National University

M. F. Jhocson St. Sampaloc, Manila

A Case Study Analysis

Netflix

Submitted to the College of Business and Accountancy

National University

In Partial Requirement for the Course

Strategic Business Analysis

By:

Abad, Jose Mari

Bolante, Rosewin

Polinar, Angelica

Venus, Vitug

Submitted to:

Mr. Roderick R. Ronidel. CPA, MBA

Case Analysis

Netflix

I. Viewpoint
 This case study will focus on the viewpoint of Bozoma Saint John, Netflix's Chief Marketing Officer. Bozoma will be the one who will decide and

implement the chosen alternative course of actions since the main problem of the Netflix company is related to her department scopes. Also, to achieve

their goal wherein to maintain their position as a well-known entertainment application in the industry.

II. Time Context

This case study will focus on the first quarter of 2022 because it was the time where the Netflix company lost almost 200,000 subscribers, and it was

their first time to lose a huge range of subscribers since the beginning of their services.

III. Statement of the Problem

Netflix has lost around 200,000 subscribers with an equivalent of 0.1 percent of their total customer base. Losing a lot of subscribers became a huge

impact to the Netflix company, and with the said issue, the researchers would like to address in this study is the improvement of Netflix's subscription fee.

In addressing this, an initiative has been taken to answer the following essential question:

1. What can Netflix do to acquire new subscribers without increasing their subscription fee?

2. What else can Netflix do to maintain their old subscribers?

3. What should Netflix do to sustain its position as a popular entertainment application with a large subscription base?

IV. Objectives

This case study aims to analyze the company's recent subscriber losses during the first quarter of the year.

The following are the objectives that this case study intends to address:

● To assess the main problem that is giving Netflix a decrease in revenue.

● To explore different kind of strategy that can maximize the subscription plan of Netflix

● To solve the declining number of subscribers of Netflix.

● To establish an efficient and effective steaming service to people.

V. Areas of Consideration

Strengths Opportunities

Brand Reputation Expand Global Customer Base

➢ Within a short amount of time, Netflix has become a ➢ Netflix has extended its operations and added a few new

household name. Early in 2022, Netflix was ranked at #4 top respected nations to its operating list. However, it is still unavailable in North Korea,

companies by Forbes. China, Syria and Crimea.

Exponential Growth Low Price Mobile Streaming Option

➢ In the previous ten years, Netflix has developed a global brand ➢ Netflix can provide a lower-cost option to attract and maintain

for online streaming entertainment, not just in the United States. members in the foreign market.

Global Customer Base Exploit Ad-Based Model

➢ Netflix has a global customer base and serves over 190 ➢ Adopting an advertising-based business strategy can help

countries worldwide. Netflix increase its income.

➢ As of the first quarter of 2022, Netflix had roughly 221.64

More Alliances/Partnership
million paid subscribers globally.
➢ It may also collaborate with several telecom companies to

Adaptability to various technologies create bundle packages in various regions.

➢ By making streaming available on all internet-connected

Niche Marketing
devices such as personal computers, iPads, mobile phones, and televisions.
➢ Producing regional content in their own languages

Originality on producing content

Introduce Cheaper Annual Subscription
 It has consistently produced high-quality original content
➢ The company's income can be increased by launching an
throughout the years.
annual subscription with incentives to attract monthly users to convert to

Affordable Price yearly subscriptions.

➢ Netflix's pricing approach has given them an advantage over

its competitors.

➢ Netflix's plans are reasonably priced and provide excellent

value.

Customer Centric Service

➢ Features an offline watching option that makes it convenient

for customers.

Award Winning Shows

➢ Has been outperforming famous traditional television

networks such as HBO and NBC.

Weaknesses Threats

Increasing Debt Competitive Pressure

➢ Netflix's total debt from December 2017 through December ➢ Every year, the number of competitors grows. Disney+, Apple

2021 averaged $13.972 billion. TV+, HBO, Amazon, Hulu, and YouTube are all constantly competing

➢ From fiscal years ending in December 2017 through 2021, with Netflix.

Netflix has a median total debt of $16.372 billion.

Digital Piracy
➢ In 2021, Netflix's total debt was $18.117 billion
➢ Thousands of individuals throughout the world are looking for

Raising Prices ways to get media content for free due to high monthly prices that they

➢ Netflix has raised its subscription prices, whilst other new cannot pay so account hacking increased drastically.

video streaming services, such as Disney+ and Apple TV+, have launched
Market Saturation
at considerably cheaper prices.
➢ Due to market saturation, Netflix will find it more difficult to

Growing Operational Costs recruit new customers in the future.

➢ Adding additional content provides Netflix with a competitive

Carbon Emission
edge, but the expense of supporting the content continues to rise.
➢ High carbon emissions are a big issue in this day and age,

Limited Copyrights when countries all over the world are facing climate change.

➢ Netflix does not control the majority of its content, which has
Government Pressure due to capacity Issues
a negative impact on the corporation.
➢ The European Union commissioner protested in March 2020

Rigid Pricing about Netflix's huge HD content straining infrastructure and interfering

➢ Unfortunately, Netflix's price system is limited to three tiers: with key operations such as military and hospitals.

Basic, Standard, and Premium. The lack of variety has contributed to a ➢ Netflix was requested to lower the amount of data in video

stagnation in the number of new subscriptions. streaming.

Lack of environmental promotion

➢ Has yet to utilize renewable energy and has yet to develop a

business strategy to promote environmental sustainability

 Shortage of customer support

➢ Because of the Pandemic, the number of Netflix subscribers

and hacked accounts surged in the first six months of 2020.

VI. Assumption

In terms of the business's assumption, Netflix subscribers are aware that they may watch not only mainstream series and movies but also Netflix's

own movies and shows. Netflix provides its own original programming video for users to watch their shows, which increases the potential loss of

subscribers. This research focuses on the company's recent subscriber losses. And what plan can Netflix address to attract more subscribers.

VII. Alternative Course of Action

ACA 1: Low Price Mobile Streaming Option

Netflix has raised its prices over the years to assist cover its rising content expense. We can't lie and claim the streamer hasn't been providing

high-quality content. Many Netflix originals and films are now competing with network TV series and films, as well as exclusive theatrical releases. As a

result, it seems to be the reason that the streaming service would raise their prices.

Unfortunately, Netflix stated that it has lost a significant number of customers, with one of the reasons cited being an increase in subscription

fees. Therefore, Netflix can provide a lower-cost option to attract and maintain members in the global market. It can spread this lower-cost option

internationally in order to compete more effectively with cheaper options such as Disney+, Apple+, Peacock, and others.

ACA 2: Establish more Partnership

 Alliances and partnerships can be beneficial to Netflix. In the past, Netflix collaborated with Channel 4 and contributed a sales benefit to the

company. It may form alliances with various telecom companies and provide bundle products in various countries. Telecom providers help businesses to

be more effective in communication, boost workplace flexibility, and expand their reach. A variety of strategies, such as package deals, can also be

developed to reach more potential consumers.

ACA 3: Introduce Cheaper Annual Subscription

Whenever Netflix releases new content, viewers typically purchase a one-month subscription and watch all of their favorite shows in a short amount

of time. The company loses revenue since consumers can cancel their subscriptions after seeing all of the new content without paying a penalty. Netflix's

income can be increased by launching an annual subscription with incentives to encourage monthly users to convert to yearly subscriptions.

VIII. Analysis

ACA 1: Low Price Mobile Streaming Option

Advantages Disadvantages

➢ Increase in subscribers ➢ Dependency of customers

➢ Compete effectively against cheaper alternatives ➢ May decrease in profit

➢ Accessible to users ➢ Phone storage Capacity

➢ Increase customer satisfaction ➢ Decrease in the quality of the product

➢ Market Growth

ACA 2: Establish more Partnership

Advantages Disadvantages

➢ Boost sales ➢ Unsuitable for some customers

➢ Increase Efficiency ➢ Product cannibalization

➢ Competitive advantage ➢ Causes a barrier to entry

➢ Service attractiveness ➢ Lowers profits for particular products

➢ Simplify the buying experience ➢ Potential management conflicts

ACA 3: Introduce Cheaper Annual Subscription

Advantages Disadvantages
 ➢ Predictable revenue ➢ May reduce overall revenues

➢ Increased Cash Flow ➢ Increase customer acquisition costs

➢ Easier to discount ➢ Lacks church rate visibility

➢ Convenient billing ➢ Losing customer can be pricey

➢ Reduce Accounting cost ➢ Unsuitable for some customers

➢ Lower churn rates

➢ Longer user commitment

IX. Conclusion

Decision Matrix

Criteria ACA 1 ACA 2 ACA 3

Ease of Implementation 2 3 1

Acceptability 2 1 3

Cost Effective 2 3 1

Practicality 2 1 3

Beneficial 3 1 2

Timeliness 1 2 3

Total 12 11 13

Legend: 1-good 2-better 3-best

Operational Definition of Terms

Ease of implementation:

Doing something with ease, without much difficulty or effort.

Acceptability:

The characteristic of something that is subject to acceptance for some particular purpose.

Cost Effective:

Producing advantageous results without incurring a lot of resources

Practicality:

The quality of being designed to achieve usefulness and convenience.

Beneficial:

Producing favorable results to the company or owner/s.

Timeliness:

This relates to the expected period for information availability when significant information is supposed to be easily accessible application and analysis

We therefore conclude that ACA 3, Introduce Cheaper Annual Subscription, is the best alternative action Netflix should implement.

Justification:

The researchers find ACA No. 3 is the best alternative course of action to address Netflix's current problems in the streaming service industry.

In an era where there are various streaming services offering fresh and interesting content at reasonable prices, it is essential for Netflix to reflect shifting

consumer demand and preferences. The researchers propose providing a lower annual subscription as a strategy to recover its subscriber losses and prevent

the predicted loss of another 2 million customers in the second quarter of 2022. As opposed to the other alternative course of action, ACA No.3 presents a

long-term vision for the firm to penetrate the market and satisfy its existing and potential customers.

ACA No. 1 Offering a low-cost mobile streaming solution may take some time and may backfire and ACA No. 2 implementing a partnership to a

telecommunication service may lead to further internal and external conflicts. Additionally, ACA No. 3 might be able to give Netflix a clear strategy on

how to deal with the current loss and continuous improvement for their business line. The alternative course of action might also introduce the company to

a more developed and improved approach in the competitive streaming industry.

Finally, once the course of action is implemented, it might give Netflix a long-term competitive edge and a solid brand reputation, which are

reasons why they are one of the top and largest streaming services in the industry.

X. Plan of Action

Activities Person Responsible Time Frame and Budgeting

Schedule a meeting to organize, discuss, and Chief Marketing Officer TF: 1 day

brainstorm about the chosen ACA.

B: $200 for snacks

Implementation of the marketing analysis: How Vice President,Strategy, Planning & Analysis TF: 3 weeks

to establish an annual subscription that meets the

B: $500 for the process of data analysis
company’s mission in accordance with the

selected ACA.
 Monitor performance measurement reports: Vice President, Data & Insights TF: Quarterly

Operational effectiveness and efficiencies.

Zero Budget

References:

Finbox website (2022). Total Debt for Netflix Inc. 

https://finbox.com/NASDAQGS:NFLX/explorer/total_debt 

Binary Stream website (2022, May 10). Annual vs monthly billing cycles | Pros and cons of subscription payment frequencies.
https://binarystream.com/blog/annual-vs-monthly-billing-cycles 

Binary Stream website (2021, January 12). Calculating subscribers churn metrics for SaaS companies.
https://binarystream.com/blog/calculating-subscriber-churn-metrics-for-saas-companies-with-examples/?utm_campaign=Blog%20body%20text
%20link&utm_source=subscription 

Pavle Bobic of CC Bill (2021, May 12). Monthly vs Annual Subscriptions: What’s better?
https://ccbill.com/blog/monthly-vs-annual-subscriptions 

Nasdaq website (2017). Can partnership with telecom service providers drive international subscriber growth for Netflix?
https://www.nasdaq.com/articles/can-partnerships-telecom-service-providers-drive-international-subscriber-growth-netflix 

Forbes website (2022). Telco-Streaming Partnerships: Eyeballs, Entertainment and Billing.

https://www.forbes.com/sites/tomokoyokoi/2022/02/16/telco-streaming-partnerships-eyeballs-entertainment-and-billing/?sh=3232b3c62d2d  

Sla-Digital website (2022) The Rise of Bundling and Carrier Billing

https://sla-digital.com/blog/the-rise-of-bundling-and-carrier-billing/  

Profitwell website (2020). How to use Price Bundling to Optimize Pricing and Boost sales.
https://www.profitwell.com/recur/all/price-bundling  

Indeed website (2021). What is a Bundle Pricing Strategy and who can use it?
https://www.indeed.com/career-advice/career-development/bundle-pricing-strategy

Business Strategy Hub website (2022). Netflix SWOT Analysis 2022 | SWOT Analysis of Netflix.
https://bstrategyhub.com/swot-analysis-of-netflix-2019-netflix-swot-analysis/
   
CNBC website (2020). Netflix names Bozoma Saint John as chief marketing officer.
https://www.cnbc.com/amp/2020/07/01/netflix-names-bozoma-saint-john-as-chief-marketing-officer.html?fbclid=IwAR1N4TiET-qywTHntum5i4R-
LK5pSvWrGk5E-FgE_l0ZFHTaIZBGczF8jpmw 

The Street website (2022). Why is Netflix losing subscribers?

https://www.thestreet.com/.amp/investing/why-is-netflix-losing-subscribers?

fbclid=IwAR1MjY82PiJxyEESa9Ez5RFKiKRAsByVQDAhKvwx9jJfVZJXpD7opzClz0U