Netflix: Pricing Decision

2011
Group 08

Name Roll No.

Siddharth Kaushik 2018PGP090

Vrindaye Sharma 2018PGP060

Mohd Asad Khan 2018PGP034

BS Varun Reddy 2018PGP016

Baheti Raghav 2018PGP015

Akash Anand 2018PGP009

Harsh Yadav 2018PGP025

Rupesh Jain 2018PGP027

5C Analysis

• Company: Netflix was founded by Reed Hastings in 1998 as a mail-order video rental service and
introduced the online subscription based streaming service in 2009.
• Customer: People who prefer watching movies at home on rental or by streaming with three
segments: Streaming only, Disk only and, Disk & Streaming renters
• Collaborators: Movie Studios, US postal Service, Internet Service Provider, Distributors
• Competitors: Disk: Redbox, Retail stores, Blockbuster. Streaming: iTunes, Amazon, Hulu Plus,
Cable Operators
• Context: The new two part pricing structure led substantial decrease in the number of total
subscribers from 24.6 million to 23.8 million
Decision Problem
Devising new pricing strategy to retain and increase customers with revenue

Alternatives
1. Stick it out: Maintaining two price model at $7.99 a month for each, mail and online
streaming
2. Make a single, lower bundle price: Bundling price of two service together in the range
of $11.99 to $13.99
3. Abandon “Unlimited” for streaming: Pay per view model for additional movie after two
movies in a week(included in subscription)
Evaluation of alternatives

• Stick it out : Revenue generated will further go down compare to 2011

and chances of losing customers is potentially high
• Bundling: Revenue will be maintained to the level of current year, but
chances of losing customers. Increase in cost for acquiring rights of movies
and content
• Abandoning unlimited streaming: Increase in revenue and retention of
customers as there is no increase in price. Additional revenue is earned
from rent for extra movies and lower costs.
Recommendation

• Abandoning unlimited streaming would be recommended to

increase the revenue with increasing and retaining the customers