CASE STUDY NO.

“THE BEST WAY FOR NETFLIX TO KEEP GROWING”

Presented by:

Amador, John Ray A.

Borromeo, Bea

Claudio, Dannah Marie A.

Ladignon, Estaphanie Gabrielle

Lopez, John Louie

Nacion, Maria Maan P.

Ortiz, Jhay Zem Y.

Roxas, Jade Erika G.

Solomon, Mario C.

Presented to: Prof. Clark Otucan

DEFINITION

Netflix is a subscription-based streaming service that allows our users to view TV

episodes and movies on any internet-connected device without ads.

Netflix is a combination of the words "Net" (as in "internet") and "Flix" (a variation of
"flick", the common abbreviation for a movie or film).

HISTORY

Netflix was launched in August 1997 by two sequential entrepreneurs, Marc Randolph
and Reed Hastings, who were also successful entrepreneurs at the time. Beginning in Scotts
Valley, California, the company expands to become one of the world's major internet
entertainment providers, with operations in more than 100 countries.

If you remember back to when Netflix originally launched, it was strictly a movie
renting business. Clients placed movie orders on the Netflix online platform, and DVDs were
delivered to their homes via the postal service. Once they were finally done with them, they
merely mailed individuals who rented it to return the Netflix in the envelopes that were given for
that purpose. At sometimes, this was viewed as a blessing for individuals who won't have access
to a video rental business in their immediate vicinity.

This has greater than 151 million incurred purchasers in much more than 190 countries
throughout the world, and it provides movie streaming services. It provides a diverse selection of
television shows, documentaries, and animated films in a variety of service, as well as unique
creations.

TIMELINE

1997- Netflix was launched in 1997 by Hastings and Randolph as a way to offer movie rentals
over the internet, according to the company's own website.

1998- It led to the introduction of Netlix.com in 1988, which specialized in DVD rentals and
sales.

1999- The company has also established a subscription service that allows customers to rent
unlimited DVDs for a monthly fee.

2000- Things started to change in 2000, when Netflix introduced recommendation systems based
on member ratings.
2002- Netflix developed slowly after going public in 2002, reaching 4.2 million users by 2005.
In the beginning, the stock was worth less than $2 per share.

2007- The arrival of streaming in 2007 was unquestionably a major turning point. Creating a
space where users could instantaneously watch content online changed the game completely.

2009- It had risen to roughly $8 per share in 2019. Of course, the rest is stock market history, as
the stock has soared to new heights, approaching $400 at one point.

2013- Everything had changed. Netflix has started producing its own unique content. "House of Cards"
and "Orange is the New Black" come to mind.

2016- Netflix was available to people all over the world, and the firm has continued to produce more
original material while attempting to expand its membership.

VIEWPOINT

Mr. Wilmot Reed Hasting Jr is the Co-founder, chairman, and Co-chief executive officer
of Netflix, the person who are responsible in making corporate decisions, managing the overall
operations and resources of a company.

TIME CONTEXT

It all started when Amazon, Apple, Disney, and Google announced that they would
establish their own digital download and streaming platforms. This created a problem to Netflix,
which is extremely popular but undeniably more expensive than other streaming providers.
Netflix's subscriber growth has slowed down as a result, and the company's stock market
valuation has dropped 15% in the last month after its growth numbers disappointed investors.

I. Problem Statement

Netflix's content spending is not acquiring enough users, according to the

experts, which resulted in a net loss in 2015. While revenue and user growth are
falling, Netflix is paying more and more to gain new subscribers. One of the
challenges facing a growing firm is attracting more consumers in order to increase
profits. Not to mention the fact that they are direct competitors. The researchers are
interested in determining the best strategy Netflix could implement to address the
issue.
II. Statement of the Objective

The primary purpose of this case study is to determine how Netflix's net
income will be affected by their increased business strategy, expanded market reach,
and tightened marketing expenses. How have these elements contributed to their
profitability up to this point?

III. Areas of Consideration

P.E.S.T.L.E. Analysis
Political Factors
▪ Netflix's accessibility has always had its drawbacks. Take, for
example, Korea, Syria, and Crimea. Netflix is a US-based firm, which
is why it does as its government directs. Because the US government
forbids any American corporation from providing services to these
countries, even if Netflix wanted to, it would be difficult due to
political concerns. This just demonstrates that corporations like Netflix
are heavily influenced by international issues, which limits the spread
of their services.
▪ Even if Netflix is permitted to operate in a country, it must adhere to
the censorship standards imposed by that country's government.
Netflix, for example, is not available in China, not only due to
restrictions imposed by the US government, but also due to the
country's censorship. Netflix's content must be severely restricted if it
is to appeal to Chinese audiences. Many series or movies will be
banned, and sequences may be blacked out or filtered to comply with
Chinese regulations, which Netflix just cannot afford. Even in our own
country, the government is attempting to restrict Netflix's content.
Even though Netflix is a video streaming service, the MTRCB clearly
said that it must abide by its laws. The Philippine government is
currently considering it, but since other nations can restrict and censor
Netflix material, it is not hard for the Philippine government to do so
as well.
Economic Factors
▪ The global economy has performed admirably for several years,
resulting in increased spending on leisure services such as Netflix by
people all around the world. Netflix, on the other hand, has seen an
increase trend since the spread of the coronavirus, which brought
economies down. This is most likely due to people sitting at home and
having nothing to do, so they look for ways to entertain themselves,
which is exactly what Netflix delivers. Even still, if the pandemic
 continues, people will want to conserve more money, which could lead
to a decline in Netflix subscriptions.
▪ Netflix has a presence in over 190 countries. As a result, the currencies
of these countries have a significant impact on their net profit. It
reflects large-scale operating expenditures, particularly given that
Netflix is producing more original content as a result of competition
and other challenges.

Social Factors
▪ Since modern technology has paved its way to this generation,
millenials and Gen-z loved netflix. It has been the main platform on
enjoying and watching films, movies or series.
▪ Netflix is alknown for its generousity on giving scholarships and
donating to charities. Their CEO namely, Reed Hastings, has been
donating to charity funds and foundations.
Technological Factors
▪ Digital movie rentals was taken over by physical movie rentals.

Legal Factors

▪ Consumer Rights, Product Safety, Federal Copyright Act

Environmental Factors

▪ Rise of virtual streaming overtakes the hard copies resulting in much

less discs in wastes.

IV. Assumptions

Even though the majority of Netflix's latest rise began in mid-March,

when several individuals were obliged to stay at home to help limit the spread of the
new coronavirus, a series of successful original episodes and films helped Netflix
expand its member base in the first quarter. Netflix attracted 15.8 million customers,
upwards of twice the current 7.2 million predicted – a year-over-year increase with
more than 22%. Netflix now boasts a global number of subscribers of 182 million.
Additionally, the company reported quarterly revenue of $5.77 billion, compared to
the projected $5.76 billion.
V. Alternative Course of Action

ACA 1: Improved Marketing Method

Effective marketing methods aid in the long-term growth of potential

subscribers while reducing unnecessary marketing costs. ADVANTAGE growth in
the percentage of potential customers and investors that will work with Netflix.

ACA 2: Concentrate on a Wider Range of a Market

One strategy for acquiring the highest number of subscribers is to

transition to a larger market base. Netflix's subscription doubling rate has been
boosted by focusing on generating a variety of content globally.

ACA 3: Track Marketing Budget

Netflix can calculate the return on investment by keeping track of the

amount set aside for subscriber acquisition.

VI. Analysis

Alternative Course of Advantages Disadvantages

Action
1. Improved Marketing - Growth in the percentage - Netflix should indeed
Method of potential customers and adequately operate this
investors that will work approach because if the
with Netflix. marketing strategy failed,
there will also be a
- Improving competitor significant loss of potential
awareness and anticipating customers or investment
rival reactions to new organizations who will
marketing techniques partner with company, and
all of the efforts will be
gone.

- Failed marketing
strategy can affect the
Netflix’s revenue and
popularity.
2. Concentrate on a - It Supports them in - Financial crisis
Wider Range of a expanding their target
Market customer base. - Netflix will down the
production or mediocre
 - It enables Netflix to content.
widen its markets in order
to increase the consistency
of its revenue sources.

- It promotes Netflix's
revenue growth.
3. Track Marketing - Netflix may keep track - They will just care about
Budget of their profits and losses. the money, not the quality
of their service.
- Netflix can ensure that
they do not exceed their
aim while both meeting
and exceeding their
customer's expectations.

VII. Conclusion

From all of the available Alternative Courses of Action (ACA), ACA No.
2 (Concentrate on a wider range of a market) is the best option for Netflix's identified
problem of net loss and poor subscription growth in 2015.

Working on a Broader Market involves expanding access to more nations

in order to reach a larger number of prospective target customers. Netflix should
invest in generating and researching various sorts of content that would attract more
users, given that third parties are not allowed to sell material through their network.
Although there are likely disadvantages to implementing them, as outlined in the
analysis, if done correctly, Netflix will be able to enhance subscription growth and
profit.