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NETFLIX ORIGINAL

Case study
2021 13+ 40m

The Best Way for Netflix to

Keep Growing
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Ladignon Estephanie Gaebrielle M.
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definition
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Netflix is a subscription-based streaming service that allows our users to view TV

episodes and movies on any internet-connected device without ads.

Netflix is a combination of the words "Net" (as in "internet") and "Flix" (a variation
of "flick", the common abbreviation for a movie or film).

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history
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Netflix was launched in August 1997 by two sequential

entrepreneurs, Marc Randolph and Reed Hastings, who were
also successful entrepreneurs at the time.

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 HISTORY
Netflix was launched in August 1997 by two sequential entrepreneurs, Marc Randolph and Reed
Hastings, who were also successful entrepreneurs at the time. Beginning in Scotts Valley, California, the
company expands to become one of the world's major internet entertainment providers, with operations in
more than 100 countries.

If you remember back to when Netflix originally launched, it was strictly a movie renting business.
Clients placed movie orders on the Netflix online platform, and DVDs were delivered to their homes via
the postal service. Once they were finally done with them, they merely mailed individuals who rented it to
return the Netflix in the envelopes that were given for that purpose. At sometimes, this was viewed as a
blessing for individuals who won't have access to a video rental business in their immediate vicinity.

This has greater than 151 million incurred purchasers in much more than 190 countries throughout the
world, and it provides movie streaming services. It provides a diverse selection of television shows,
documentaries, and animated films in a variety of service, as well as unique
creations.

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 TIMELIN
E
 1997 - Netflix was launched in 1997 by Hastings and Randolph to offer movie rentals over the internet, according to
the company's own website.
 1998 - It led to the introduction of Netlix.com in 1988, which specialized in DVD rentals and sales.
 1999 - The company has also established a subscription service that allows customers to rent unlimited DVDs for a
monthly fee.
 2000 - Things started to change in 2000, when Netflix introduced recommendation systems based on member ratings.
 2002 - Netflix developed slowly after going public in 2002, reaching 4.2 million users by 2005. In the beginning, the
stock was worth less than $2 per share.
 2007 - The arrival of streaming in 2007 was unquestionably a major turning point. Creating a space where users could
instantaneously watch content online changed the game completely.
 2009 - It had risen to roughly $8 per share in 2019. Of course, the rest is stock market history, as the stock has soared
to new heights, approaching $400 at one point.
 2013 - Everything had changed. Netflix has started producing its own unique content. "House of Cards“ and "Orange
is the New Black" come to mind.
 2016 - Netflix was available to people all over the world, and the firm has continued to produce more original
material while attempting to expand its membership.

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Mr. Wilmot Reed Hasting Jr is the Co-founder, chairman, and Co-

chief executive officer of Netflix, the person who are responsible in
making corporate decisions, managing the overall operations and resources
of a company.

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time context
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It all started when Amazon, Apple, Disney, and Google announced that they would establish their own digital
download and streaming platforms. This created a problem to Netflix, which is extremely popular but undeniably
more expensive than other streaming providers. Netflix's subscriber growth has slowed down as a result, and the
company's stock market valuation has dropped 15% in the last month after its growth numbers disappointed
investors.

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 I. PROBLEM STATEMENT
Netflix's content spending is not acquiring enough users,
according to the experts, which resulted in a net loss in 2015.
While revenue and user growth are falling, Netflix is paying more
and more to gain new subscribers. One of the challenges facing a
growing firm is attracting more consumers in order to increase
profits. Not to mention the fact that they are direct competitors. The
researchers are interested in determining the best strategy Netflix
could implement to address the issue.

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 II. STATEMENT OF THE OBJECTIVE
The primary purpose of this case study is to determine how
Netflix's net income will be affected by their increased business
strategy, expanded market reach, and tightened marketing
expenses. How have these elements contributed to their
profitability up to this point?

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 III. AREAS OF
CONSIDERATION
P.E.S.T.L.E. ANALYSIS

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 POLITICAL FACTORS
• Netflix's accessibility has always had its drawbacks. Take, for
example, Korea, Syria, and Crimea. Netflix is a US-based firm,
which is why it does as its government directs. Because the US
government forbids any American corporation from providing
services to these countries, even if Netflix wanted to, it would be
difficult due to political concerns. This just demonstrates that
corporations like Netflix are heavily influenced by international
issues, which limits the spread of their services.

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 POLITICAL FACTORS
• Even if Netflix is permitted to operate in a country, it must adhere to the
censorship standards imposed by that country's government. Netflix, for
example, is not available in China, not only due to restrictions imposed by the
US government, but also due to the country's censorship. Netflix's content must
be severely restricted if it is to appeal to Chinese audiences. Many series or
movies will be banned, and sequences may be blacked out or filtered to comply
with Chinese regulations, which Netflix just cannot afford. Even in our own
country, the government is attempting to restrict Netflix's content. Even though
Netflix is a video streaming service, the MTRCB clearly said that it must abide
by its laws. The Philippine government is currently considering it, but since other
nations can restrict and censor Netflix material, it is not hard for the Philippine
government to do so as well.

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 ECONOMIC FACTORS
• The global economy has performed admirably for several years, resulting
in increased spending on leisure services such as Netflix by people all around the
world. Netflix, on the other hand, has seen an increase trend since the spread of
the coronavirus, which brought economies down. This is most likely due to
people sitting at home and having nothing to do, so they look for ways to
entertain themselves, which is exactly what Netflix delivers. Even still, if the
pandemic continues, people will want to conserve more money, which could
lead to a decline in Netflix subscriptions

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 SOCIAL FACTORS
• Since modern technology has paved its way to this generation, millennials
and Gen-z loved netflix. It has been the main platform on enjoying and watching
films, movies or series.
• Netflix is alknown for its generousity on giving scholarships and donating
to charities. Their CEO namely, Reed Hastings, has been donating to charity
funds and foundations.

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 TECHNOLOGICAL FACTORS
• Digital movie rentals was taken over by physical movie rentals.

LEGAL FACTORS
• Consumer Rights, Product Safety, Federal Copyright Act.

ENVIRONMENTAL FACTORS
• Rise of virtual streaming overtakes the hard copies resulting in much less discs in
wastes.

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 IV. ASSUMPTION
Even though the majority of Netflix's latest rise began in mid-
March, when several individuals were obliged to stay at home to help
limit the spread of the new coronavirus, a series of successful original
episodes and films helped Netflix expand its member base in the first
quarter. Netflix attracted 15.8 million customers, upwards of twice the
current 7.2 million predicted – a year-over-year increase with more than
22%. Netflix now boasts a global number of subscribers of 182 million.
Additionally, the company reported quarterly revenue of $5.77 billion,
compared to the projected $5.76 billion.

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 V. ALTERNATIVE COURSE OF ACTION
ACA 1: Improved Marketing Method
Effective marketing methods aid in the long-term growth of potential
subscribers while reducing unnecessary marketing costs. ADVANTAGE growth in
the percentage of potential customers and investors that will work with Netflix.

ACA 2: Concentrate on a Wider Range of a Market

One strategy for acquiring the highest number of subscribers is to transition to a
larger market base. Netflix's subscription doubling rate has been boosted by
focusing on generating a variety of content globally.

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 V. ALTERNATIVE COURSE OF ACTION
ACA 3: Track Marketing Budget
Netflix can calculate the return on investment by keeping track of the amount
set aside for subscriber acquisition.

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 VI. ANALYSIS
ALTERNATIVE COURSE OF ADVANTAGES
ACTION
Growth in the percentage of
potential customers and
investors that will work with
Netflix.
1. Improved Marketing Method
Improving competitor
awareness and anticipating
rival reactions to new
marketing techniques.
37:23
DISADVANTAGES
Netflix should indeed adequately
operate this approach because if the
marketing strategy failed, there will
also be a significant loss of
potential customers or investment
organizations who will partner with
company, and all the efforts will be
gone.
Failed marketing strategy can affect
the Netflix’s revenue and
popularity.
40:00
 VI. ANALYSIS
ALTERNATIVE COURSE OF ADVANTAGES DISADVANTAGES
ACTION

It Supports them in expanding Financial crisis

2. Concentrate on a Wider Range
of a Market
their target customer base.
Netflix will down the production or
It enables Netflix to widen its mediocre content.
markets in order to increase the
consistency of its revenue
sources.

It promotes Netflix’s revenue

growth.

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 VI. ANALYSIS
ALTERNATIVE COURSE OF ADVANTAGES DISADVANTAGES
ACTION

Netflix may keep track of their They will just care about the
profits and losses. money, not the quality of their
service.
3. Track Marketing Netflix can ensure that they do
Budget not exceed their aim while
both meeting and exceeding
their customer's expectations.

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conclusion
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Working on a Broader Market involves expanding access to
more nations in order to reach a larger number of prospective
target customers. Netflix should invest in generating and
From all of the available Alternative researching various sorts of content that would attract more
Courses of Action (ACA), ACA No. 2 users, given that third parties are not allowed to sell material
(Concentrate on a wider range of a market) through their network. Although there are likely disadvantages to
is the best option for Netflix's identified implementing them, as outlined in the analysis, if done correctly,
problem of net loss and poor subscription Netflix will be able to enhance subscription growth and profit
growth in 2015.

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Thank you for listening!

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