Scribd
Upload
6 views

Assignment 1 Netflix

Uploaded by

georgemang810010
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
6 views

Assignment 1 Netflix

Uploaded by

georgemang810010
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 8

Required Assignment 1.

1: Case Study: Long Term Success Roadmap


Case Study: Netflix – Long-term roadmap for long-term success
By George Mang

1. Reason for being – A clear statement of purpose, mission and vision


a. Mission: Netflix’s purpose is to “entertain the world, anytime, anywhere.” with a
clear goal to provide a wide range and selection of entertainment content for diverse
audiences globally.
b. Vision: Becoming and maintaining a global brand name and leadership position in
internet streaming entertainment – which is on-demand, personalized, and available
on any screen – which traditional linear TV could not do. They hope to continue
being one of the leading firms of the streaming entertainment, by continuously
innovating, and enhancing the Netflix platform to meet the evolving needs of global
customer needs.

2. Core drivers of growth – Ways of creating long-term business value


a. Global market driver: Netflix is expanding aggressively into underpenetrated
markets in Asia, such as Hong Kong, Japan, Korea, Singapore, as well as countries
in the African continent, to tap into new global subscriber bases.
b. New content expansion: Netflix is investing heavily into original content, making
its own movies, series, and documentaries, notable examples include “Stranger
Things”, and “The Crown”, to attract new subscribers.
c. Ad-supported subscription: Netflix aims to attract more cost-sensitive subscribers to
introducing ad-supported subscription plans to lower the cost for customers, as well
as increasing advertisement revenue streams.
d. Technology innovation: Netflix is constantly improving its algorithms to give users
better recommendations, better user interfaces, better user experience.

3. Market view – Management’s perspective on the market


a. Although an industry leader, management team of Netflix is fully aware that they
are operating in a highly competitive business environment. To remain competitive,
the company must constantly innovate in better contents, subscriber experience, and
technology.
b. The company is always evolving, originally from a traditional DVD rental service to
a global entertainment streaming giant and original content producer.
c. Netflix is always innovating, by refining its algorithm, investing in better streaming
technology, and ultimately to provide subscribers a better customer experience with
high-quality videos and user interaction.

4. Competitive advantages – The company’s unique strengths and assets


a. Product differentiation: Original content – Netflix creates its original contents that
differentiates itself from competitors. High quality shows such as “Squid Game”,
“Stranger Things”, “Wednesday” were highly popular and critically acclaimed.
b. Global audiences: Netflix is now operating in 190 countries, reaching a vase
number of audiences when compare to competitors. The global presence also allows
Netflix in understanding diverse customer needs.
c. Customized user experience and technology: Netflix offers a customized user-
friendly interface and uses sophisticated algorithms for personalized content
recommendations. This enhances customer experience.
d. Strong brand name: Netflix is already a well-known brand in the global streaming
industry that customers trust. The name has become synonymous with streaming
entertainment.
5. Long-term objectives – Company’s strategic goals, with 3–5 year targets tie to
core drivers of growth
a. Maintain leadership position in streaming entertainment:
b. Global Expansion: Expand presence in international markets (new markets),
adapting its content and marketing strategies to local preferences, technology, and
regulatory environment.
c. Maintain technology leader in streaming.
d. Improve gross profit margin, operating margin, and net profit margin.
e. Exclusive deals: secure exclusive streaming rights to popular content will
differentiate Netflix from competitors.

6. Strategic plan
a. Maintain number one brand in streaming entertainment.
b. Aggressive sales and marking for global expansion: especially untapped
international markets: Netflix operates in a stable fixed cost environment, high
growth in incremental revenue could significantly improve the bottom line.
c. Financial management: Introduce monetization strategy by introducing and
expanding ad-supported subscription to lower cost for customers and increase
additional revenue source. Lower high content cost to maintain profitability while
maintaining and attracting customers.

7. Capital allocation
3–5-year goals:
a. Attract creative talent: Attracting top creative talent (screen writers, producers,
directors) internationally to maintain competitive position in quality and innovation and
create original content that could target local needs.
b. Leverage on AI technologies: Refine AI-driven recommendations and engagement to
further enhance customer experience.
c. International expansion: Increasing growth and presence in high growth countries in
ASEAN, Australia, South America, and Africa, with affordable pricing strategies.
5–10-year goals:
a. Global Market Dominance: Solidifying Netflix’s dominant position as a global leader
by investing in aggressive marketing, ongoing expansion and content diversification.
b. Investing in contents, technology, and marking initiatives that creates enduring
competitive advantage: Maintaining a competitive edge against all other streaming
competitors by 1. Product differentiation 2. Cost advantage 3. Focus Strategy.
c. Financial Health: Ensuring long term profitability by reducing debt due to high content
spending in the growth stage. Providing good returns to shareholders through dividends
or stock repurchase.

8. KPI
a. Subscriber growth and retention: Closely monitor the total number of subscribers
globally, segmented by region, and their growth rate and churn rate (cancellation rate).
Growth rate – Churn rate = retention rate – the % of subscribers who continue their
subscription for over a 1-year period. Focus on those customers.
b. Revenue growth: Total revenue generated month on month (MoM), quarter by quarter
(QoQ), year on year(YoY), 1-3 years, and 1-10 years. Average revenue per user (ARPU),
average revenue per family, segmented by region.
c. Active user engagement monitor: Number of users who logs in daily, weekly, and
monthly.
d. Financial Performances: Gross profit margin change MoM, QoQ, YoY. Net Income
change MoM, QoQ, YoY. Free cash flow change MoM, QoQ, YoY.

9. Risks
a. Competition from competitors: Competition from Amazon Prime, HBO, Disney+ and
any emerging streaming platforms can lead to higher churn rate and decrease revenue
and0 growth rate.
b. High and increasing cost on production: Inflation leads to high and increasing cost
related to producing original content.
c. Technology risks: Netflix must keep pace with technological change and advancement
and ongoing user expectations for higher and higher quality streaming experiences.
d. Global expansion hurdles: Cultural and operational challenges related with expansion
into international markets, where customer preferences and political climate are very
different when compared to North America.

10. Compensation
a. Competitive base salary but emphasize on performance-based compensation: Providing
a competitive base salary to attract talent but ensure that it is linked to performance
(could be linked to KPI being achieved). KPI examples include subscriber growth,
revenue growth, net income. Offer substantial performance bonuses if exceeding those
targets.
b. Stock Options: Provide stock options vested over 5-10 years to create loyalty and
provide incentives for management to enjoy stock price appreciation.
c. Claw back Provision: Netflix could reclaim bonuses and stock options if management
fails to perform or achieve their targets, misconduct, or fail to meet regulatory or
compliance standards.

END

You might also like