Project Netflix Updated

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Project - Netflix ( Updated)-converted
ENVIRONMENTAL STUDIES (University of Calcutta)
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PROJECT REPORT
(Submitted for the Degree of B.Com. Honours in Marketing under the
University of Calcutta)
Title of the Project
BUSINESS MODEL AND MARKETING STRATEGIES

OF NETFLIX
Submitted by
Name of the Candidate : DEEP SINGH
Registration No. : 017-1111-3250-19
Name of the College : THE BHAWANIPUR EDUCATION SOCIETY

COLLEGE
Roll No. : 191017-21-0481
College UID : 0103193064
Supervised by
Name of the Supervisor : MICHAEL RONY MULLICK
Name of the College : THE BHAWANIPUR EDUCATION SOCIETY

COLLEGE
Month & Year of Submission :

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Annexure-IA
Supervisor's Certificate
This is to certify that Mr. DEEP SINGH HORA a student of B.Com. Honours in Marketing of The
Bhawanipur Education Society College under the University of Calcutta has worked under my
supervision and guidance for his Project Work and prepared a Project Report with the title Business
Model and Marketing Strategies of Netflix which he is submitting, is his genuine and original work
to the best of my knowledge.
Place: Kolkata
Date:
Signature:
Name: Prof MICHAEL RONY MULLICK
Designation: Lecturer
Name of the College: The Bhawanipore Education
Society College

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Annexure-IB
Student's Declaration
I hereby declare that the Project Work with the title BUSINESS MODEL AND MARKETING
STRATEGIES OF NETFLIX submitted by me for the partial fulfillment of the degree of B.Com.
Honours in Marketing under the University of Calcutta is my original work and has not been
submitted earlier to any other University/Institution for the fulfillment of the requirement for any
course of study.
I also declare that no chapter of this manuscript in whole or in part has been incorporated in this report
from any earlier work done by others or by me. However, extracts of any literature which has been
used for this report has been duly acknowledged providing details of such literature in the references.
Signature:
Name: Deep Singh Hora
Address:
39 Samiran Roy Road,
Asansol - 713301
Registration No.: 017-1111-3520-19
Place: Kolkata
Date:

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BUSINES
S MODEL
AND
MARKETIN
G
STRATEGIES
OF NETFLIX
5

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ACKNOWLEDGEMENT
The Project Report entitled “BUSINESS MODEL AND MARKETING STARTEGIES OF NETFLIX” has
been prepared by me and I had undertaken project survey under the supervision of Professor MICHAEL RONY
MULLICK
and Dean of our college Professor Dilip Shah.
I am immensely grateful to my guide and to all my faculties for their constant

encouragement and guidance throughout this period.
I also express my sincere thanks to The Bhawanipur Education Society College and
for their valuable support towards the completion of this work.
I would like to take this opportunity to thank all my friends who have assisted me in
completing this project. Last, but certainly not the least, I am indebted to my parents and
almighty. Without their blessings or grace, I couldn’t have finished this project under stipulated
time and with focused vision.

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CONTENTS
1. INTRODUCTION............................................................................................................................................... 9
BACKGROUND........................................................................................................................................................10
NEED OF MARKETING.......................................................................................................................................... 13
A BRIEF REVIEW OF LITERATURE.....................................................................................................................13
OBJECTIVES.............................................................................................................................................................15
METHODOLOGY OF OUR STUDY.......................................................................................................................15
LIMITATIONS OF THE STUDY..............................................................................................................................16
2. CONCEPTUAL FRAMEWORK........................................................................................................................... 18
3. PRESENTATIONS, ANALYSIS & FINDINGS......................................................................................................... 20
NETFLIX BACKGROUND......................................................................................................................................20
HISTORY...................................................................................................................................................................20
NETFLIX MISSION..................................................................................................................................................21
NETFLIX CULTURE................................................................................................................................................ 21
NETFLIX MANAGEMENT......................................................................................................................................21
NETFLIX CUSTOMERS.......................................................................................................................................... 22
FINANCIALS OF NETFLIX INC.............................................................................................................................23
BALANCE SHEET..................................................................................................................................................23
PROFIT AND LOSS................................................................................................................................................24
CASH FLOW...........................................................................................................................................................25
STRATEGIC ANALYSIS..........................................................................................................................................26
EXTERNAL ANALYSIS...........................................................................................................................................27
PESTEL ANALYSIS................................................................................................................................................. 27
PORTER’S FIVE FORCES ANALYSIS...................................................................................................................29
INTERNAL ANALYSIS............................................................................................................................................32
SWOT ANALYSIS.................................................................................................................................................... 33
MARKETING STRATEGIES OF NETFLIX............................................................................................................36
MARKETING MIX................................................................................................................................................... 37
PRODUCT OFFERING STRATEGIES..................................................................................................................37
PROMOTION, COMMUNICATION AND INFLUENCE.....................................................................................37
ADVERTISING......................................................................................................................................................... 40
NETFLIX COMPANY STRATEGIES......................................................................................................................41
DATA ANALYSIS & INTERPRETATION............................................................................................................... 44
4. CONCLUSION................................................................................................................................................. 50
RECCOMENDATIONS AND SUGGESTIONS.......................................................................................................51
ANNEXURES...................................................................................................................................................... 54
BIBLIOGRAPHY.................................................................................................................................................. 56

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1. INTRODUCTION
PREAMBLE
According to “American Marketing Association Board of Directors”, Marketing is the activity,

set of institutions, and processes for creating, communicating, delivering, and exchanging
offerings that have value for customers, clients, partners, and society at large.
Promotion is one of the market mix elements or features, and a term used frequently in
marketing. Promotions refer to the entire set of activities, which communicate the product,
brand or service to the user. The idea is to make people aware, attract and induce to buy the
product, in preference over others. Promotion is also used to persuade customers that the
product is better than competing products and to remind customers about why they may want to
buy.
A few methods of different promotional strategies are quoted below:
 Advertising
 Public relations & sponsorship
 Personal Selling
 Sales Promotion
 Direct Marketing
 Public relations

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BACKGROUND
Marketing has undergone several changes over the past hundred years. Changes in pattern and
intensity of economic activity, paved the way for marketing in the 19th Century. With the growth
in the size and scope of national and international economies, retailing and advertising
eventually emerged as an essential part of marketing.
The traditional marketers concentrated only on products and on the sale and purchase of goods
& services. Marketing strategies remained outdated due to the rules of thumb and lack of
information. The sources of marketing were advertisement in newspapers, newsletter,
magazines, brochures, radio, television, fliers, postcards, letters, and also through telemarketing.
They paid little attention to the areas like after sale services and devoted even less attention to
social responsibility or to social accountability.
With the advent of globalization, the entire concept of marketing has undergone a revamp.
Marketing not only means selling, it now covers various other aspects. Marketing now focuses
on product, price, place and promotion which make up the marketing mix. Each of these
components is important to achieve the organizational goals. Marketing now starts with
marketing orientation wherein the marketer studies the demand and need of the consumers and
then starts with the production and ends with the after sale services. It is now inclined towards
the customer satisfaction. In the present global scenario, the method of promotion has
also

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changed with the advent of internet. The sources of marketing and promotion in the present
scenario are the various social networking sites like Facebook, Twitter etc.
Marketing strategy is one the most important areas that needs to be carefully examined by the
corporate. A sound marketing strategy becomes imperative.
Marketing strategy is commonly defined as a strategy employed by a firm to attain its marketing
objectives, which in turn is related to the achievement of the firm’s business objectives. In other
words, marketing strategy refers to the marketing goals and action plans that address matters of
product/ service price, distribution, communication, and the process of new product
development.
The adaptation of any strategy depends much on factors such as management style and
experience of the top management, age of the institution, economic environment, and
regulations. Generally, it can safely be identified whether a particular bank is a market leader,
challenger, follower and nicher by identifying its vision, mission, objectives, and marketing
strategies.
The market leader strategy is for those firms that occupy a dominating position in the market
and have established their reputation as a leader. By virtue of having a leadership in the market,
it is natural that the market share of the concerned firm is the biggest.
Companies belonging to the challenger group are those occupying second, third and lower rank
and are always formulating and pursuing strategies to expand their market share by targeting the
territory of the market leader. Whereas, strategies adopted by the followers would normally be to
maintain its current customers base and win a fair share of new customers by bringing
distinctive advantageous to their target market.
The market nicher is for the smaller firms, which have limited resources and generally focused
on selected customers. Firms that fall under this category, often concentrates on only one market
segment of the market. Usually, only one marketing strategy, which is well, tailored to meet the
needs of a specific target-market group, is developed.
The online Wikipedia has one of the best definitions of for this reason that the concept may be
seen as vague or imprecise, and why there exist various definitions of the term. It states that

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“Marketing is the process by which companies determine what products or services may be of
interest to customers, and the strategy to use in sales, communications and business
development. It generates the strategy that underlies sales techniques, business communication,
and business developments. It is an integrated process through which companies build strong
customer relationships and create value for their customers and for themselves.”
“Marketing strategy is a process that can allow an organization to concentrate its limited
resources on the greatest opportunities to increase sales and achieve a sustainable competitive
advantage”. It further explains that marketing strategies serve as the fundamental underpinning
of marketing plans designed to fill market needs and reach marketing objectives. Plans and
objectives are generally tested for measurable results.
Generally, marketing strategies are developed as multi-year plans, with a tactical plan detailing
specific actions to be accomplished in the current year. Time horizons covered by the marketing
plan vary by company, by industry, and by nation, however, time horizons are becoming shorter
as the speed of change in the environment increases. Marketing strategies are dynamic and
interactive. They are partially planned and partially unplanned.
Marketing strategy involves careful scanning of the internal and external environments which
are summarized in a SWOT analysis. Internal environmental factors include the marketing mix,
plus performance analysis and strategic constraints. External environmental factors include
customer analysis, competitor analysis, target market analysis, as well as evaluation of any
elements of the technological, economic, cultural or political/legal environment likely to impact
success. A key component of marketing strategy is often to keep marketing in line with a
company's overarching mission statement
A marketing strategy should be centered on the key concept that customer satisfaction is the
main goal.
Paul Keech defined marketing strategy as “A strategy often integrates an organization's

marketing goals, policies, and action sequences (tactics) into a cohesive whole. Similarly, the
various strands of the strategy, which might include advertising, channel marketing, internet
marketing, promotion and public relations, can be orchestrated.”

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CEO, Consultant, defines “Marketing strategy is the method that a company uses to create brand
awareness and persuade consumers of the need to purchase their products or services.”
Planning and developing marketing strategy takes lot of time and resources one gains
knowledge of the customers to target and better enhanced marketing message so it resonates
with the customers.
NEED OF MARKETING
Marketing takes a day to learn. Unfortunately it takes a lifetime to master.”
PHILIP KOTLER
Marketing fulfills a vital function. A business owner must be familiar with the business's
customer base, as well as the strengths and weaknesses of the business's competitors. These
factors, and others, should be identified in a well-prepared marketing plan.
A good plan will outline how a business can attract and retain customers, how it will compete
against its competitors, and the budget needed to attain positive results. It should include market
research, business location, the target customer group, competition, the product or service being
sold, budget, and advertising and promotion.
Thus in brief we can say that following are the basic need of marketing and promotional
strategies:-
 To understand the need of the target customer

 To increase profit through customer satisfaction
 To attract the target customer by persuading them to buy your product.
 To stand out as a prospective organization with prospective customer and healthy
reputation.
A BRIEF REVIEW OF LITERATURE

The primary objective here is to review the relevant literature of the current state of marketing
theories, applications of marketing strategies and the influences of globalization on the method
of marketing over the past two decades. A number of professors of well-known
management

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institutions and marketing scholars like Philips Kotler & Armstrong have spoken about the
concept, need and changes in the marketing and promotional strategies.
Netflix’s Long-Term View, as written by CEO Reed Hastings on the company’s Investor
Relations website will serve as the primary source and offer the framework of this project. The
document aims to present the ways in which “Netflix is leading the way around the world” as an
Internet television network because of its unique marketing and promotional strategies in the
entertainment industry.
The data from the questionnaire on the marketing strategies of Netflix have been used as a
primary source and on the topic of Netflix’s forward-looking statements and strategies, financial
data and statements on the nature of the business coming directly from the company itself have
been used as secondary sources.
Netflix is very tight-lipped about its internal workings, especially regarding its collection of “big
data” on subscribers’ viewing habits and personalization preferences. The company does not
provide much insight on its metrics other than to plainly say what is working and what isn’t.
Literature that does exist on the subject is either speculative or originates from Netflix’s press
releases.
Netflix is amongst the most recognizable dotcom brands today. Starting as a DVD rental service,
the company encountered difficulty in maintaining a sustainable, cash-flow-positive business
before their popularity escalated through their status as pioneers in the restructuring of the online
entertainment streaming industry. This perception aligns with the Netflix’s strategic mission of
revolutionizing the way in which people access and engage with content. Their stated vision of
how to accomplish the aforementioned is to become the best global entertainment provider
(meaning one whom is the fastest, the easiest, and the most reliable), licensing the world over
and helping content creators find a global audience. Netflix is now amongst the world’s leading
internet entertainment providers, boasting over 130 million memberships in hundreds of
countries worldwide. They account for over a third of total internet traffic in the United States,
as users have unlimited, de-commercialized, and ubiquitous access to the service’s plethora of
TV series, full length films, and more. While Netflix has dominated the online streaming
market, the

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space is changing rapidly and so the company must continually re-evaluate their strategy in
order to realize sustained success.
Through an internal and external analysis of Netflix, this report examines the strategic
challenges facing the streaming giant and proposes recommendations that will enable them to
achieve their key objectives. Following these recommendations are key actions and an estimated
timeframe for implementation.
We shall review in detail about the marketing and promotional strategies in the next chapter in
order to know what view do marketing scholars and management gurus hold about the
marketing and promotional strategies.
OBJECTIVES
The objective of marketing strategy depends on the aims and priorities of the organization.
These objectives have been divided into two parts to get brief idea about the basic objectives of
every organization.
Broad Objectives
 How to achieve specific level of sales volume?

 How to achieve a target percentage of the market share?
 How to achieve market leadership?
 How to achieve customer satisfaction?
Specific Objectives
 How to appeal a particular market segment?

 How to create brand loyalty?
 How to create a security in the market?
 How to increase product range or how to bring about innovation?
METHODOLOGY OF OUR STUDY

The methodology of our study discloses the following facts:-

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 AREA OF STUDY
The area of our study is based on the marketing and promotional strategies of Entertainment
Industry on a global platform. Leading product has been selected on the basis of their market
share for study and their comparative study has been carried out.
 TYPE OF STUDY
The project work can be conducted by either on a subjective basis or on an objective basis.
Subjective study means in depth analysis of any topic whereas objective study focuses on only
the major aspects of any topic. In our project work we have conducted the study on an objective
basis so as to get an overview of the marketing and promotional strategies of the ‘Netflix’ which
invests a lot on promotional strategies.
 TOOLS OF DATA COLLECTION
For the purpose of conducting any project both primary and secondary data are used. In our
project work we have used both the primary & secondary data for conducting the study.
Primary Data: - The primary data used in this report include the questionnaire in which the
consumer data is collected regarding their views towards Netflix. A group of 152 consumers
have been taken up for this purpose.
Secondary Data: - The following are the sources secondary data:-
 Newspaper
 Websites
 Research Papers
 Books on marketing
LIMITATIONS OF THE STUDY

For the perfect presentation of our study, we have followed the Statistical Method in order to
throw light on the analysis of the different marketing and promotional strategies adopted by our
chosen subject.

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Every study has its own limitations and so does this one. Our study comprises of marketing and
promotional strategies adopted by NETFLIX. It suffers from the following limitations:
 As every study is limited with its area of focus, so was ours. The study conducted by us
is a partial one; hence the relevant findings are only related to particular areas.
 Our study focused on only one player in the entire industry; deriving conclusions about
the entire industry based on the performance of only one component may not be
considered justifiable.
 The sample size taken is small to make a universal statement.
 The final conclusion can also be affected by some of the extraneous variables.
 Biasness of the respondent.
 Lack of sufficient information.

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2. CONCEPTUAL FRAMEWORK
AN OUTLINE OF THE CONCEPT
Marketing is one of the important components of an organization. This fact had been established
long time back by the marketing scholars and thinkers. Various principles and strategies have
been established by them indicating the necessity of marketing and marketing. Every such
organization which is successful in today’s market had been following these strategies.
In the era of globalization, the marketing scholars and fads have again proved through their
researches that marketing not only adds up to the sales of the organization but also provides a
brand image to the organization. This brand image is comes to the organization with
promotional strategies of the organization.
Thus we can say that year after year various scholars and thinkers have done researches and
presented their view on marketing strategy. Every new aspiring scholar in the field of marketing
must know about the literature of marketing and marketing strategy and the various work done
under this topic not only nationally but also internationally. Some of these works have been
shown in the following chapter.

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3. PRESENTATIONS, ANALYSIS & FINDINGS

In this chapter we shall discuss about the marketing and promotional strategy of the leading
company of the entertainment industry i.e. NETFLIX, to understand about the core concept of
promotional strategies and how these strategies have paved the way of success for this product.
NETFLIX BACKGROUND
Netflix, Inc. is an American provider of on demand Internet streaming media available to North
and South America, the Caribbean, United Kingdom, Ireland, Sweden, Denmark, Norway,
Finland, the Netherlands, etc. and flat rate DVD-by-mail in the United States, where mailed
DVDs are sent via permit reply mail.
Online streaming service and DVD delivery service are the two main two main product lines for
Netflix. Netflix core product is a service .This marketing plan will focus on online streaming
service
HISTORY
Reed Hastings, founder and CEO, launched Netflix as an online rental movie service in 1999.
Netflix is a company that distributes movies and television by streaming online and mail
delivery. There are eight different membership options to choose from each varying in number
of DVDs rented out at a time. Netflix also offers to stream movies and television series directly
from their website to different devices (i.e. Pc, Mac, iPad, iPhone, Wii, PS3). The overall goals
for Netflix are simple: to build the world’s best Internet movie service and to deliver a growing
subscriber base and earnings per share every year.
Netflix is amongst the most recognizable dotcom brands today. Starting as a DVD rental service,
the company encountered difficulty in maintaining a sustainable, cash-flow-positive business
before their popularity escalated through their status as pioneers in the restructuring of the online
entertainment streaming industry. The perception aligns with Netflix’s strategic mission of
revolutionizing the way in which people access and engage with content. Their stated vision of
how to accomplish the aforementioned is to become the best global entertainment provider
(meaning one whom is the fastest, the easiest, and the most reliable), licensing the world over
and helping content creators find a global audience. Netflix is now amongst the world’s leading
internet entertainment providers, boasting over 130 million memberships in hundreds of

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countries worldwide. They account for over a third of total internet traffic in the United States,
as users have unlimited, de-commercialized, and ubiquitous access to the service’s plethora of
TV series, full length films, and more. While Netflix has dominated the online streaming
market, the space is changing rapidly and so the company must continually re-evaluate their
strategy in order to realize sustained success.
Through an internal and external analysis of Netflix, this report examines the strategic
challenges facing the streaming giant and proposes recommendations that will enable them to
achieve their key objectives. Following these recommendations are key actions and an estimated
timeframe for implementation.
NETFLIX MISSION
Netflix mission states “our appeal and success are built on providing the most expansive
selection of DVDs; an easy way to choose movies; and fast, free delivery” (Topix.com)
NETFLIX CULTURE
Netflix culture is that of freedom and responsibility as elaborated in CEO Reed Hastings’
presentation on Netflix’ “Freedom and Responsibility” culture. They have nine specific values,
which includes Judgment, Communication, Impact, Curiosity, Innovation, Courage, Passion,
Honesty, and Selflessness. Employees help each other to be great.
NETFLIX MANAGEMENT
Founder and CEO Reed Hastings has created a unique management style that is most notably
similar to that of George Clooney’s Danny Ocean role; that is, “a leader who hires the best, and
gets out of the way” (Wells). Netflix thus has a laid-back structure that allows employees to
make their own decisions, but greatly encourages that smart decisions are made. Some of the
perks include allowing employees to structure their own compensation packages, no clothing
policies, and having a—hypothetical—unlimited amount of vacation days. Hastings understood
that valuable employees are happy employees. However much of the importance of this style of
management is in its beginning: hiring top-notch colleagues. And finally, regarding expensing,
entertainment, gifts and travel, simply “act in Netflix’s best interest”. By creating an ideal
workspace to provide a highly productive environment, excellence in work quality is expected,

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and crucial. In the case that employees do not live up to this high standard, Netflix provides
large

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severance packages for quick termination. Some of Netflix Divisions are content division,
streaming and partnership division, product division, Finance division, Counsel Division, Talent
division, marketing and communication divisions.
NETFLIX CUSTOMERS
Netflix customers are divided into two sections: traditional DVD delivery and online streaming
customers. Traditional consumers are particular and selective; they have a specific title or genre
they are looking for, (often making up niche market consumers), and they desire a rich viewing
experience, which currently makes them more likely to consume hardcopy media. They are
willing to wait a few days to acquire their title, as long as it meets their expectations. These also
have a low propensity to substitute, because they are committed to video entertainment, and
possibly a higher propensity to purchase video, more likely to be older, and because they view
and access rentals through more traditional channels, they invest more time and energy in their
choices. These customers opt for Netflix mail-delivery services as well as more differentiated
online subscription plans.
Online streaming consumers are not as selective as their counterparts. They watch videos when
they can. They value easy and immediate access, portability and transferability of the product, and
are more than willing to watch video on their computers or other devices like I pads, computer
tablets and even smart phones. This consumer has a higher propensity to substitute than the DVD
rental customer. They are also typically younger, and more Internet-savvy. These customers often
opt for affordable monthly online subscription plans. To access Netflix’s services customers incur
monetary costs for rental fees and subscription fees. Apart from the cost that is directly related to
Netflix services, customers have to purchase devices in which they can use to access Netflix
services like computers, television sets, modems and Internet packages.

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FINANCIALS OF NETFLIX INC.

BALANCE SHEET
Netflix, Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands)
December 31,December 31,December 31, December 31, December 31,
20152016201720182019
Assets
Current assets:
Cash and cash equivalents $ 18,09,330 $ 14,67,576 $ 28,22,795 $ 37,94,483 $ 50,18,437
Short-term investments 5,01,385 2,66,206 - - -
Current content assets, net 29,05,998 37,26,307 43,10,934 51,51,186 -
Other current assets 2,15,127 2,60,202 5,36,245 7,48,466 11,60,067
Total current assets 54,31,840 57,20,291 76,69,974 96,94,135 61,78,504
Non-current content assets, net* 43,12,817 72,74,501 1,03,57,754 1,49,51,141 2,45,04,567
Property and equipment, net 1,73,412 2,50,395 3,19,404 4,18,281 5,65,221
Other non-current assets* 2,84,802 3,41,423 6,65,610 9,10,843 27,27,420
Total assets $ 1,02,02,871 $ 1,35,86,610 $1,90,12,742 $2,59,74,400 $3,39,75,712
Liabilities and Stockholders' Equity
Current liabilities:
Current content liabilities* $ 27,89,023 $ 36,32,711 $41,67,724 $46,81,562 $44,13,561
Accounts payable 2,53,491 3,12,842 3,59,555 5,62,985 6,74,347
Accrued expenses and other liabilities* 1,40,389 1,97,632 3,20,411 4,81,874 8,43,043
Deferred revenue 3,46,721 4,43,472 6,18,622 7,60,899 9,24,745
Total current liabilities 35,29,624 45,86,657 54,66,312 64,87,320 68,55,696
Non-current content liabilities 20,26,360 28,94,654 33,29,796 37,59,026 33,34,323
Long-term debt 23,71,362 33,64,311 64,99,432 1,03,60,058 1,47,59,260
Other non-current liabilities 52,099 61,188 1,35,246 1,29,231 14,44,276
Total liabilities 79,79,445 1,09,06,810 1,54,30,786 2,07,35,635 2,63,93,555
Stockholders' equity:
Common stock 13,24,809 15,99,762 18,71,396 23,15,988 27,93,929
Accumulated other comprehensive income (loss) (43,308) (48,565) (20,557) (19,582) (23,521)
Retained earnings 9,41,925 11,28,603 17,31,117 29,42,359 48,11,749
Total stockholders' equity 22,23,426 26,79,800 35,81,956 52,38,765 75,82,157
Total liabilities and stockholders' equity $ 1,02,02,871 $ 1,35,86,610 $1,90,12,742 $2,59,74,400 $3,39,75,712
Source: netflixinvestor.com/financials

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PROFIT AND LOSS
Netflix, Inc.
Consolidated Statements of
Operations
(unaudited)
(in thousands, except per share data)
Twelve Months Ended Twelve Months Ended Twelve Months Ended Twelve Months Ended Twelve Months Ended
December 31, December 31, December 31, December 31, December 31,
2015 2016 2017 2018 2019
Revenues $ 67,79,511 $88,30,669 $1,16,92,713 $1,57,94,341 $2,01,56,447

Cost of revenues
45,91,476 60,29,901 80,33,000 99,67,538 1,24,40,213
Marketing
8,24,092 9,91,078 14,36,281 23,69,469 26,52,462
Technology and development
6,50,788 8,52,098 9,53,710 12,21,814 15,45,149
General and administrative
4,07,329 5,77,799 4,31,043 6,30,294 9,14,369
Operating income 3,05,826 3,79,793 8,38,679 16,05,226 26,04,254
Other income (expense):
Interest expense (1,32,716) (1,50,114) (2,38,204) (4,20,493) (6,26,023)
Interest and other income (expense) (31,225) 30,828 (1,15,154) 41,725 84,000
Income before income taxes 1,41,885 2,60,507 4,85,321 12,26,458 20,62,231
Provision for (benefit from) income taxes 19,244 73,829 (73,608) 15,216 1,95,315
Net income $ 1,22,641 $ 1,86,678 $5,58,929 $12,11,242 $18,66,916
Earnings per share:
Basic $ .29 $ .44 $ 1.29 $ 2.78 $ 4.26
Diluted $ .28 $ .43 $ 1.25 $ 2.68 $ 4.13
Weighted-average common shares outstanding:
Basic 4,25,889 4,28,822 4,31,885 4,35,374 4,37,799
Diluted 4,36,456 4,38,652 4,46,814 4,51,244 4,51,765

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CASH FLOW
Netflix, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
Twelve Months Twelve Months Twelve Months Twelve Months Ended Twelve Months Ended
December 31, December 31, December 31, December 31, December 31,
2015 2016 2017 2018 2019
Cash flows from operating activities:
Net income $ 1,22,641 $ 1,86,678 $ 5,58,929 $ 12,11,242 $ 18,66,916

Adjustments to reconcile net income to net
cash used in operating activities:

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Additions to streaming content assets (57,71,652) (86,53,286) (98,05,763) (1,30,43,437) (1,39,16,683)

Change in streaming content liabilities 11,62,413 17,72,650 9,00,006 9,99,880 (6,94,011)
Amortization of streaming content assets 34,05,382 47,88,498 61,97,817 75,32,088 92,16,247
Depreciation and amortization of property, equipment and intangibles 71,911 71,911 71,911 83,157 1,03,579
Stock-based compensation expense 1,24,725 1,73,675 1,82,209 3,20,657 4,05,376
Other non-cash items* 1,11,008 1,19,861 1,17,864 81,640 2,28,230
Foreign currency remeasurement loss (gain) on long-term debt - - 1,40,790 (73,953) (45,576)
Deferred taxes (58,655) (46,847) (2,08,688) (85,520) (94,443)
Changes in operating assets and liabilities:
Other current assets 18,693 46,970 (2,34,090) (2,00,192) (2,52,113)
Accounts payable 51,615 32,247 74,559 1,99,198 96,063
Accrued expenses and other liabilities 48,810 68,706 1,14,337 1,50,422 1,57,778
Deferred revenue 72,135 96,751 1,77,974 1,42,277 1,63,846
Other non-current assets and liabilities (18,366) (52,294) (73,803) 2,062 (1,22,531)
Net cash used in operating activities (6,59,340) (13,94,480) (17,85,948) (26,80,479) (28,87,322)
Cash flows from investing activities:
Purchases of property and equipment (91,248) (1,07,653) (1,73,302) (1,73,946) (2,53,035)
Change in other assets* (79,870) (78,118) (60,409) (1,65,174) (1,34,029)
Purchases of short-term investments (3,71,915) (1,87,193) (74,819) - -
Proceeds from sale of short-term investments 2,59,079 2,82,484 3,20,154 - -
Proceeds from maturities of short-term investments 1,04,762 1,40,245 22,705 - -
Net cash provided by (used in) investing activities (1,79,192) 49,765 34,329 (3,39,120) (3,87,064)
Cash flows from financing activities:
Proceeds from issuance of debt 15,00,000 10,00,000 30,20,510 39,61,852 44,69,306
Issuance costs (17,629) (10,700) (32,153) (35,871) (36,134)
Proceeds from issuance of common stock 77,980 36,979 88,378 1,24,502 72,490
Other financing activities (545) 230 255 (1,956) -
Net cash provided by financing activities 15,59,806 10,26,509 30,76,990 40,48,527 45,05,662
Effect of exchange rate changes on cash, cash equivalents, and restricted (15,924) (9,165) 29,848 (39,682) 469
cash
Net increase (decrease) in cash, cash equivalents, and restricted cash 7,05,350 (3,27,371) 13,55,219 9,89,246 12,31,745
Cash, cash equivalents, and restricted cash beginning of period 11,13,608 18,18,958 14,91,587 28,46,806 38,36,052
Cash, cash equivalents, and restricted cash end of period $ 18,18,958 $ 14,91,587 $ 28,46,806 $ 38,36,052 $ 50,67,797
Non-GAAP free cash flow reconciliation:

Net cash used in operating activities $ (17,85,948) $ (17,85,948) $ (17,85,948) $ (26,80,479) $ (28,87,322)
Purchases of property and equipment (91,248) (1,07,653) (1,73,302) (1,73,946) (2,53,035)
Change in other assets (79,870) (78,118) (60,409) (1,65,174) (1,34,029)
Non-GAAP free cash $ (19,57,066) (19,71,719) $ (20,19,659) $ (30,19,599) $ (32,74,386)
flow $

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STRATEGIC
ANALYSIS STRATEGIC ISSUES
As society and science technology develops, the Internet has begun to change people’s daily
lives, such as the habits of study, communication and entertainment. Thus, in the context online
business has become more and more common. Netflix was online business, founded by Hastings
in 1997. Its service item was online subscription-based DVD rentals.
In the development process of Netflix, there exists seven main strategic issues:
Firstly, Netflix ignored the actual situation and chose the similar business model with the other
famous internet brands like eBay, Amazon. Because of competition advantages with other
retailers, Netflix did not realize this until they found out the subscriber would not choose to
return after their first experience.
Secondly, In order to develop the market, the firm has to spend much money to attract more new
customers, and Netflix neglect the customer service, so that some early customers still lost by
the slower service that Netflix offered.
Thirdly, Customers always like top new released movies which were the most expensive, thus
increased the cost of Netflix. As a result, the subscribers should expense more cost to acquire
new movie because of the strategy called “all you can eat”. Netflix was always shipping the new
movies package which has some old movies, but most subscribers may not like them.
Fourthly, the number of new films was less than the desired one and it leaded to customer
dissatisfaction. Due to there was no direct relationships with the major studios, Netflix only built
its film library through relationships with a small number of movie distributors.
Fifthly, due to Netflix set up a single distribution center in Sunnyvale and California, Post Office
may spend a long time to mail on cross-country and then lead to extend delivery period. As a
result, it lost a lot of customers.
Sixthly, According to the subscription-based services, customer loss is the key strategic issue of
Netflix. Owing to the high competitive market and raise of price, customer loss has become an
urgent problem. Hence, customer acquisition, which includes developing new clients and

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retaining old clients, has become the main strategy to improve the business performance of the
company.
Finally, the threat from video on demand (VOD) influences the performance of Netflix
seriously. VOD can immediately provide customers to watch latest movies. Therefore, they
consider that VOD is more convenient than DVD rental and traditional video stores.
EXTERNAL ANALYSIS
As do all players in the content streaming industry, Netflix is presented with and must consider
the external forces that impact their strategic decision making. To gain or sustain a competitive
advantage, managers must continually tailor their strategies to align with the environments in
which their businesses operate; external environments play an important role in shaping the
future of industries, especially those that are changing rapidly like Netflix’s. This is largely due
to the increasingly digitalized nature of the world and advances in technology, factors that will
be considered throughout the following external analysis.
PESTEL ANALYSIS
Given the nature of the market and size of Netflix, traditional analytical tools like the PESTEL
Analysis represent an excellent lens through which one can examine the company’s situation,
serving to unearth disparities that subsequently enable management to plan risk reduction and
leverage Netflix’s internal strengths. The politics, economies, social structures, technological
conditions, and legal environments of the countries in which Netflix operates significantly affect
their success; Netflix’s business is driven by having favorable economic conditions in the 190
countries in which they operate, so understanding such things bares pertinence. Furthermore, the
company is heavily invested in international growth, making the following PESTEL analysis
even more important.
Netflix PESTEL Analysis
Political  Copyright and content laws

 Piracy regulation/governmental effort in services sector
 Political stability
 Navigating global political climate (operating in multiple countries)
 Repeal of net neutrality that could lead to a shift/restructuring in power (to ISPs)

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Economic  Exchange rates = key issue

o Bear pertinence to expansion where exchange rates move Netflix into
the category of a luxury purchase
 Essential for competitive pricing in the current economic landscape
 Multitude of economic climates to navigate
 Liquidity effected as cash outflows continue to increase
 Efficiency of markets and capital required to sustain presence
 Economic growth impacts purchasing power
o Increases in disposable income lead to more spending on entertainment
Socio-  Continually changing consumer preferences
cultural o Reduction in attention span necessitates breadth of product
offering
 Diverse cultural context/need to appeal and understand many markets
 Watching is a social phenomenon (trend away from constant access would be

detrimental)
 Changing demographics/continual adoption from new segments
 Changing attitudes towards health/environmental consciousness etc. thatimpact
viewership
 Genres/content heavily dependent and fluctuating depending on socio-cultural trends
o Changes in leisure interests
 Web series gaining tremendous amount of popularity (younger markets have far
fewer viewers of traditional television)
Technological  Nearly 50% YoY growth for the 4k television market
 Increases in VOD demand
 Requirements for internet speed/capacity
 Impact on product offerings/modalities of dissemination and access
 Rate of technological diffusion
 Improvements in compression techniques that improve streaming quality with
less data usage
 Continual need to modernize business model
 Need to maintain content library, recommend and support relevant content
across different interfaces and devices (high technological competency)
 Lower barriers to entry for content streaming with technological advancement
Ecological  Competitors using renewable energy/best practices

 Laws affecting energy usage/sustainability goals
 Socio-cultural attitudes toward renewable energy/best practices

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Legal  Legal framework to enforce contracts

 Tariffs in service industry
 Pricing regulations for services
 PR/financial implications from consumer lawsuits
 Employment laws
 Legal battles against geo-blocks etc.
 Strict censorship in large markets (such as China)
PORTER’S FIVE FORCES ANALYSIS

In continuing with an analysis of Netflix’s external environment, the five forces model bears
tremendous significance to Netflix’s strategy formulation. While the PESTEL analysis allows
one to evaluate the external environment and identify subsequent opportunities and threats, this
framework helps determine profit potential and to derive the implications that these forces have
upon Netflix. For example, a report issued by Nielsen illustrates that while 90% of US
households with streaming subscriptions elect Netflix as their provider of choice, 33% of these
subscribe to more than one service; this speaks to the high power of Netflix’s buyers. Other key
takeaways from a five forces analysis of Netflix (included below):
 The cost of switching for Netflix’s consumers is minimal; there is no annual contract,
and the recurring fees are negligible.
o Most streaming services offer a free trial, making it easy for customers to
frequently switch between providers
 Netflix must keep user preferences in mind
o They have to stream tailored content and add compatibility to accommodate
viewing preferences like closed captioning and foreign languages.
 As video streaming has become more popular, the number of new entrants has increased.
o Many of these players are taking on genres, as opposed to competing directly
with Netflix (i.e. focusing on foreign movies, documentaries etc.)
o This necessitates the continual evaluation of whether competition in these niche
spaces makes sense.

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 Netflix must refine its brand to appeal to a broad range of consumers

o New competitors are often considered to be trendy for specific demographics.
o Netflix should ensure that the technology behind its streaming service works
well, and that viewers can relate to the brand in other ways, such as through how
they search.

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Implications of the Five Forces for Netflix
In examining each competitive force, Netflix can address them in the following ways:
Competitive Force How Netflix Can Mitigate
New Entrants  Continually innovate in new products and services.

 Build economies of scale to lower fixed costs per unit
 Build capacities and R&D; new entrants are less likely to
enter a dynamic industry where the established players
such as Netflix keep redefining standards. This
significantly reduces the profit window for new firms
Bargaining Power of  Build efficient supply chain with multiple suppliers.

Suppliers  Experiment with using different suppliers and always have
contingency plans to mitigate lost contract
opportunities/fall-throughs
 Develop dedicated suppliers whose business depends upon
Netflix
Bargaining Power of  Continue to grow the user base; reduces bargaining

Buyers power and presents the opportunity to streamline sales
and production
 Rapidly innovate and develop new offerings, reducing
consumer defection
Threat of Substitutes  Commit to being service vs. product oriented

 Develop further understanding (leverage data capabilities)
of customers needs rather than what the customer
purchase historypredictive analyses
 Increase switching costs
Rivalry Amongst Existing  Build sustainable point of differentiation

Competition  Continually develop scale
 Collaborate with competition to increase market
sizedon’t have to keep competing for a
dwindling market

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INTERNAL ANALYSIS
The following internal analysis of Netflix is a necessary complement to the previous analyses.
The company’s ability to gain and sustain a competitive advantage is largely driven by such
things as core competencies, and the identification of these unique strengths embedded within
the firm must precede the formulation of strategic recommendations. As the best firms
conscientiously identify their competencies, resources, and capabilities with regards to their
competition, this report will do the same.
Core Competencies & Potential Sources of Competitive Advantage
Netflix’s most noteworthy competencies are content based. The company is a pioneer in content
delivery; their content has tremendous brand name recognition, comprised of dozens of Emmy
and Oscar award winning programs, both original and licensed, that viewers love. To this end,
Netflix is a leader in original content development among streaming services. The variety and
quality of their original content is one of their primary sources of competitive advantage. They
have the infrastructure and the distribution network necessary for such an endeavor, and their
content aligns with the VRIO decision tree: it is valuable, costly to imitate, rare, and organized
to capture value. This original material is also not substitutable given the breadth and continual
innovation backing it. Another of Netflix’s core competencies is their superior data collection
and analytical capabilities. This is evidenced by their unrivalled variety of product offerings, all
of which are developed and implemented with intimate knowledge of their consumers’
preferences and viewing habits; simply put, one of Netflix’s main strengths is finding something
for everyone.
The company’s other most noteworthy competencies include:
 Reputation and brand name recognition (on a global scale)

 Highly experienced and valued employee base
 Technological expertise
o Seamless front-end user experience
o Ease of use
o Capabilities for multi-device streaming
 Uniquely localized content

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o Leverages expertise in local responsiveness

o The company has more foreign subscribers than all other streaming services
combined.
o Best practices in content dubbing, closed captioning, etc.
Financial Performance Relative to Competitors

Netflix’s financial performance, in relation to key competitors such as Amazon, is also important
to consider in developing strategic recommendations as it helps to assess current positioning and
goal formulation. Netflix has reported total revenue increases of ~34% YoY, which trumped
their competitors’ average revenue growth of ~21% YoY.
However, their net margin of ~10% contributed to their admission of having lower profitability
than their competition. This could be attributed to several factors, such as investment in
expansion and development, and thusly should not be taken as an objectively bad thing.
Furthermore, Netflix shares have performed well in 2018, more than doubling in price so far this
year. From a stock-market perspective, Netflix represents a growth stock, where much of its
valuation is predicated upon the expectation of continual growth.
SWOT ANALYSIS
The SWOT analysis, included on the following pages, is useful in the development of a forward-
thinking strategy for Netflix in its consolidated examination of both internal and external factors.
This analysis serves to identify factors pertinent to Netflix’s current or future competitive
advantage; for example, Netflix’s strengths can help them capitalize upon opportunities to
expand into more international markets given their experience with culturally tailored
programming, their breadth of content, and the infrastructure and resources necessary to support
such an expansion.
Helpful Harmful
towards achieving the objective towards achieving the objective
Strengths Weaknesses
 Exclusivity with regards to licensing  Heavy dependence on suppliers (networks etc.)
through studios/broadcast networks o Suppliers are becoming competitors
 Status as pioneer in the industry (helps  High fixed costs
secure many highly-demanded titles to build  Financial resources are strong, but limited
databasedeterrent to new entrants with regards to competition (like Amazon)
because there is a smaller pool of producers  Low brand loyalty (but high brand recognition)

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from which to gleam content)  High cost to develop in-house content

 Competitive first-mover advantage  Environmental coststerrible ranking
o Strong brand name/knowledge base for environmental awareness (garnered bad
 Established economies of scale publicity as competitors like Amazon and
 Strong focus on innovation across the organization Facebook use over 40% renewable energy with
 Flexible infrastructure with low operating costs their services)
 Tons of consumer data AND expertise/data o Data server capacity puts tremendous
analysis capabilities to generate audience- pressure on the environment
specific content
o Strong understanding of the user base
o Knowledge AND understanding of target
audience and consumer preferences
 High quality ratings for in-house content
 Convenient one-stop-shop
 No reliance on ad agencies
 Netflix has more subscribers worldwide than
all other streaming services combined
 Tremendous breadth of content offerings
 Not fragmented (license content AND own
the platform that content is consumed
throughaccess data to drive success
across entire businessvertically
integrated)
o Important to leverage this information
 Ability to promote content on the platform itself
 Lots of customer interaction through media
 Little traditional
advertisingorganic brand content
strategy (subscribers grow, social media
engagement based on high-quality content
and resulting word of mouth)
 Account for more than one-third of North
American internet traffic
Opportunities Threats
 Further leverage consumer data and gain more  Studios/broadcasting networks taking away
impactful insights as technology and data exclusivity from programming
mining techniques/processes evolve  Development of existing/new alliances
 Reduce reliance on suppliers/licensing by amongst competition
continuing to develop and market in-house  Few barriers
content  Content piracy
 Development of international business which has a  Industry deregulation
long way to go before reaching maturity (such as  Net neutralityunfavorable
partnerships in Europe) terms and consumer frustration
 Improve consumer perception of environmental  Technological penetration
awarenessexplore solutions to  Amazon looking to acquire live sports
reduce carbon footprint broadcasting rights
 Technological advancement (VR, 4K etc.)  Fierce competition

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present new revenue streams and ways to deliver o Few barriers to entry, market subjective to
content changes from rapid technological change
 Growing market for content in foreign  Potential for investment into original content
languages (region-specific content) to shrink library
 Huge revenue potential from advertisements  Revenue from international markets is affected by
 Further leverage niche markets changes in exchange rates
(documentaries, specials etc.) that Netflix  Increases in subscription rates could lead
excels in to consumers switching to competition
 Increased ubiquity of the internet
 Leverage complements
o Potential movie deals to get in-house content
in cinemas (which have good profit sharing)
 Video streaming in china will more than quadruple
by 2020
 Capitalize on nearly 50% YoY growth for the 4k
television market (continue R&D to support
efficient 4k streaming)

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MARKETING STRATEGIES OF NETFLIX

Netflix streaming service is positioned as the personalized low price instant movies and TV
shows entertainment with the biggest collection targeting the mass market. Comparing to other
competitors Netflix offers the watching experience without disruptions from other adverts
compare to Hulu, It has the largest selection compare to all close competitors and customers can
watch from a bigger variety of devices and internet connection speeds which puts it on top list
when it comes to convenience.
Every customer is served individually using a sophisticated analysis of big data and accurate
recommender systems so that the service can be as personalized as possible while aiming at
attracting as many subscribers as possible from all walks of life.
MARKETING OBJECTIVES
Marketing
 Increase the brand awareness and goodwill especially in new international markets.
 Highlight the competitive price and variety of content and the social media integration
that Netflix offers compared to their competition by including these details in every
message.
 Increase number of subscription from 40 million people to 70 million
 Improving the Instant streaming service in various aspects
Media
 Increase our share of voice by 40 percent by the end of the campaigns first year.
 Increase the frequency rate of all current advertising messages by 50 percent and extend
our reach by 10 percent.
Promotion & advertising
 Reach 95 percent of the target audience at least twice with messages detailing Netflix‘s
instant streaming.

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 Use mobile ads to increase awareness of Netflix‘s instant streaming service on particular
mobile devices.
MARKETING MIX
PRODUCT OFFERING STRATEGIES
Netflix could have more recent movies in their collection in order to attract customers who only
want to watch new movies online and could also get move recent TV shows for the customers
who want current TV shows. Apart from that Netflix do not currently have online games and does
not currently carry in their libraries.
Sports instant streaming which have a great potential market since none of the close competitors
provide this kind of service, between 21.6% and 22.4% of all Fans in Major North American
Sports Leagues spend between 1 and 4 hours a week on internet search for the sports news and
clips.
Netflix has to keep expanding the collection it already has by bidding for more popular TV titles.
Increase exclusive content from in house production. Collaborate with well-known actors to create
more original series and release the seasons in less than 12 months that Netflix currently does.
Netflix can do more to accommodate different internet speeds so that these customers can watch
from anywhere they have an internet connection and can work with internet service providers so
that customers may have special internet packages enable them watch their movies more
comfortably with affordable internet service.
Netflix should make it possible to pay using other medium for payments apart from credit cards
like mobile money, cheques, western union any many other forms of payment to allow customers
from countries where credit cards are not popular have access to Netflix too.
PROMOTION, COMMUNICATION AND INFLUENCE
Netflix offers a free month trial for all of the new subscribers aiming at showing the high value of
service before the subscriber commit to Netflix. The objective is to attract more loyal subscribers
because people join Netflix with confidence of what they are purchasing which increase trust and
loyalty among subscribers. This promotion sends a message that Netflix is confidence of the value

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it has to offer and does not hesitate to let people have the Netflix experience before they decide to
buy subscriptions.
PRICE
Netflix pricing objective is gaining the maximum market share for Netflix which translates to
customer attraction and retention. Their pricing is also set to match the competitors where they
charge $7.99/month for unlimited streaming, the same price as Hulu while Amazon prime
$6.50/month but the customer incurs extra cost for some individual titles. There have not been a
lot of price changes with the online streaming industry and all the major players keeps the price
at the similar margin which means if any one of the competitors will change the price Netflix is
likely to react if not changing the price will result to lost subscriptions. Netflix changed its
prices and separated the two products lines of streaming and DVD rental by 60% increase in
price for customers who wanted both services. Netflix has ever since maintained its price at the
industry average. Netflix does not practice price differentiation because it targets the mass
market
PEOPLE
Netflix should have highly qualified and fast customer service people to take care of the customers
because that is the only point of contact with the customers. Netflix respond within 5 minutes of a
call to all customers and this could be improved further to 3 minutes.
PLACE & PROCESS
Process in which customers go through to subscribe is made simple and self-service. It takes a few
minutes to create the Netflix account and to start watching instantly and it all reflects the
convenience aspect of the service.
DISTRIBUTION
Netflix accommodate different internet speeds so that the customers can watch from anywhere
they have an internet connection and in order for them to do this Netflix is strategically
establishing relationships with ISPs because there is a threat that the government may not honor
the internet neutrality law which will allow ISP to charge customers differently with different
content which will hurt Netflix business.

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Netflix can also partner with companies to develop Netflix programs specific to their platforms
that will come pre-installed on all their devices, further partnership can be done with cable and
gaming companies to develop instant streaming option for video games. Content providers also
should be approached for exclusive rights to content before the competitors do the same.
PHYSICAL EVIDENCE
Online movies and TV shows streaming primary physical evidence is the Netflix website where
people log in to watch their movies and Netflix apps which enable people who use phones to
access Netflix get that experience, the website should be improved constantly and more user
friendly so that subscribers can search for content more easier and prevent any possible downtime.

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ADVERTISING
a) Advertising through mobile phones & tablets messages
As of May 2013, 91% of adults had a cell phone, 56% a smartphone, and 34% had a tablet
computer. As of January 2013, 26% of adults owned an e-book reader. Therefore advertising
through phones and tablets became an easy task for Netflix.
b) Social media and internet advertising
Social media is extremely important for Netflix because the service is located on the internet the
same place where the social media is. Netflix provides opportunities for its customers to share
and interact with their friends in various social media while they are on Netflix account. Netflix
also collect the social media information to better serve the customers and know how the
customers perceive them.
c) TV commercials
Based on the America‘s commercial broadcast television industry‘s (referred to as TVB) media
comparisons study 2012, Television reached more people than the internet (88.3% > 73.1%).
However, considering that the location of the product is on the internet, we want to focus a good
part of the advertising to internet ads as well. Television will have more money budgeted to it,
due to the production costs
d) Additional promotional tools: QR codes
QR codes are becoming popular as smart phones become more standard. Netflix may agree with
a candy company to put Netflix QR codes on their movie size candy. They can also arrange for
the QR codes to be put on pop-con packages that are used in movie theatres even those sold in
stores. The QR codes will lead customers to Netflix.com and YouTube clips of commercials.
Netflix can also run a follow up campaign for Netflix users to submit their own video of them
using or advertising the Netflix. If their video passes YouTube regulations, those videos can be
put on YouTube with a QR code attached the customers may be rewarded with discounted
subscriptions for a month or two. This creates consumer excitement and involvement.

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Example of QR codes: These are machine-readable codes
consisting of an array of black and white squares, typically used for
storing URLs or other information for reading by the camera on a
Smartphone
NETFLIX COMPANY
STRATEGIES Competitive & Corporate Strategy
Netflix’s differentiated competitive strategy is focused on three primary components: spending,

content, and user experience. The company invests a tremendous amount of resources into new
content development annually, especially now geared towards its original shows and movies,
moving away from their previous strategy of focusing on licensing content under ownership by
other studios. This competitive strategy is rooted in their desire to build a content portfolio of
lasting value, which comes with large upfront costs, but which also will likely drive growth for
years to come. Netflix’s focus on content is not one where quality is compromised by quantity.
The billions of dollars that are invested towards content-production are largely spent on
attracting industry-best directors, writers and actors whom are given a tremendous amount of
autonomy, enabling them to do their jobs well. As a result, Netflix’s content portfolio received a
leading 112 nominations at the 2018 Emmy Awards. This strategy has led them to become a
high-quality entertainment platform, where exclusive content keeps subscribers coming back for
more.
The third most noteworthy component of Netflix’s competitive strategy is that of the user
experience, which the company has prioritized. The interface is simple and consistent across all
devices; it is easy to navigate, and Netflix doesn’t try to blend advertising content into its
streams like Hulu or Amazon who try to steer viewers towards downloads not included in their
service. Netflix has realized that additional advertising revenue ultimately isn’t worth the
detraction that

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results from viewer dissatisfaction; anything that takes away from viewers’ focus on content is
removed from the platform.
Global Strategy
Netflix’s global strategy is unique in that it must secure content deals on a regional basis.
The company faces many regulatory restrictions, and customers in new markets often prefer
local-language tailored content. Furthermore, many subscribers in new geographic areas are
accustomed to free content and hesitate to pay for streaming services. Netflix’s global strategy is
important in that there already exist strong competition in many foreign countries, where leaders
offer localized content that mitigates any opportunity for a first-mover advantage. The table on
the following page examines key phases of Netflix’s global strategy:
Key Component of Global Strategy Details
Selective market entrance Netflix selected markets based on perceived

differences, first selecting those that were less
differentiated; through this process, they
learned how to properly expand and enhance
their capabilities beyond the US (Brennan,
2018).

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Faster, post-learning, expansion Drawing on the lessons from the first phase,
Netflix selected markets based on
attractiveness (similarities, affluence etc.),
and supported the rollout with local
partnerships and investments in localized
content and data analytics
Rapid expansion Expanded rapidly using the expertise

generated from previous phases; helped to
determine content preferences, marketing
tactics, and company-wide organization.
Focused in this phase on adding more
languages, optimizing personalization
algorithms, and expanding support for devices
and operations

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DATA ANALYSIS & INTERPRETATION

Now we shall analyze and interpret how these promotional strategies have been able to create a
brand image for Netflix among the users.
A group of 152 customers have been taken up as sample and their views on certain questions
have been shown below:-
1. Indicate which online streaming/rental services you currently use?
INTERPRETATION
Out of 152, 117 use Youtube and 107 use Netflix i.e., Netflix is the second mostly used online
entertainment service.
2. How much time you spend watching shows online?

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INTERPRETATION
Out of 152, 125 users i.e., 82.2% spend 0-5 hours watching online shows and 13.2% spend 5-10
hours.
3. Do you currently have a Netflix subscription?
INTERPRETATION
Out of 152, 93 users i.e., 61.2% have a Netflix subscription and 62.5% are willing to pay for
the online entertainment services.
4. What is your profession?
INTERPRETATION
Out of 152, 88.2% users are students and the rest are working professionals and self employed.
This implies that Netflix is very popular among the young generation customers.

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5. What is your Gender?
INTERPRETATION
Out of 152, 59.2% users are male and 40.8% are female.
6. Indicate how many times you use your Netflix subscription in a given month. (This includes
streaming movies and TV shows)
INTERPRETATION
Out of 152, 48.2% customers use Netflix subscription everyday and 28.2% use it 2-6 times a
week. Also in a given month, 43% users stream online content through Netflix, everyday.

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7. Will you use Netflix again?
INTERPRETATION
Out of 152, 84.9% customers will use Netflix subscription again and 15.1% will not use it
again.
8. How much (in rupees do you spend) on Netflix per month?
INTERPRETATION
Out of 152, 69.7% customers spend less than Rs. 500 on Netflix per month and 10.5% spend
more than Rs. 800 per month.

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9. Rate Netflix on a scale of 1 – 5, where 1 is best and 5 is worst.
INTERPRETATION
Out of 152, 54 customers (35.5%) have given Netflix a rating of 1 (best) and 18 customers
(11.8%) have given a rating of 5 (worst).
10. Which of the following age groups best describe you?
INTERPRETATION
Out of 152, 47.4% customers each are in the age group of below 18 and 18-25 years.

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11. Please indicate one company you view as a competitor of Netflix.
INTERPRETATION
Out of 152, 71 respondents view Amazon Prime as the prime competitor of Netflix and 11
respondents view Hotstar as one of the competitors.
4. CONCLUSION
PREFACE
In this chapter we shall draw some conclusions from the analysis done and the interpretation
made in the previous chapter and based on such conclusions we shall provide some
recommendations which shall be helpful in developing the product in the future days to come.
CONCLUSIONS
Our study discloses the following results:-
 70% of the respondents use Netflix as the source of online entertainment service.
 Majority (82%) of the respondents, spend at least 5 hours watching shows on Netflix and
around 13% spend 5-10 hours.
 61% of the respondents have Netflix subscription and out of them 88% are students.
 The above result implies popularity of Netflix among the younger generation. This has
also been depicted in the age group analysis where 47% (each) of Netflix users are in the
age group of below 18 and 18-25 years.

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 48% respondents use Netflix everyday for watching series and movies.
 Given the popularity of Netflix among young generation, 85% students would want to
use Netflix again.
 88% respondents are students but still 70% of them spend approximately Rs. 500 per
month on Netflix.
 Netflix has been rated as one of the best online streaming services by 35% of the
respondents and 22% rated it as average.
 47% of the respondents consider Amazon prime as one of the top competitors of Netflix.

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4.1. RECCOMENDATIONS AND SUGGESTIONS
RECCOMENDATIONS:
Netflix must implement a new strategic approach where they are not as susceptible to
fluctuations inherent to this saturated entertainment industry. To continue growing, Netflix has
several options to consider:
1. Continue focusing on original content development, allocating less and less funding
towards licensing content
2. Maintain presence in current markets, domestically and internationally, focusing only on
customer retention and competitive customer acquisition
3. Diversify the current platform to include different types of content, becoming a more
holistic online destination for consumers
4. Continually allocate resources to international expansion, namely in countries where
there is high pressure for localization that Netflix can uniquely satisfy (unlike key
competitors)

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SUGGESTIONS:
Netflix is currently in the business of buying and making content. While they have experienced
tremendous success with this business model, they are fighting a battle over content acquisition
and creation that is only becoming more competitive and expensive as new entrants appear.
Furthermore, many of their competitors, such as Amazon and Disney, have deeper pockets and
more resources. To best leverage their existing position, Netflix need to take several actions.
Following are some suggestions for the same:
1. Netflix should consider a strategy akin to YouTube, adding capabilities to their existing
platform that allow third party content providers to sell directly to subscribers, but with
prices controlled by Netflix.
2. This is both feasible and attractive when one considers Netflix’s primary strengths: they
possess an impressive and virtually unparalleled infrastructure for content creation and
delivery, tremendous brand name recognition, an unrivaled subscriber base, and are
attractive for many third parties. These parties are not limited to video content providers,
as the platform also appeals to marketers and game developers.
3. Allowing third parties to sell products within the service but outside of the subscription,
Netflix could add a substantial revenue source to their business that fulfills the growing
needs of their subscriber base.
4. Expanding their offering to become a more holistic destination for online entertainment,
Netflix can tap into an entirely different growth dimension; this is competitively
necessary.
5. The added breadth to their offerings can augment customer retention, as Netflix can
become a one-stop-shop for online content. This aligns with the key decision criteria,
enabling many more content creators to reach global audiences, and making Netflix’s
platform a more holistic entertainment destination.
Netflix have managed to position their brand as affordable, convenient, with largest library and
most of all personalized. They have successfully stocked their company with the widest range of
films and the first to have a good recommender system ahead of its competitors they have
integrated their service with the social media. By starting their instant streaming product line as

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soon as broadband internet was able to support it, they not only stayed ahead of the competitive
game, they‘ve monopolizedthefield.
Now that the instant streaming feature has become so popular, many are trying to imitate and
enter into the market. By implementing the creative strategies suggested, Netflix will secure
their place on top.
Through increasing the reach of their instant streaming message, eventually every home will
have a Netflix subscription. Netflix will not only be a choice but the choice for everyone.

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ANNEXURES
QUESTIONNAIRE
1. Indicate which online streaming/rental services you currently use?

 Netflix
 Youtube
 Amazon prime
 Hotstar
 Voot
 Others
2. How much time you spend watching shows online?
 0-5 hrs
 5-10 hrs
 10-15 hrs
 15-20 hrs
 >20 hrs
3. Do you currently have a Netflix subscription?
 Yes
 No
4. What is your profession?
 Homemaker
 Student
 Working Professional
 Self-employed
5. What is your Gender?

 Male
 Female

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6. Indicate how many times you use your Netflix subscription in a given month.
 Everyday
 2-6 times a week
 Once a week
 Once a month
 Less than once a month
7. Will you use Netflix again?

 Yes
 No
8. How much (in rupees do you spend) on Netflix per month?

 <500
 501-800
 >800
9. Rate Netflix on a scale of 1 – 5, where 1 is best and 5 is worst.
10. Which of the following age groups best describe you?

 Under 18
 18-25
 26-35
 36-55
 55+
11. Please indicate one company you view as a competitor of Netflix.

BIBLIOGRAPHY
 www.economictimes.indiatimes.com
 www.google.com
 www.netflixinvestors.com
 www.scribd.com
 https://en.wikipedia.org/wiki/Entertainment_industry_in_India
 https://en.wikipedia.org/wiki/Netflix

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 Netflix Inc. (NFLX: NASDAQ GS): Netflix, Inc.'s Annual Revenues.

Businessweek.com
 Journals & Research Papers
 Byland, A. (2018). Netflix, Inc’s Competitive Advantage. The Motley Fool.
 Investopedia. (2018). The rise of Netflix (NFLX). Investopedia.

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ENVIRONMENTAL STUDIES (University of Calcutta)

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Title of the Project

BUSINESS MODEL AND MARKETING STRATEGIES

Registration No. : 017-1111-3250-19

Name of the College : THE BHAWANIPUR EDUCATION SOCIETY

Roll No. : 191017-21-0481

College UID : 0103193064

Name of the Supervisor : MICHAEL RONY MULLICK

Name of the College : THE BHAWANIPUR EDUCATION SOCIETY

Month & Year of Submission :

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Name: Deep Singh Hora

39 Samiran Roy Road,

Registration No.: 017-1111-3520-19

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I am immensely grateful to my guide and to all my faculties for their constant

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3. PRESENTATIONS, ANALYSIS & FINDINGS......................................................................................................... 20

RECCOMENDATIONS AND SUGGESTIONS.......................................................................................................51

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According to “American Marketing Association Board of Directors”, Marketing is the activity,

A few methods of different promotional strategies are quoted below:

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Paul Keech defined marketing strategy as “A strategy often integrates an organization's

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 To understand the need of the target customer

A BRIEF REVIEW OF LITERATURE

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 How to achieve specific level of sales volume?

 How to appeal a particular market segment?

METHODOLOGY OF OUR STUDY

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 TOOLS OF DATA COLLECTION

LIMITATIONS OF THE STUDY

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 The sample size taken is small to make a universal statement.

 Biasness of the respondent.

 Lack of sufficient information.

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3. PRESENTATIONS, ANALYSIS & FINDINGS

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FINANCIALS OF NETFLIX INC.

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PROFIT AND LOSS

Revenues $ 67,79,511 $88,30,669 $1,16,92,713 $1,57,94,341 $2,01,56,447

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Cash flows from operating activities: