netflix business opportunity
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Netflix Opportunity
to Change the World
Some Background For
Candidates
1
Netflix Snapshot
• Netflix has nearly 38 million members in
40 countries enjoying more than one
billion hours of TV shows and movies per
month, including original series
• Domestic profits fueling global expansion
• Improving choosing, content & streaming
to win more share of member viewing
• Streaming is the future of television
2
Successful Expansion
• Netflix expanded from DVD to become
leader in streaming TV shows and movies
• It’s so hard that most companies fail: • AOL shrank with dialup access
• Yahoo didn’t drive search or social
• Kodak and Blockbuster went bankrupt
• But we did it!
– even if it wasn’t as pretty as we wanted…
3
Next Five Years
1. Huge improvements in choosing, content,
and streaming
2. Global expansion market by market
3. Produce great exclusive original series
4
Stepping Back 70 Years…
5
First Era of Television:
Linear Broadcast Networks
6
Few choices
to watch at any
given time
ABC, CBS, NBC, …
Second Era of Television:
Linear Cable Networks
7
~200 choices at
any given time
ESPN, HBO,
Discovery, TNT,
AMC, etc.
DVR adds some on-demand
on top of linear networks
Third Era of Television:
Internet Networks
8
Millions of Choices
Pure On-demand
Apps Keep Improving
All Screens
Internet Video Networks
9
Billions of people getting
high-speed internet
10
TV becoming app-centric,
like tablet, phone, and laptop
11
Built into TV
12
Smart TV Apps
Tiny Affordable Box
or
Game Console
Netflix Is:
Wide-ranging selection of TV shows and movies
Pure on-demand choosing and viewing with the
highest video quality possible
Personalized, social, intuitive, evolving UI on all
internet screens
Inexpensive, $8/month, unlimited viewing
No commercials, no commitments, no contracts
13
Netflix is Not:
• Not: Pay-per-view new movies
– like Apple, Amazon, Google, Microsoft, Sony,
Walmart, Best Buy, …
• Not: Ad-supported free content
– like YouTube, Crackle, Hulu
• Not: Sports, contestant, news, porn, music
video, instructional, or user-gen video
• Not: All movies and TV shows in one place
14
USA Market Size for Netflix
• Linear HBO is about 30m USA subs
• But Netflix has broader appeal:
– Only $8/month and unbundled
– More content including kids, anime, family, and
thousands of shows and movies
– Pure on-demand
– On tablets, laptops, phones in addition to TV’s
– Enjoyed through personalized social UI
• Netflix market size: 60-90m USA members
15
Global Market Size
is Large and Growing
600m broadband households
1b Facebook users
6b mobile phones
16
Big Market Means
Netflix Has
Many Threats
17
TV Everywhere
• Great internet apps (HBOgo, etc) on all
screens for all existing networks, at no
extra consumer cost, could mean:
– less watching of Netflix
– less desire by networks to license prior-
season to Netflix, because they can self-
monetize
18
Other Subscription
Internet Networks • Hulu+, also at $8, but with commercials
• Amazon Prime Instant Video
• Lovefilm Instant in UK
• Large new entrants willing to invest heavily
in content, marketing and technology
19
ISP Market Power Issues
• ISPs can give their own video data special
treatment, violating net neutrality principles
• ISPs can refuse us, or try to charge us for,
sufficient entry ports to their network for the video
data their subscribers are requesting from us
• ISPs can charge consumers per-gigabyte, even
though off-peak usage has zero marginal cost
20
Piracy Growth
• Piratebay.se
• Cuevana.tv
• Letmewatchthis
• Hotfile
• And 1000 more…
21
Ad-supported & PPV Video
• Free ad-supported TV shows and movies
are popular
• Pay-per-view TV episodes ($2) and
movies ($4) are widespread
22
The best way to predict the
future is to invent it
-Alan Kay
23
24
Netflix is
innovating at web speed
to create amazing
internet-video experiences
on all internet-connected screens
Fantastic Customer Sat
By Democratizing Innovation
• Our many internal innovators constantly
try to improve our service, for a random
100,000 members
• Then we compare member satisfaction
• Only changes that actually improve
satisfaction get published to all members
• A/B testing enables many people at Netflix
to have ideas and learn what pleases most
25
Our Simple Strategy
• Improve our service faster than competitors
– Better choosing: improve and simplify
personalized social UI to generate more
viewing and satisfaction from existing content
– Better content: license more content, and
expand into original series
– Better streaming: ever better audio video
quality and less buffering
26
Netflix Virtuous Cycles
Help Us Stay Ahead
More
Content
More Members
& Revenue
More
Word of
Mouth
More R&D for Better Service
Innovators Needed
to Drive Progress at
World’s First and Leading
Internet TV Network
29 Updated: Nov 2012