NETFLIX INTERNATIONAL EXPANSION CASE ANALYSIS NETFLIX’S JOURNEY - TIMELINE Launched in Australia, New Zealand, Japan. 3rd European exp: Italy, Portugal and Spain Launched in Netherland Further European expansion (company's first non-English language shows) Launched in Latin & central America and Carribean Launched in Canada Launched in UK and Ireland 1 Million subscribers A partnership with Best Buy gives exposure in the chain’s 1,800 stores On January 6, 2016 Netflix announced a major international expansion into 130 new territories; its service would now be available nearly "worldwide" Introduction to Video streaming devices Founded by Marc Randolph and Reed Hasting in California Revenue sharing deals signed with WB Beggins offering DVD rental and sales Q.01: SWOT ANALYSIS STRENGTH • Award winning original content, high-value licensed content like Orange is the new Black, House of Cards, Narcos, etc WEAKNESS • Need to strike strong deals with content owners • High subscription prices • Adapts with the change in industry, from mail order DVD to internet streaming & VOD • Low profit margins due to the cost of international expansion and currency fluctuation • Netflix has developed an ecosystem for use on various Internetconnected devices, including televisions, computers, and mobile devices. • Dependence on content licensing costs and relationships with distributors. • Potential dependences on regulations and laws in different countries. OPPORTUNITY • Entry into Regional language content THREAT • Local & International competition like Amazon Prime, YouTube • Netflix is still not available in China- more international expansion • Black market around the world i.e. Piracy • Finding local partners to further international expansion • Rising content costs, limited access to content due to stiff competition with cable tv's and conflicts with content owners. • Capitalizing on its exiting user base • Competition and price wars between streaming services. • legal issues with local authorities and content providers because of licensing and violation off regulations. • Scale and popularity will help potentially lower their content licensing fees and can potentially increase their average revenue per user per month Q 02: Challenges and Strategies CURRENT STRATEGIES Huge Content Catalogue availability to consumers Adapting according to the expansion Stretching hands on acquiring new content by collaborating with entertainment providers Aggressive spending on marketing to raise brand awareness Proprietary software technology Netflix developed was a large part of the strategy CHALLENGES THE CONTENT CONUNDRUM a.Regional markets content b.Content in limited languages c.People are reluctant to pay and find local competitor more affordable This is especially relevant because many regional competitors in developed markets, like Germany and France, have looked to Netflix's success in the US as inspiration to get their own offerings into the market ahead of Netflix's entry. These competitors generally have more localized content. PRICE ARBITRAGE GOVERNMENT CENSORSHIP Expensive price point in certain markets. Netflix has made the choice to not chop down its price point significantly in developing markets. This makes it relatively more expensive compared to competitors, many of which have lower price points. Regulatory restrictions, global licensing deals and cultural factors are an issue which requires a lot of time and money to move way forward. E.g Chinese market. CHALLENGES INTERNET SPEED AND INFRASTRUCTURE In India we have speed at which video doesn’t buffer properly. This means that people with an Internet connection speed of 1Mbps or 2Mbps and with a data cap of 40 to 50 GB — which is roughly the average in India — will find it difficult to use Netflix heavily. Watching a handful of movies and TV shows could eat up a little over half of a user’s data cap, make them quickly hit their FUP limit, and have their Internet speeds reduced to a piddly 512 Kbps. COMPETITION IN THE GLOBAL MARKETS a. Television operators b. VOD service providers c. Indian competitors like Hotstar, Spuul, Eros Now, Ditto d. Underdeveloped Infrastructure: Poor Network quality COMPETITION DTH DTH is giving tough competition to Vod platforms. TataSky for example has its own VoD platform which gives 5000 titles where one can watch several movies and TV shows, on demand. Similarly, TataSky has its own mobile app whereby paying a fixed fee one can access all the content library. Partner with Multichannel Television Provider Continue International Expansion Netflix will be able to provide its members with access to additional TV series, offering exclusive content, it is a necessity for Netflix to continue to expand its content library and make it accessible across multiple channels. There are many territories that Netflix need to target like China. This will provide advantage to Netflix, related economies of scale, and early mover benefits in many international markets. Leverage offline streaming Technology Allowing customers to offline buffer content to view when internet is unavailable will attract more customers. Customers in India often don’t get to view online streaming content in many areas as it consumes maximum bandwidth. Digital India Campaign With the advancement of Digital India campaign and introduction of 4G services, Internet bandwidth and services will grow and Netflix should tie with them for the advancement. STRATEGIES TO OVERCOME CHALLENGES Q 03: Competitor Analysis THE SHOW IS OVER!