UNCERTAINTY

IN

GROUP 5

Ian Lord Perdana 2006499490

Nadia Rahma Putri 2006499811

Shawn Nataniel Jani 2006554330

 What is
Netflix?
Netflix content varies by Each Netflix plan
region and may change determines the number of
Netflix is a subscription-based over time. Netflix user can devices you can watch
streaming service that allows their watch from a wide variety Netflix on at the same
members to watch TV shows and of award-winning Netflix time and if you prefer to
Originals, TV shows, view in Standard
Movies without commercials on an movies, documentaries, Definition (SD), High
internet-connected device. and more. Definition (HD), or Ultra
High Definition (UHD).

Place Your Footer Here 2

History of NETFLIX
1997 1999 2007 2007 2013 2015
Netflix Founded Netflix Monthly Netflix Streaming Netflix Growth Netflix 1st Series Netflix 1st Movie
Subscriptions Platform

Netflix debuts
Reed Hastings the political
and Marc Netflix Netflix delivers its drama, House Netflix releases its
Randolph launches its Netflix billionth DVD and of Cards, its first first feature film,
founded Netflix monthly announces that begins to move high-profile Beasts of No
in Scot Valley, subscription it will launch away from its original Nation.
California concept streaming video original core production.
business model of
mailing DVDs by
introducing video
on demand via the
Internet.

Place Your Footer Here 3

 COMPETITORS

BEFORE AFTER

Place Your Footer Here 4

BEFORE

Place Your Footer Here 5

 COMPETITORS FROM DERIVATIVE OF
TELEVISION CHANNEL

Netflix Perspective:
Advantage:
- Can be watch BEFORE
anytime and anywhere
- User can choose which film to watch as they will
- Non-commercial (No Advertisement)
- No need to pay higher price for buy or rental tv box in
subscription tv cable.
- Support offline playback
Disadvantage:
- The movies available are restricted by region (ex: Netflix
movies in Indonesia are limited)
- The latest episode is not available right away
-

Place Your Footer Here 6

UNCERTAINTY

Place Your Footer Here 7

Risks faced by Netflix’s Consumers
After Netflix announces its first subscribe-based streaming
services in 2007, their business starts to grow rapidly, and
every year Netflix’s subscriber grow even bigger than before.
This shows that Netflix’s consumer has Risk-Averse attitudes
toward risk.

Risk Averse is an attitude when person prefer additional sure

amount of $M to a risky prospect with an expected value of
$M.

Risk-averse consumer prefers a sure things to an uncertain

prospect of equal expected value. which in this case, Netflix’s
consumer prefer a sure amount (subscribing cost) than to pay
for every film they want to watch.

Place Your Footer Here 8

Consumer’s Uncertainty
● Consumer uncertainty in trying new products
● The price is too expensive
● Genre preferences (before subscribing)
● Consumer is bored with the list of movies
(after subscribing)
● Data Usage Settings to Improving product
quality
● Mobile Data Package to improving product
quality

Place Your Footer Here 9

Risk Faced In choosing a product, there are many factors that consumers consider, but in
the case of Netflix the biggest question is whether consumers will be satisfied
by and like the services offered by Netflix. So, one of the uncertainties
experienced by the consumer is when trying new products.

Consumer Managers Decision:

There are several strategies used by Netflix managers to minimize this risk,
Consumer one of which is adjusting the price offered for the Indonesian market.
uncertainty in trying Netflix price in USA:
new products Basic: $8,99 -> Rp. 126.983,-
Standard: $ 13,99 -> Rp.
197.608,-
Premium: $ 17,99 -> Rp.
254.108,-
*kurs rupiah (20/12/20) -> $1 =
Rp. 14.127,-

Netflix Price after tax

Source:
https://www.businessinsider.com/how-much-is-netflix?r=US&IR=T#:~:text=Netflix's%20streaming%20plans%20cost%20%248.99,starts%20at%20%2411.99%20per%20month.
https://www.netflix.com/ChangePlan Place Your Footer Here 10
 Managerial decision:
Risk Faced One of the uncertainties faced by consumers is whether consumers will be
satisfied after purchasing the package. If there is no trial, consumers will not

by be able to experience the direct experience. So one of Netflix's Managers

strategies is to minimize the uncertainty experienced by consumers is to
provide a free trial for 1 month so that consumers can feel comfortable
Consumer watching Netflix.

However, because Netflix requires registered consumers to enter credit card

Consumer data, there are other risks. The way Netflix faces this risk is by providing the
uncertainty in trying facility to cancel the subscription if you are not satisfied with the Netflix
new products product, with the condition that you have to cancel before the set billing date.

Source:
https://www.netflix.com/browse Place Your Footer Here 11
 Even though the Netflix price has been adjusted for the

Risk Faced Indonesian market, the price for subscribing to Netflix

is still classified as middle-up price class. So that
managers need a strategy to get Indonesian

by consumers.

Manager’s Decision:

Consumer One of the strategies that managers use is to provide

some price relief. In addition to the cellphone packages
described earlier, Netflix also provides sales packages
The Price is too for standard and premium, where for the standard
package the number of users who can use it
expensive simultaneously is 2 screens. while for premium, the
number of users who can use it together is 4 screens.

Calculation for price per screens:

Ponsel : Rp. 54.000 (only Phone or Tablet)
Basic : Rp. 120.000
Standard : Rp. 76.500
Premium : Rp. 46.500

So that when consumers invite people to join together,

the most affordable packages are actually premium
ones.

Source:
https://www.businessinsider.com/how-much-is-netflix?r=US&IR=T#:~:text=Netflix's%20streaming%20plans%20cost%20%248.99,starts%20at%20%2411.99%20per%20month.
https://kumparan.com/kumparantech/netflix-resmi-rilis-paket-nonton-murah-rp-49-ribu-di-indonesia-1sQCsr69LRA Place Your Footer Here 12
 Managerial decision:
Risk Faced The price comparison between Netflix USA
and Netflix Indonesia is quite different.

by According to our group's analysis, the level of

risk that Netflix faces in Indonesia is much
higher than in America. Where in Indonesia,
Consumer hack accounts sold in the "secondary market"
are very widespread, so Netflix needs to
adjust the price so that the price offered in the
"secondary market" is irrelevant.
The Price is too
expensive One example that we found at Shopee, the
average seller fixes a price of around Rp.
39,000, -. If from the slide before we know
that the price per screen of the premium
package is Rp. 46,500, -. So that only the
difference of Rp. 7,500 and it’s official from
Netflix. By adjusting the price, it is Netflix
hopes that consumers will choose official
products issued by Netflix.

Place Your Footer Here 13

Risk Faced
by
Consumer
Genre preferences
(before subscribing) One of the biggest uncertainties faced by consumers is whether the
movies provided on Netflix are in accordance with individual consumer
Consumer is bored genre preference (before subscribing). In addition to providing free trial
facilities to consumers, Netflix also recommends films that consumers
with the list of prefer by means of a form filled out by consumers to choose the
movies preferred film genre.
(after subscribing)
In addition, there is a risk that consumers cannot find the movies they
prefer (after subscribing), so Netflix uses machine learning to recommend
films based on the films that consumers have watched. So with the hope
that consumers remain satisfied and the films offered.
Source:
https://www.netflix.com/browse Place Your Footer Here 14
Risk Faced Consumers are exposed to the

by risk of not being able to use the

Netflix service due to the limited
Consumer internet quota and
controlling data usage to use
difficulty

Netflix service.
Data Usage Settings to
Improve product
quality Strategy that can be taken by
managerial is to provide
choices of Netflix data
according to consumer
preferences.

Source:
https://www.netflix.com/browse Place Your Footer Here 15
Risk Faced Consumers have the risk of not being able to use streaming services
from Netflix because of limited quota, especially for consumers who
don't have wifi access.
by The strategy taken by the manager to reduce this risk is to work with
Consumer providers to provide Netflix streaming packages at lower prices.

Netflix didn’t cooperate with any WIFI Provider (Indihome,

Mobile Data Package
Firstmedia etc.)
to improve product
quality

Source:
https://www.businessinsider.com/how-much-is-netflix?r=US&IR=T#:~:text=Netflix's%20streaming%20plans%20cost%20%248.99,starts%20at%20%2411.99%20per%20month. Place Your Footer Here 16
https://kumparan.com/kumparantech/netflix-resmi-rilis-paket-nonton-murah-rp-49-ribu-di-indonesia-1sQCsr69LRA
 Risk in Netflix’s Managers
The impact of uncertainty in consumer behavior is
directly applicable to the company’s manager.

Based on our group analysis, Netflix’s Manager

attitude toward risk is Risk-Neutral.

The risk-neutral manager must determine what

output to produce before the managerial is certain of
the demand for the product.

Place Your Footer Here 17

Manager’s Uncertainty
● Consumer only uses the free trial
● Content unattractive
● Content Piracy

Place Your Footer Here 18

 The company is experiencing uncertainty with the risk of
Risk Faced consumers only signing up for Netflix just to try the one month
free promo without having ability to pay.
by The Managerial Decisions:
Company The strategy taken by management to reduce the risk by filtering
consumers using registration and payment using credit cards.

Consumer only uses

the free trial

Source:
https://www.netflix.com/browse Place Your Footer Here 19
Risk Faced Netflix revenue comes from
legal registered consumers
by The and payment in Netflix

Company account where consumers

can unsubscribe at any time.

Content unattractive Managerial decisions:

One of the reasons consumers unsubscribe application
because less attractive content. Netflix management is
taking steps by producing in-house or acquire exclusive
rights to stream content such as Orange is the New Black,
Stranger Things, BoJack Horseman, and many more. The
production are called Netflix Originals.

Source:
https://www.netflix.com/browse Place Your Footer Here 20
Risk Faced Managerial decision:

One of the biggest concerns for paid content providers like Netflix is
by The that their content can be illegally leaked and the number of paid
subscribers may decline or growth may slow. To prevent such illegal
Company content leakage, Netflix protect the contents by using technologies
called ‘DRM’ and ‘watermarking’.

Content Piracy

Source:
https://www.engadget.com/2016-08-09-netflix-https.html Place Your Footer Here 21
https://medium.com/pallycon/how-netflix-protects-contents-part-1-a40508ed0001
Risk Faced Problems:
Netflix is blocked by several cable TV and wifi providers

by The (Bundled) in Indonesia. Netflix act as a strong competitor

to cable TV contents..

Company
Relationship with
TV Cable and wifi
Provider Managerial decision:
With the increase in netflix users in Indonesia, cable TV and Wifi
provider consumers also want to watch netflix, so providers are
indirectly forced to unblock netflix.
Netflix and cable TV and Wifi providers has increase their
relationship.

https://tekno.kompas.com/read/2020/07/07/14190027/telkom-indihome-dan-telkomsel-resmi-buka-blokir-netflix#:~:text=KO
MPAS.com%20%2D%20Mulai%20hari%20ini,id%20mengakses%20konten%2Dkonten%20Netflix. Place Your Footer Here 22
 After Netflix announce their subscription based for
streaming in 2007, it is shown in the chart on the left that
Netflix experienced an increase in Net Income.

The growth of Netflix’s net income is shown in the table

above, in 2007, netflix experienced the highest growth
from 16% to 36%.
In 2019, When Covid-19 pandemic broke, Netflix’s
business was not affected. During this pandemic it
solved yet another uncertainty for the company’s
revenue. Netflix’s business mainly focuses on streaming
so people would still use Netflix more than ever because
they are forced to stay at home during this pandemic.

https://ir.netflix.net/financials/annual-reports-and-proxies/default.aspx

Place Your Footer Here 23

Thank
You