Netflix

Slide 2. Company Overview

Netflix was founded in the August 29,1997 by Reed Hastings and Marc Randolph in California, USA.
Initially, Netflix sold DVDs and offered a DVD rental service to its customers. Today, it is a content
platform and a production company. It offers a subscription-based streaming service to its customers
that includes a variety of content, including the content that it produces in-house. It offers its streaming
service to subscribers in over 190 countries.
In 2020, it reported a revenue of $25 billion and also surpassed 200 million paid subscriber count. Netflix
accounted for more than 45% of the market share for streaming subscribers as of 2020.
Since Netflix converted to streaming, it is the world’s ninth-largest internet company by revenue,
ranging its presence at a global scale.
 
Slide 3. Timeline
August 29, 1997: Netflix is registered in Scotts Valley, California.
April 14, 1998: the website launches as Netflix at 9am. The video library has approximately 900 titles
1999: 239000, subscribers sign up and the video library expanded to 3100 titles
In the early 2000, The pay-per-rental model was droped and lauched its well known subscription model
2002: Netflix goes public in May
2003: Marc Randolph leaves Netflix and sells his shares
2007: Netflix begins to stream content, delivering directly to TVs, computers and tablets and it first trials
were in Canada. Company also introduces the video on demand (V.O.D)
2012: Netflix starts making its original shows
2021: Netflix hits 209 million subscribers in over 190 countries and it has more than 15000 titles and
earns over $25billion in annual revenues. The company also introduces mobile games, allowing users to
play games on Netflix

Slide 4. Key Executives

Netflix has a functional organizational structure. Netflix has 5,400 employees, of which 45 are in a
leadership position.The Netflix Executive Team is rated an "A+" and led by CEO Ted Sarandos. Netflix
employees rate their Executive Team in the Top 5% of similar size companies on Comparably with
10,000+ Employees. Hispanic or Latino employees and the Marketing department are more confident in
their Executive Team, while the Admin department and the Customer Support department think there is
room for improvement. Out of their 5 competitors, Google, Meta, Apple, Amazon, and Hulu, Netflix's
score ranks in 1st place.
Here are further demographic highlights of the leadership team:
 The Netflix executive team is 36% female and 58% male.
 61% of the management team is White.
 16% of Netflix management is Hispanic or Latino.
 11% of the management team is Black or African American.

Slide 5. Predicted Reach

The explosion in Netflix’s global content also has seen the company amass a sizable rental property
portfolio that includes more than 30 office spaces worldwide.

Slide 6. USP
 Huge Movie library
 Decent Price (no late fee/hassle)
 Delivery l Watch Instantly
  Most popular website with unique Content and original shows
 Tailored Service
 An example: Netflix show are with a strong female protagonist, rather than passive sexually
objectified “Proppain Princess” characters like house of cards, suits etc.
 Deliver couch potatoes the best selection of TV shows and movies possible, in the most convenient
way possible.
 Netflix has received 430+ nominations and 72 awards for its originals programming.
 In 2018 Netflix released 700 original TV shows and 80 original flims

Slide 7. Vision and Mission

Vision : this vision statement highlights the company’s strategic objective of being at the top of the
competition, considering large players like Amazon and Walmart.
Mission : This mission statement is based on the nature of the company in providing on-demand movie
streaming services.

Slide 8. SWOT analysis

Strengths:
 The company has been able to build strong brand equity over the years. It has done that by
offering a high level of service to its customers, which has increased its popularity.
 In recent years, Netflix started creating its original shows and movies. 
 In 2020, its global subscriber base increased to 200 million. No other platform currently enjoys
this large a customer base, which also gives Netflix a competitive advantage.
 Netflix is able to provide an ad-free experience to its users. The content that they watch is free
from intrusive advertisements, unlike some platforms.
Weakness
 Apart from the content that is produced by Netflix on its own, Netflix does not own the
copyrights to the content in its library. 
 Netflix's business model is not so unique that no one else can replicate it. Many similar
platforms have emerged, and these services are taking some of the market away from Netflix.
 Netflix's service can only be used by subscribers if they have access to the internet.
Oppurtunities
 Netflix has a huge presence worldwide. It is available in over 190 countries. In countries where
the service was introduced more recently, however, most of the population remains untapped.
 As the world is becoming more and more globalized, the people want to see what is being
watched in other countries while watching local content. 
 Netflix is working on bringing on more content in localized languages.
Threats
 Since its business model is easily imitable, Netflix faces huge competition from its competitors. 
 Content is illegally streamed on various websites by users who do not use Netflix.
 Censorship on the internet is becoming a concern for many governments, so censorship of
content on platforms like Netflix may not be far away.

Slide 9. Competitors
Over time, Netflix has expanded not only its streaming platform, content, and services but also its list of
competitors. Netflix competitors include Google, Meta, Amazon, Apple and Hulu. Netflix ranks 1st in
Overall Culture Score on Comparably vs its competitors.
 Slide 10. – Slide 11. Risk Prioritizing
Well in the start it wasn’t clear that Netflix has implemented a formal ERM program, its actions offer
illustration of both effective and ineffective ERM. In the late fourth quarter of 2013 Netflix took actions
for to be more in line of ERM Mindset and thus Netflix has been growing operational risks from the
rising costs for content and increased competition in the streaming content market, but it is a clear
opportunity for expanding the models. There are clearly new risks as Netflix has gone against the grain
with the business model it has adopted for its original content.
MEASURES TO MITIGATE ITS COMPETITION RISK
 Netflix announced on that it was reducing the price of its subscriptions in India to boost its user base.
 The timing was no coincidence, as rival Amazon Prime Video had previously announced an increase
in its prices effective Tuesday.
 The largest price drop is for the basic full-service plan, It is now priced at just Rs199 a month, a 60%
cut from Rs499.

Slide 12. Taxation-related Risk

Netflix undertakes tax planning in a manner that is aligned with the company’s overall business strategy
and in compliance with all relevant tax laws. Tax considerations are secondary and reasonably based on
commercial operations and economic substance. Where appropriate, Netflix utilises government-
sponsored tax incentives or opportunities for obtaining tax efficiencies. Transactions between Netflix
group companies are conducted on an arm’s-length basis and in accordance with relevant law and
relevant OECD principles.

Slide 13. Foreign Exchange Risk

Foreign Exchange exposure is growing as they are already expand internationally. they engage in natural
hedging, in which the spending for international markets are paid in local currency to match the revenue
collected from the members. they also adjust prices from time to time to mitigate the negative effects of
foreign exchange. Also protect it by fixing the future rates of exchange via a Forward Contract.

Slide 14. Reliance on Industry Partner

Netflix is depend on the third party for providing them the content over which can possibly have conflict
with their comeptitors. Jason Turkovich joins Netflix in Seattle from Amazon, where he held the same
role of risk Management. Netflix uses Amazon Web services for data processing and storage and also
seek alternative provider to work on a back up plan in case of failure of AWS. And thus is a competitive
advantage.

Slide 15. Cyber Attack

Removes all weak ciphers and uses only Authenticated Encryption with Associated Data(AEAD). The
company’s cyber risk management boils down to three important mechanisms: people, processes and
policies. Risk management also works with third-party vendors, as well as ensuring that people at all
levels of the organization are properly trained to recognize and deal with attempts to breach security.

Slide 16. Licensing Disputes

It adversely affect the company’s business model thus Netflix follows a license agreement is constituted
under the terms of a legally binding contract between the content owners and the company, and each
agreement varies based on the needs of the content owner and Netflix some licenses are limited for a
time while others will last for a perpetuity.
Slide 17. Competitive offering and privacy
It hampers the business revenue and also impact the services provided thus Netflix uses Digital Right
Management (DRM) to protect the copyrights of its premium content. Netflix’s competitive
transnational strategy focuses on leveraging experience and learning to maintain a dynamic scale
economy.

Slide 18. Netflix Threat Beta vs. Stock Price

Background: In January and November of 2017, Netflix was the subject of two major phishing
campaigns. After the second attack, Netflix invested in better cybersecurity. Until that point, Netflix had
a threat better that was considered a very high risk of a breach. Currently, Netflix has average risk.
Financial Impact: There is little evidence that Netflix had a large negative financial impact from the two
publicly disclosed phishing attacks. Phishing attacks, by themselves, do not constitute major breaches.
When a phishing attack leads to significant data loss, the financial losses accumulate quickly.
Lessons Learned: Netflix took the right steps to invest in cybersecurity. Since 2018, Netflix decreased
their risk of a Cybersecurity attack by over 80%. Recent improvements starting in mid-2019 made a
significant impact on Nexflix’s risk levels.