- The document discusses lessons learned from Netflix's transformation from a DVD rental service to a global streaming leader under the visions of its leaders. It highlights how Netflix countered Blockbuster through a superior business model of online rental and subscription services. It also explains how Netflix formulated strategies around exclusive content licensing, ubiquitous infrastructure and language support to achieve massive scale in streaming globally.
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11. Global leader in subscription internet TV
Growing slate of global, original content
109 115 million members
190 countries, 10s of languages
1000s of device types
Netflix Streaming
29. Envision what you want in the future so you can work and
plan towards it.
Begin with the End in Mind
30. Put First Things First
1. Urgent – Important
Crises
Pressing problems
Deadline-driven projects
Meetings, preparations
2. Not Urgent - Important
Preparation, prevention
Planning
Innovation, creativity
Values clarification
Relationship building
Empowerment
Work-life balance
3. Urgent – Not Important
Interruptions, some calls
Some mail, reports, meetings
Many popular activities
4. Not Urgent – Not Important
Trivia, busywork
Junk mail
Some calls
Time wasters
31. Put First Things First
1. Urgent – Important
Crises
Pressing problems
Deadline-driven projects
Meetings, preparations
2. Not Urgent - Important
Preparation, prevention
Planning
Innovation, creativity
Values clarification
Relationship building
Empowerment
Work-life balance
3. Urgent – Not Important
Interruptions, some calls
Some mail, reports, meetings
Many popular activities
4. Not Urgent – Not Important
Trivia, busywork
Junk mail
Some calls
Time wasters
38. Strategy: a route to continuing Power
in significant markets
Power: the set of conditions creating
the potential for persistent differential
returns
Business Strategy
Hamilton Helmer
40. Some condition which yields material improvement in cash flow
of the power wielder via reduced cost, enhanced pricing and/or
decreased investment requirements.
Benefit
41. Some obstacle which engenders in competitors an inability
and/or unwillingness to engage in behaviors that might over
time arbitrage out this benefit.
Barrier
42. A business in which per unit cost declines as production
volume increases.
Benefit: lower costs
Barrier: fear of retaliation
1. Scale Economies
43. The value of a product to a customer is increased by the use
of the product by others
2. Network Economies
44. 3. Counter-positioning
A newcomer adopts a new, superior business model which
the incumbent does not mimic due to anticipated damage
to their existing businesses
45. The value loss expected by a customer that would be
incurred from switching to an alternate supplier for
additional purchases
4. Switching Costs
46. The durable attribution of higher value to an objectively
identical offering that arises from historical information
about the seller.
5. Branding
47. Preferential access at attractive terms to a coveted asset
that can independently enhance value.
6. Cornered Resource
48. Embedded company organization and activity sets which
enable lower costs and/or superior product, and which can
be matched only by an extended commitment.
7. Process Power
53. A newcomer adopts a new, superior business model which
the incumbent does not mimic due to anticipated damage
to their existing businesses
Counter-positioning
57. Embedded company organization and activity sets which
enable lower costs and/or superior product, and which can
be matched only by an extended commitment.
Process Power
71. A newcomer adopts a new, superior business model which
the incumbent does not mimic due to anticipated damage
to their existing businesses
Netflix counter-positioned against itself
Counter-positioning
75. Global leader in subscription internet TV
Growing slate of global, original content
109 115 million members
190 countries, 10s of languages
1000s of device types
Netflix Streaming
76. A business in which per unit cost declines as production
volume increases.
1. Scale Economies
77. Competitors license the same content at the same time
Inception: Non-Exclusive Studio Contracts
78. • Netflix
– has 50M members who will watch one title from deal
– pays $50M for a non-exclusive deal
– $50M / 50M = $1 per view
• Amazon
– has 5M members who will watch 1 title from deal
– pays $5M for a non-exclusive deal
– $5M / 5M = $1 per view
Exercise
80. • Netflix
– has 50M members who will watch one title from deal
– pays 60M for an exclusive deal
– 60M / 50M = $1.20 per view
• Amazon
– has 5M members who will watch 1 title from deal
– must pay 60M for an exclusive deal
– 60M / 5M = $12 per view
Exercise
85. 2007
• Jan – Windows
2008
• May – Roku
• Oct – LG, Samsung Blu-ray
• Oct – Apple Mac
• Nov – XBox 360
2009
• Jun – LG DTV
• Nov –Sony PS3 (disc)
• Nov – Sony Bravia
– DTV & Blu-ray
Device Ubiquity
86. 2011
• May – Android
• Nov – First e-readers
– Kindle Fire, Nook
Device Ubiquity
2010
• Mar – Nintendo Wii (disc)
• Apr – Apple iPad
• Aug – Apple iPhone
• Sep – Apple TV
• Oct – Sony PS3 (no disc)
• Oct – Nintendo Wii (no disc)
• Nov – Windows Phone 7
87. 2010 - Canada
2011 - Latin America
2012 - UK, Ireland, Nordics
2013 – Netherlands
2014 - Austria, Belgium, France, Germany, Luxembourg, Switzerland
2015 - Australia, New Zealand, Japan, Spain, Italy, Portugal
Geographic Ubiquity
88. • English
• Spanish (Latin American)
• Portuguese (Brazilian)
• Dutch
• French
• German
• Japanese
• Spanish (Castilian)
• Italian
• Portuguese (European)
Language Ubiquity - Subs, Dubs, UI
92. Before Global
• English
• Spanish (Latin American)
• Portuguese (Brazilian)
• Dutch
• French
• German
• Japanese
• Spanish (Castilian)
• Italian
• Portuguese (European)
Global
• Chinese
• Korean
• Arabic
Language Ubiquity – Sub, Dubs, UI
121. Josh Evans
Senior Director of Platform Service Engineering @ GitHub
November 13, 2017
Vision & Strategy
Epiphanies of a Netflix Leader
Editor's Notes
Explicit, intentional work of leadership
John Lasseter
Steve Jobs
Ed Catmul
Netflix had a 5 year headstart while blockbuster clung to their existing business model
Evidence of a counter positioning strategy
In 2009 Hacking Netflix went on a tour of a Netflix DVD shipping center.
They found this unmarked building and truck outside.
3a.m. The mail is picked up from the Postal Distribution Center and the workers start processing the DVDs.
Each envelope is ripped open by hand, and the DVDs are inspected for cracks.
The NPI sorter performs multiple tasks, and is even used to process employee time cards. The DVDs are run through the machine once to check them back into inventory, a second time to determine if they are being rented that day, and finally to be addressed and sorted for mailing when they are in the envelope. The Hartford shipping center has 3 of the NPI machines, and they are incredible fast and process 30,000 discs per hour.
first barcode scanner, inkjet printer for addressing, and the final scanner for sorting
The Stuffers load the envelope onto a conveyor, use suction to open the pocket, slide the DVD into he envelope, fold the cover over, seal the envelope, and apply the round sticker.
Streaming became the disruptive startup within Netflix – funded by a profitable DVD business
The vision remained the same – the only change was the delivery mechanism.