General presentation of the company
Netflix, Inc. is the world’s leading Internet television network. Over 93 million members in over 190 countries enjoy more than 125 million hours of TV shows and movies per day. Netflix’s offer includes its original series, documentaries and feature films. Members can watch as much as they want, anytime, anywhere, on nearly any Internet-connected screen. Members can play, pause and resume watching, all without commercials or commitments. Additionally, in the United States members can order DVDs delivered to their homes.
Company’s history
In 1997, in Los Gatos, Reed Hastings founded Netflix. The starting company only offered online movie rentals. In 1998 they launch the first website that offers DVD rental and DVD sales. In 1999 Netflix still rents and sells DVDs but they introduce a subscription service. From now on, Netflix offers unlimited DVD rentals for one low monthly price. Netflix’s personalized movie recommendation system was founded in 2000. In 2007 Netflix introduces streaming. Members are now allowed to instantly watch television shows and movies on their personal computers. During the following years, Netflix partners with different companies in order to allow their members to stream on almost any Internet connected device. This streaming service causes an important breakthrough for Netflix. In 2011 Netflix launches throughout Latin America and the Caribbean. Later, in 2012, Netflix became available in several European countries. Only in 2014 Netflix became available in Belgium. Over the years, Netflix was nominated and won several Primetime Emmy Awards. In 2015 Netflix launches in Australia, New Zealand, Japan and continues its expansion across Europe. Nowadays Netflix is available in almost every country except for China, the Crimea, North-Korea and Syria.
Company’s numbers
Netflix is a pioneer in the market for entertainment video. In the last quarter of 2016 Netflix achieved a net profit of 67 million dollars and a turnover of 2,5 billion dollars. In the same quarter Netflix employed approximately 4,700 employees. More numbers will be discussed in ‘Annual report’.
Competition
Netflix competes for a share of member’s time and spending for relaxation and stimulation. The amount of competition is big and changes rapidly. Netflix competes against linear networks, pay-per-view content, DVD watching, other internet networks, video gaming, web browsing, magazine reading, video piracy, and more.
Netflix its main competitors are Amazon Prime and Hulu. Their main competitors are entertainment video providers, like multichannel video programming distributors (ex. cable television systems), internet-based movie and TV content providers, video gaming providers and DVD rental outlets. Players in the industry compete on price, exclusivity, range of content and user experience.
Hastings, the CEO of Netflix, also claims to be very concerned about competition such as Facebook, Snapchat and YouTube. Any other source of entertainment that their members can choose over them is considered competition. The company’s objective is “to win moments of truth”. This means Netflix tries to persuade its consumers to choose them in their moments of free time, even though they have a multitude of other options.
Even though their consumers may maintain simultaneous relationships with multiple entertainment sources, the company’s objective remains the same: “winning moments of truth”. In order to reach this goal, Netflix continually improves their service.
If video piracy becomes easy, reliable, and socially acceptable, it could become Netflix’s largest competitor. Because video piracy is free and offers a very broad selection, it is a dangerous competitor for entertainment time in many international markets. For instance, music revenues have been falling for 15 years due to large scale music piracy. Netflix hopes to remain successful by offering great inexpensive services.
Target market
It’s hard to describe Netflix’s target market. Since their members are of all ages, have different incomes, have different preferences and are from all over the world. Netflix doesn’t divide its market in segments, but targets a mass market and aims at acquiring as many subscribers as possible. If Netflix focused on only one segment, they wouldn’t be profitable since their subscription rate per person is low. Another reason for not having specific segments is their service. The service offered is highly tailored to individual needs using complex prediction algorithms and a recommender system.
Overview of main activities
Netflix has three activity segments: domestic streaming, international streaming and domestic DVD. First of all, the domestic streaming segment consists of the revenues from monthly membership fees in the United States. Secondly, the international streaming segment derives revenues from monthly membership fees from members outside of the United States. These two segments offer services consisting solely of streaming content to Netflix members. The last segment, the domestic DVD segment derives its revenues from the monthly membership fees for the DVD-by-mail service.
Netflix is the leading internet television network. They offer their members 125 million hours of TV shows, movies and documentaries. Providing content is one of their key activities. Part of their offer consists of original and exclusive programming. Their programming includes increasingly content they produce themselves. They produced movies, series and documentaries themselves. Some examples are Orange is the new black, House of cards, Riverdale, The crown, etc.
Netflix is a global company and therefore attracts markets all over the world. Consequently, they have to deal with cultural differences an variances in content tastes. As a result, they are now developing a growing number of non-English language original from places such as Mexico, France, Italy, Japan and Brazil. Netflix wants to bring engaging stories from many cultures to people all over the world.
Netflix is a not a generic video company. Their customers can’t stream all types of video such as news, sports, porn, gaming and reality. They focus on being a movie and TV series entertainment network.
Mission statement
Netflix doesn’t have an official published mission statement. Nevertheless, their mission can be derived from their website and other sources. Their main objective is “to win moments of truth” of their members. They want to offer their members an amazing entertainment experience. Secondly, Netflix wants to grow their streaming subscription business domestically and globally. They want to provide entertaining content all over the world. Furthermore, they want to remain the world’s leading Internet television network. Finally, The company attaches great importance to flexibility. There service is affordable and members can cancel their subscription every month. Besides, Netflix persists in being a commercial-free streaming service.
One time, Netflix referred to its brand promise as a ‘quest’. “We promise our customers stellar service, our suppliers a valuable partner, our investors the prospects of sustained profitable growth, and our employees the allure of huge impact.” Some say this can be considered as Netflix’s mission statement.
Over the years, Netflix vision slightly changed and today their vision can be better derived from their long-term view. Their long-term view is called: ‘Netflix’s View: Internet TV is replacing linear TV’. The long-term view describes, among others, their vision on internet TV apps, their goal: create content people love, their focus and its global objective.
Internet TV apps
Internet TV apps are becoming more and more popular. Netflix knows when it fails to develop first-class apps, they will lose viewing and revenue. Netflix continuous to improve their service.
Content people love
As mentioned earlier, Netflix strives ‘to win moments of truth’ from their members. They persuade this by constantly improving their services, but, most importantly, by offering a wide range of content to its customers. People’s tastes are very broad and Netflix tries to offer and create content for everyone. They offer action blockbusters, Korean soaps, anime, sci-fi, Sundance films, zombie shows, kids cartoons, etc. Plus, they try to make recommendations based upon individual users’ tastes. Furthermore, since 2013, Netflix creates original content. With each original, they learn more about what their members want, about how to produce and promote effectively.
Focus
Netflix describes itself as “a global internet TV network offering movies and TV series commercial-free, with unlimited viewing on any internet-connected screen for an affordable, no-commitment monthly fee.” Netflix claims to be a focussed passion brand, not a do-everything brand.
First of all, Netflix persists in offering flat-fee unlimited view content and being commercial free. Unlike a lot of his competitors who offer pay-per-view or free-ad support content. Secondly, Netflix is a movie and TV series entertainment network. They don’t offer all types of videos like sports, porn and gaming. Furthermore, Netflix is about flexibility. Their no-hassle cancellation proves this. Finally, Netflix claims: “We are about the freedom of on-demand and the fun of binge viewing. We are about the flexibility of any screen at any time. We are about a personal experience that finds for each person the most pleasing titles from around the world.”
Global
Netflix is available in over 190 countries. Their service is available in almost every country, except for China, Crimea, North Korea, and Syria due to U.S. government restrictions on American companies. Netflix is planning to make their content available in these countries. In 2016, Netflix launched more than 130 new markets. In these new markets they primarily target outward-looking, affluent consumers with international credit cards and smartphones. Their approach is to listen, learn and thus improve the Netflix experience in these markets.
Netflix is the worldwide leading internet television network and therefore has to deal with several cultural differences and some variances in content tastes around the world. Nevertheless, Netflix believes high-quality storytelling has universal appeal that transcends borders. So they try to increasingly license content on a global basis. Nowadays, the company develops a growing number of non-English language originals from places such as Mexico, France, Japan, Brazil, etc.
Values
Netflix formulated nine values. These values are the behaviours and skills they look for in their employees. Netflix believes that employees who share a same set of core values, are the key to a successful company. Each value has four short defining statements, all starting with ‘you’.