OPPORTUNITIES

● Global e-commerce revenue to grow by 19 percent to $680B

- J.P. Morgan: With e-commerce spending performing well over the past holiday
season in 2010, retailers are hoping this trend will continue into 2011

● Capacity to create original content

- The company can earn from its original movies and shows, in addition to earnings
from streaming operations.

● Nintendo would bring Netflix’s online streaming video service to its Wii gaming console.
● Increase of 500 million users worldwide are expected to subscribe to mobile video
services, according to a five-year global market forecast.
- According to Pyramid Research’s mobile video service: a five-year global market
forecast (2009), by 2014, more than 500 million users worldwide will subscribe to mobile
video services, equal to 8.5% of all mobile subscription services
THREATS

● Rising competition
- As technology advances, there are expected emerging companies with lower startup
costs that will enter the market in the foreseeable future.

● Rampant piracy of movies and series

- Digital piracy is going rampant as thousands of people around the world find ways
of booting up media content because of high monthly costs which they cannot
afford.

● By law, Netflix cannot release new DVDs until 28 days after retail release.
- For example, “Robin Hood,” starring Russell Crowe, is available to stream on
Amazon but will not be available on Netflix until after 28 days. Hulu Plus has the
current season of “The Office,” while the most recent episodes on Netflix are from
last season.

● Constraints of Europe & Asian laws on the company’s operations, such as the Freedom of
Communication Law of France, and the censorship policy in Malaysia, Indonesia and
Vietnam mainly due to religious purposes.

● In North America, Netflix reached 29.7% of peak downstream traffic and has become the
largest source of Internet traffic overall in 2010
● Major local competitors of Netflix in its target markets have started buying their
own cloud encoder.