Netflix in the Czech Republic
Rebecca Booker
Ashley Moore
Taylor Thorn
Katie St. Peter
Robby Choueiri
June 12, 2013
MGT 302

Background
•
World's largest online DVD movie rental service
•
Appeal and success is built on providing the most expansive selection of DVDs, easy way to choose movies, and fast, free delivery.

How it Works

History
•
Formed in 1997 in Los Gatos, CA
•
2001: A partnership with Best Buy gives Netflix exposure
•
2003: Subscribers top 1,000,000, and Netflix has its first profitable quarter
•
2013: Offer a collection of 100,000 titles on DVD and surpassed 10 million subscribers

Company Facts
Present in 40 countries
Viewers watch more than one billion hours of television and movies each month
900 corporate employees

International Expansion
2010- Canada
2011- Latin America
Mexico
Caribbean
Central America
South America
2012- Spain
UK
Ireland
Norway
Denmark
Sweden
Finland

International Success is Clear
“Our launch in the Nordics was very successful, confirming our belief in the large international opportunity for our service.”
-CEO Reed Hastings and
CFO David Wells

Recent Job Posting by Netflix
“...We are looking for highly motivated individuals with the right mix of technical, organizational and communication skills to provide localization for the Netflix experience in the following languages: Turkish, Dutch,
Hindi, French, and Korean.”

Czech Republic and Netflix...

Czech Republic Market
Population of the Czech Republic, Data of FAO , year 2009 ; Number of inhabitants in millions.

Geography
•
Centralized Location o Good starting point for innovation o Permeate Europe more easily
•
The Czech Republic has attracted a large amount of foreign direct investment (FDI) since 1990, making it one of the most successful transition countries in terms of
FDI per capita.
Opportunity within region

Political Environment
•
Stable Parliamentary Republic for past 20 years
•
Legal Environment: Internet laws o
Illegal streaming o
Litigation issues o
Regulations
•
Relationships o Suppliers & Content providers

Economic Environment
•
Entertainment is not a primary industry
•
Economic growth in 2011 and slowdown mirrors global economy
•
Spending Trends o Consumer expenditures (52.5%) in relation to GDP o o
Household income falling
The current economic crisis has had a negative impact on consumer confidence

Age Distribution of Czech Republic

Social Environment
•
Culture trends o
Demand and instant gratification o
Convenience and recency
•
Secular nature
•
Language barrier

Size of Target Market
Personal computers per household
CZSO

Technological Environment
•
Availability of Wi-Fi
•
Natural disasters- control centers
•
Competing technology o Video on Demand o Online Streaming o Other alternatives

Barriers and Risks
Online Streaming and Video on Demand Competitors
-Transactional
-Subscription
-Central and Eastern Europe
-Free online live TV
-International
-With cable subscription
-Video on Demand

Market Share for Movie/TV
Channels
Nova Cinema and Other
Stations, including HBO

Strengths
•
Investment in Streaming Content
•
International Market Expansion
•
Outstanding Member Experience
Attracts and Retains Subscribers
Opportunities
•
Increase in online spending & internet usage
•
Creating and having original content
•
Growing Opportunities in International
Markets along with mobile viewing devices
Weaknesses
•
Older Demographic struggles with new technology
•
Lack of new content
•
Movie rental market in steep decline
Threats
•
Pirating/streaming
•
Increasing competition
•
Brand Identity

Market Potential in Czech Republic
•
Current ways to view movies and television: o DVD rental stores, Extra service through television (HBO), Squid TV (which requires a smart TV) o Netflix offered on Iphone, Android, and Windows markets o Popularity of Gaming Devices in Czech Republic

Gaming Devices Galore!

Broadband and Internet Access:
U S A 27.62 % Broadband Access
Czech Republic 14.50%
Broadband Access
Czech
Republic
Statistics

Mode Of Entry
•
Joint Venture with European company,
Topfun
•
Starz
•
Better than attempted UK expansion because trusted brand name in Europe
•
Boost popularity because integration with
European company for films and shows

Mode Of Entry
•
Payment online with Visa and MasterCard
•
Seamless transition since TopFun has cloud based servers

Three Dimensions of Netflix
Dual
Adaptation •
Integrate TopFun, a central and eastern european company into the Netflix brand to bolster consumer confidence immediately
•
Keep Packaging and Brand colors
•
Adding TopFun logo to website and advertising
•
Translate Packaging to Czech
•
Dubbing in
Czech language or subtitles
•
Partnering with
TopFun media
•
Limit service to
Online
Streaming

Czech Average Gross Monthly
Income
24,061 CZK ($1241.79 USD)
Decreased by 1% in 2012

US Average Gross Monthly Salary
$4208.50 USD ( 81544.27 CZK)

Pricing
•
Unlimited plan no DVD's costs approximately .18% of the average gross salary in the US
•
Unlimited Plan no DVD's would cost
$2.36 USD or 45.73 CZK
•
May not be sufficient
•
Solution: set a higher price initially, allow it to change over time
•
Possibly 150 CZK ($7.79 USD) closer to
0.62% of Gross Czech Salary

Distribution
•
Limit Netflix service to just online streaming, therefore no need to worry about DVD distribution centers or channels for now
•
Instead, focus on developing TopFun cloud coverage and establishing a data farm in the host country

Client Base

Communication and Advertising
While marketing expenses increase slightly, revenue increases tenfold in comparison

Communication and Advertising
Marketing expenses should remain a large percentage of operating expenses, but also initially invest in the technology and establishment of the core product

Marketing/ Advertising
•Translate website to Czech
•Direct Marketing–email offerings of free trial for
30 days sent to TopFun users and movie goers
•Press Releases– About launch of company and freebies to bloggers
•Online Marketing – App-translation to Czech
•Online Marketing - Advertising Banners at TopFun, SquidTV, search engines, newspapers, magazine
•Social Networking- Translate Facebook, Twitter, online dating, etc. to Czech
*80% of US Netflix users learned about Netflix through word of mouth

Bibliography http://www.startupoverseas.co.uk/starting-a-business-in-czech-republic http://www.businessinsider.com/chart-of-the-day-netflix-watch-instantly-streaming-video-2010-2 http://www.businessinsider.com/chart-of-the-day-netflix-takes-off-as-blockbuster-shrinks-2009-11 http://www.fundinguniverse.com/company-histories/netflix-inc-history/ https://signup.netflix.com/MediaCenter?id=5380#rhastings http://www.newmediatrendwatch.com/markets-by-country/10-europe/43-czech-republic https://en.wikipedia.org/wiki/Nova_Cinema_(Czech_Republic) http://export.gov/czechrepublic/corporatesocialresponsibility/index.asp
http://www.isfe.eu/sites/isfe.eu/files/attachments/czech_republic_-_isfe_consumer_study.pdf
http://www.ato.cz/ http://www.czso.cz/eng/redakce.nsf/i/czech_demography_2010_vol_4 http://prezi.com/6poiwxdn5i7a/netflix-case/ http://www.czso.cz/eng/redakce.nsf/i/home http://paidcontent.org/2013/04/01/netflix-korea-india-turkey-france-netherlands/ http://en.wikipedia.org/wiki/List_of_countries_by_number_of_broadband_Internet_subscriptions http://cz.topfun.tv/ http://www.fool.com/investing/general/2010/07/01/netflix-strengths-weaknesses-opportunities-threats.aspx
http://www.ibisworld.com/industry/default.aspx?indid=1370 http://www.businessinsider.com/online-streaming-is-making-the-dvd-obsolete-2013-1?op=1 http://www.worldtvpc.com/blog/nielsen-online-video-viewing-45-year/ http://www.cjournal.cz/files/115.pdf
http://files.shareholder.com/downloads/NFLX/2523506528x0x656163/831036da-b64e-43a4-96c5-99fd62b784c5/NFLX-Transcript-2013-04-22T22_00.pdf