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    Netflix: Chapter 4 & 3 - Case Scenario

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    Rubab Kanwal
    Netflix is the world's leading internet television network with over 100 million members in 190 countries. It began as a DVD rental service in 1997 but has since expanded into streaming content online. Netflix's primary source of revenue is monthly subscription fees for streaming and DVD rental plans. It faces ongoing costs such as licensing content from studios, producing original content, marketing, and developing technology to deliver a high-quality user experience. As competition in the online streaming market increases, Netflix must continually adapt its business model.

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    Netflix: Chapter 4 & 3 - Case Scenario

    Uploaded by

    Rubab Kanwal
    52 views3 pages
    Netflix is the world's leading internet television network with over 100 million members in 190 countries. It began as a DVD rental service in 1997 but has since expanded into streaming content online. Netflix's primary source of revenue is monthly subscription fees for streaming and DVD rental plans. It faces ongoing costs such as licensing content from studios, producing original content, marketing, and developing technology to deliver a high-quality user experience. As competition in the online streaming market increases, Netflix must continually adapt its business model.

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    NETFLIX

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    Netflix is the world's leading internet television network with over 100 million members in 190 countries. It began as a DVD rental service in 1997 but has since expanded into streaming content online. Netflix's primary source of revenue is monthly subscription fees for streaming and DVD rental plans. It faces ongoing costs such as licensing content from studios, producing original content, marketing, and developing technology to deliver a high-quality user experience. As competition in the online streaming market increases, Netflix must continually adapt its business model.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    52 views3 pages

    Netflix: Chapter 4 & 3 - Case Scenario

    Uploaded by

    Rubab Kanwal
    Netflix is the world's leading internet television network with over 100 million members in 190 countries. It began as a DVD rental service in 1997 but has since expanded into streaming content online. Netflix's primary source of revenue is monthly subscription fees for streaming and DVD rental plans. It faces ongoing costs such as licensing content from studios, producing original content, marketing, and developing technology to deliver a high-quality user experience. As competition in the online streaming market increases, Netflix must continually adapt its business model.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    NETFLIX

    Chapter 4 & 3 – Case Scenario


    Netflix is the world’s leading internet television network with over 100 million members in over
    190 countries. The users are enjoying more than 125 million hours of TV shows, movies,
    documentaries - and more - on a wide range of Internet-connected devices. The company also
    provide DVD rental plans where it supplies the shows and movies on DVDs. It has been founded
    in 1997 by Reed Hastings and Marc Rudolph to use internet to rent movies on DVD.

    The Netflix went through a lot of different phases, and changed significantly from its initial idea
    to become a giant in the Video on Demand industry. The company’s target market includes
    males and females between the ages of 17-60 and households with income levels of $30,000
    and up. The following screenshot is illustrating how Netflix categorize its movies and TV shows
    to suit all customer interest, including Kids.

    The primary source of revenue for Netflix is subscriptions. That is, subscribers pay to access
    content on Netflix and to get DVDs delivered to them. The company offers 3 different plans for
    users based on the streaming quality (SD, HD, Ultra HD) of the content provided. The costs of
    these plans differ in different countries. Similar operating model is adopted for the DVD renting
    service where the monthly membership fees which depends on the number of Disc out-at-a
    time and Discs per month. The DVD rental and streaming membership plans are two different
    services and cannot be grouped as one.
    There are many expenses and expenditures which the company has to incur to get those
    profits.
    1. Licensing cost: In order to stream your favorite shows and movies in a legal
    environment, Netflix has to bear a cost to license and acquire content which differs for
    different content.
    2. Production cost: in 2013, Netflix has been produced its own shows to minimize Licensing
    cost
    3. Marketing cost: Increasing competition is the most difficult threat the company faces.
    The market for online entertainment services remains subject to rapid technological
    change, and fewer barriers to entry in the streaming business means greater
    competition from rivals. It has to compete with many new and established players like –
    Amazon Prime, Hulu, Hotstar, etc. which involves a lot of marketing expenditure.
    Moreover, it covers payments to affiliates and device partners, and the first month fees
    of every user.
    4. Research and development cost.
    5. Technology and development cost : To make their experience lag proof –without delay -
    and seamless, Netflix has and will keep on partnering with hundreds of ISPs to localize
    substantial amounts of traffic with Open Connect Appliance embedded deployments.
    These partnerships involve huge costs.
    6. General and administrative cost: These costs include payroll and other expenses on the
    human resource of the company, as well as professional and partnership fees related to
    administration of the company.

    References:
    NETFLIX. (2018). Help Center: Internet Connection Speed Recommendations. Retrieved from NETFLIX:
    https://help.netflix.com/en/node/306
    Pahwa, A. (2018, March 30). Netflix Business Model | How does Netflix make money? Retrieved from
    FEEDOUGH: https://www.feedough.com/how-does-netflix-make-money/

    Based on the case scenario, answer the following questions:

    1. Identify the categories of e-Commerce that NETFLIX belongs to. Briefly, Explain each
    category.
    2. How did NETFLIX create an effective business presence online?
    3. Based on SWOT, analyze the strength and threats that are facing NETFLIX.
    4. Why some companies like NETFLIX are changing the revenue model through the time.
    Propose new model that NETFLIX can implement to gain revenue.
    5. Categorize – with explanation - three online business models that Netflix implemented to
    gain revenue. Illustrate the models with an example from the scenario.
    Model Explanation Example

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