Online Video Distribution: Netflix, Hulu and iTunes

by Hien Le, Alex Fass, Ana Sena and Isaac Rosales

  (from the Big Bang to Tomorrow)

1992: Original South Park Short Produced

2007: Netflix switched to Internet VOD

2008: Hulu was launched by Disney, NBCUniversal & News Corp

2014: 1st Golden Globe Award for an Internet show (House of Cards – Netflix)

2016: Season 20 of South Park exclusively distributed by Hulu.

A brief history of TV Streaming

Performance Comparison

50M  Subscribers

63%  of  US  Online  TV  market

6M  Subscribers

35%  of  US  Online  TV  market

800M  account.

67%  of  digital  TV  download  market

Financial PerformanceCompany Market Cap Revenue ROI Profit Margin

Netflix 24.42B 5.5B 7.8% 4.5%

iTunes (Apple)

659.21B 18.07B (182.35B)

26.2% 21.6%

Hulu(Private)

Est. 2B Est. 1B N/A N/A

Netflix’s Resources• Company Culture & HR approach

• Marketing Strategy

• Relationship with Content Providers

• Relationship with Device Manufacturers

Company Culture & HR Approach● Act in Netflix’s best interest:

o Rely on your own logic and common sense

o Don’t rely on formal policies

● Eliminate formal performance reviews

● Managers build their own teams

● Leaders build company culture

● HR should think like business people

Marketing Strategy● Customer service

● Customer guarantees

● User friendly website

o Category Search

o Optimized content suggestions

● Clever advertising

Relationship with Content Providers● Revenue Sharing Agreement

● Profit sharing

● Netflix to pay-per usage

● Lower overhead on content

Relationship with Device Manufacturers● Netflix-Ready Devices

● Automatically launch

● Netflix button with logo

Hulu’s Resources● User Base

● Content Supplier Relationships

● Quick Release Window Access

● Big Data

Exclusive Content • Revenue Sharing

Next Day Availability

Big Data: Hulu Originals

Big Data: Swappable Ads

● What is EST? o Transactional o Ownership o Downloadable

● iTunes as a Digital Media Collection o Establishment of EST originally as iTunes Music Store, launched 2003 o Own music and take it with you o Value-added incentives dealt blow to music pirating o Replacement of physical media collection with digital collection

iTunes: The EST Model

iTunes: Resources● The Apple Ecosystem

o Brand loyalty leads to ownership of multiple Apple Devices

o Hardware and software integrated with iTunes

● Quality and Quantityo Wide selection and downloads stay

even if media is pulledo Streaming by temporary download

● Other Advantageso Season Passo iTunes Extraso Early/Concurrent movie releases

Recommendation

EST Original Content• Original Programming

• Electronic Sell Through

Conclusion