Business Model Canvas

Miss Jacinta Hayden Miss Annie King

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1. Introduction

2. Business model canvas

a. Customer Segments

b. Value Propositions

c. Channels

d. Customer relationships

e. Revenue streams

f. Key resources

g. Key activities

h. Key partnership’s

i. Cost structure

3. Conclusion

Contents

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Introduction Netflix is the world’s leading internet television

network

With over 75 million streaming members in over

90 countries

Its customers enjoy more than 125 million hours

of TV shows and movies per day

Its online catalogue includes original series,

documentaries and feature films

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Introduction - SWOT Strengths

• strong brand to differentiate from competitors

• a large catalogue

• original content

• fast forwarding functionality

• HD viewing

• ability to watch content simultaneously on multiple devices

Weaknesses

• Their international business is not yet profitable

• Investing large amounts of their revenue on original content is risky

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Introduction - SWOT

Opportunity's

- Grow its international market share

- Grow its movie catalogue in order to gain more subscribers

Threats

- Ever changing due to technology advancement’s

- Black market

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Business model canvas – Customer segments

• It has an estimated 75 million streaming members in over 90 countries

• Customer segment are that they are aged between 24-35 with annual

salaries starting at $50,000. Have at least a bachelor’s degree and have

children

• Anyone who can afford an internet connection

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Business model canvas – Value Propositions

There are three key features that attract Netflix’s

customers which add a unique value to retain them

1) Original content

2) Multiple viewing options

3) Price

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Business model canvas – Channels

• Website Netflix.com and mobile app.

• Netflix started out as a movie and television rental delivery service.

Movies and series were delivered to subscriber’s homes in exchange

of a monthly fee.

• Netflix has changed and adapted its business model to meet market

demands and obtain growth by offering a large online streaming

catalogue

• Netflix can be viewed across different devices and mediums such as

online streaming on your laptop or physical Blu-ray DVD rental

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Business model canvas – Customer Relationships

• gives their subscribers a voice to rate what they are watching on

Netflix and recommend movies of interest to other customers. This

provides an element of trust amongst the Netflix community.

• Netflix’s self-service model gives their customers a sense of control as

it is solely up to them what they watch

• They have a customer service and technical support line which is 24

hours. They also have an online form which customers can submit

when they require support.

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Business model canvas – Revenue Streams• Netflix main source of revenue is from their online streaming membership

which comes in three different price levels.

• They also earn revenue from their DVD postal service which is only in the US

• With their Netflix original content they also make revenue on product

placement

• Also they earn revenue from print advertising on their DVD postal packaging

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Business model canvas – Key Resources

Netflix key resource are

• Physical - Netflix has a top-quality streaming IT infrastructure,

warehouses, offices, storage facilities and machinery to enable their

shipping side of the business model.

• Intellectual - To protect their strong brand Netflix use a combination of

patent, trademark, copyright and trade secret laws and

confidentially agreements to protect their intellectual property

• Human – Netflix have over 3700 employees which make their business

operate on a daily basis which includes CEO and co-founder Reed

Hastings

• Financial – Netflix revenue stream earns them a large amount of cash

which is key to keep funding their operating. Netflix also floats on the

stock market which is another source of finance which enables them to

continue their expansion plans.

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Business model canvas – Key Activities

• maintaining its online platform to ensure it its performing to a

high standard

• creating and acquiring new content to add to its online and

physical catalogue

• ensuring its key partners, vendors, operational functions

and human resource are meeting SLA’s and strategic

objectives

• continuous training, innovation and service improvement

activities to support problem solving scenarios

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Business model canvas – Key Partnerships

• Netflix have agreements with various cable, satellite and

telecommunications operators to ensure their service is

reliable and available for their customers.

• Netflix also partner with such high profile television

networks and motion picture studios such as FOX and

Universal

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Business model canvas – Cost structure

Incoming - Netflix has a fixed price cost model which they have raised in

increments over the years. As previously stated they earn other elements of

their revenue from advertising but the majority of their revenue comes

from their subscription fees.

Outgoing - As a business they would have a number of their own fixed and

variable costs to pay out such as wages, delivery costs, property rental,

machinery costs, electricity, packaging, Tax’s, content acquisition, data

warehousing storage, IT costs etc.

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Conclusion

Netflix saw a gap in the market and created a business model to sell their service.

Then continuously innovated its model to adapt to the ever changing environment around it.

Their expansion plans are risky but there financial return on investment is the evidence to prove that their strategy has been a success.

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• Alexander Osterwalder, 2013. Business Model Generation: A Handbook for

Visionaries, Game Changers, and Challengers. 1 Edition. Wiley.

• Netflix, 2015 Annual report, Available at https://ir.netflix.com/annuals.cfm

[Accessed on 06 November, 2016]

• Investazor, The Netflix Saga, Part 1: Understanding the Business model, Available at

http://investazor.com/2013/11/15/netflix-saga-part-1-understanding-business-

model [Accessed on 06 November, 2016]

• I Know first, Netflix SWOT Analysis: What is there to come in 2016?,Available at

https://iknowfirst.com/netflix-swot-analysis-what-is-there-to-come-in-2016 [Access

03 November, 2016]

• EBSCO Publishing Firm,(2016), Netflix Inc. SWOT Analysis, Available at

http://www.marketlineinfo.com [Accessed 03 November, 2016]

• Unicorn Economy, How does Netflix make money, Available at

http://unicornomy.com/how-does-netflix-make-money-business-model [Accessed

on 08 November, 2016]

References