Consumer is the winner - Times of India

Managerial Communication
GROUP AM2
 Aashna Akhtar – 16F703
 Akashdeep Sanyal – 16F707
 Ashish Joy – 16F719
 Saan Isaac George – 16F744
 Poorvi B.Happalad - 16H109
 Pratish Prakash Mallya – 16H110

All About Netflix - The Rise and Rise

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