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Business History

Project report on

Submitted to:
Dr. Vijayudu Gnanamkonda
Assistant professor - Marketing
IBS - A constituent of IFHE

Submitted by :

Enrollment No. Name Seat no.

22BSPHH01C1343 VIKASH KUMAR YADAV 39
22BSPHH01C0888 RAKSHITA RAJ 40
22BSPHH01C1260 TANISHK GUPTA 41
22BSPHH01C1073 SHALWI PRASAD 42
22BSPHH01C1338 VIDIT JAIN 43
22BSPHH01C0112 AMISHA ARYA 44
22BSPHH01C1149 SHRUTI KUMARI 45
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Table of Contents
Company overview 4

History of Netflix 4

Mission & Vision 5

Organizational Structure 5
Netflix’s U-Form Organizational Structure 5

About the product 6

Core Customer Audiences 6

Netflix Demographic Segmentation 6
Netflix Geographic Segmentation 6

Content strategy 7
Original Content 7
Release Timely Content 7
Generate Interactive Content 8

SWOT Analysis 9

CSR 10

Ansoff Matrix Analysis 11

Market Penetration 11
Market Development 11
Market Penetration 11
Market Development 12

Promotional strategy 13
Influencer marketing 13
Social media marketing 13
Email marketing 13

Competitors of Netflix 14
1. Disney Hotstar 14
2. Hbo Go 14
3. Hulu 14
4. Amazon Prime Video 14

Market Share of Netflix 15

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What sets Netflix Apart 15

Adaptive Streaming 15
Access To Exclusive Content 15

CRM 16

Macro Environment Review 16

Economic environment 16
Social environment 16
Environmental environment 16
Technological environment 17

Why is Netflix struggling? 17

Goals 18

The Netflix effect 18

References 19
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Company overview
● Netflix Inc (Netflix) provides internet entertainment services for watching movies and
television shows. The company offers TV shows and movies such as original series,
documentaries, and feature films through an internet subscription on the TV, computer,
and mobile devices. It offers DVDs by-mail service in the US.
● Headquarter : United States of America
● No. Of employees: 11,300
● Industry: Media
● Website: www.netflix.com
● Mutual fund holders - 45.48 percent
● Individual’s Stakeholder - 4.008percent
● Other institutional - 34.86 percent
Top Executives
● Reed Hastings. - Chairman, President & Co- chief executive officer
● Theodore A.Sarandos - Co - CEO,
● Director & chief content officer
● Gregory K.Peters - Chief Operating & product officer
● Spencer Adam Neumann - Chief financial officer
● Adrine C.Mc Fetridge - Engineering Director

History of Netflix
Founded by Marc Randolph & Reed Hastings on Aug 29, 1997 in California.
Originally a website that rented DVDs through mail posting and a
traditional pay-per-rental model (P.P.R.M)
In the early 2000, The P.P.R. M was dropped and launched its well-
known subscription model.
By 2005, Netflix had 35,000 different film titles and shipped 1 million DVDs
out every day.
In Feb 2007, company introduces the video on demand (V.O.D)
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Mission & Vision

Mission - At Netflix, we want to entertain the world. Whatever your taste, and no matter where
you live, we give you access to best-in-class TV series, documentaries, feature films and mobile
games. Our members control what they want to watch, when they want it, with no ads, in one
simple subscription.
Vision - The vision of Netflix is: Becoming the best global entertainment distribution service.
Licensing entertainment content around the world. Creating markets that are accessible to
filmmakers.

Organizational Structure
Netflix Inc.’s organizational structure is hierarchical but with modifications that account for
business flexibility and responsiveness to global market changes. Through this corporate structure,
the company is able to continually evolve to offer original entertainment content and on-demand
media streaming services that attract target customers around the world. Thus, the organizational
structure allows for the achievement of Netflix Inc.’s corporate mission statement and corporate
vision statement.

Netflix’s U-Form Organizational Structure

Netflix Inc. has a U-form or unitary organizational structure that involves a hierarchy for
maintaining executive control and direction throughout the organization. However, this corporate
structure is relatively flat compared to many businesses that have a hierarchical organizational
architecture. For example, in Netflix’s organizational chart, all the main business executives directly
report to the CEO. This organizational structural design reduces the management levels needed to
escalate issues from the online company’s bottom-line to its organizational headquarters. The
following are the main characteristics of Netflix’s corporate structure:

1. Functional groups for online and non-online operations

2. Geographical divisions for managing regional markets
3. Divisions for various product types and operation types
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About the product

Netflix is a popular streaming service that offers a vast catalog of movies, TV shows, and original
content. It's available on smart TVs, through streaming devices, and even on your smartphone and
tablet using the official app for iOS or Android.

Netflix supports just about any device with a Wi-Fi connection. This includes PCs, smartphones,
tablets, most smart TVs, set-top boxes, Amazon Fire TV devices, Blu-ray players, and game
consoles. It’s one of the most accessible streaming platforms out there, with more than a decade’s
worth of integrations in popular tech.

Netflix has three major content sources: licensed non-first-window content like Showtime's
"Shameless," licensed original first-window content such as "Orange is the New Black," which is
owned and developed by Lionsgate, and owned original first-window content from the Netflix
studio, such as "Stranger Things." First-window content means that it airs on Netflix first.

Core Customer Audiences

The Netflix target audience is located worldwide in around 190 countries. The typical age of
Netflix users is in the younger adult age bracket, a member of Gen Z or Millenials, and with a lower
income range of $25-50K.

There are more female Netflix viewers than male, but only just – 52% female to 48% male.

The target market for Netflix is extremely broad and diverse, and a closer analysis of Netflix target
market demographics and Netflix consumer segmentation is a helpful way to dig deeper.

➔ Netflix Demographic Segmentation

While Netflix demographics are highest for younger age brackets (Gen Z 70% and Millenials 65%),
the Netflix user age shows that older consumers are also a strong audience.

➔ Netflix Geographic Segmentation

Once, Netflix users had a majority base in the US, however this is no longer the case.
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Content Strategy

➔ Original Content
Netflix continues to invest in creating original content. For the financial year 2017, the brand has
earmarked $6 Billion to create original content for the platform. Netflix announced two original
series created for India last week.

Major networks in the United States are now creating their own streaming service to compete with
Netflix. Disney & ESPN have already stated that they will launch their own service before the end
of this year.

Netflix also acquired indie comics publisher Millarworld last week. Millarworld has been the mind
behind films like Kingsmen and Kick-Ass. Netflix’s strategy to invest in original content has
enabled it to win new subscribers. The platform will release 40 movies by the end of this year, more
than double the number of movies it made last year.

➔ Release Timely Content

When it comes to releasing content, Netflix does it strategically as well. Take the popular Netflix
original series, Stranger Things, for example. The company released all episodes of the
highly-anticipated second season of Stranger Things on a Friday, just days before Halloween. The
show’s scary theme was primed for a Halloween release and also timed to coincide with a popular
time in which people binge-watch – the weekend.

The phrase “timing is everything” proves true once again for marketing. Brands can look more into
timing and scheduling content releases such that they are tied to certain holidays or special events.
It is also important for brands to pay attention to what is happening around the world so that you
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can sync your content releases with relevant current events. This helps to increase the relevance and
timeliness of your content, so that it would resonate better with consumers.

➔ Generate Interactive Content

One of Netflix’s most popular yet disturbing thriller series, Black Mirror, illustrates the extreme
effects of futuristic technologies in a dystopian world. Bandersnatch, its standalone film which was
released in 2018, broke new grounds with its fresh, interactive video concept. By allowing viewers
to click and choose which forked path the protagonist should take, people were hooked for as long
as four hours on this film, continually attempting to navigate their way to a happy ending. While
their efforts were often time-consuming and futile, the enjoyment in trying still kept many viewers
engaged.

From Bandersnatch’s example, we can see that fresh content is highly effective at helping brands to
engage their audience and set them apart from their competitors. Thus, brands who truly think
outside the box – in this case, in the form of interactive content – stand to gain a lot more
attention. Through creating unique experiences that instigate interactions between your brand and
consumers, this makes it more interesting for viewers, motivating them to further engage with your
brand, potentially increasing conversions and generating sales.

Simply put, Netflix’s success can be attributed to its well-crafted content strategy. By continually
coming up with innovative products and services, while keeping the pulse on what’s current, the
brand effectively manages to develop strong relationships with its consumers and remain top of
their game.
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SWOT Analysis
STRENGTHS -
● Global Market Leader
○ Strong BrandRecognition
○ High Customer
● Satisfaction
○ Affordable Pricing
○ Large Content Selection
● Original TV Series
● Available on multiple Platforms
● Watch Unlimited Amount or "binge" watch.
● No Commercials

OPPORTUNITIES -
● Original series
● Further International Expansion
● Show More Popular Content
● Partnerships - Pre-installed Netflix
● Expand Target Market - Diversification
● Advertisements

THREATS -
● Streaming Competitors
● Illegal Streaming
● Higher Licensing Costs
● Changing Customer Demands
● New Entrants

WEAKNESS -
● User Friendliness
● Password Sharing
● Older Titles
● Share Decreases
● Monthly Sign Up
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CSR
➔ NETFLIX Net Zero + Nature plan follows these steps:

REDUCE
REDUCE our internal emissions on a 1.5°C pathway (aligned with climate science) and address
indirect emissions in partnership with our suppliers. For emissions we or our suppliers can’t
avoid we will...

RETAIN
RETAIN nature's existing carbon storage, protecting ecosystems like forests that prevent carbon
from entering the atmosphere and invest in other high-impact projects aligned with climate
science. Finally,

REMOVE
REMOVE carbon from the atmosphere by restoring and regenerating natural ecosystems. We’ll
focus especially on projects that advance sustainable livelihoods, biodiversity, climate resilience,
and environmental justice.

➔ Entertain to Sustain:-
Sustainability is an epic story creators are already telling.
In 2020, 160 million households around the world chose to watch at least one story on Netflix
that helped viewers better understand climate issues and highlight hopeful solutions around
sustainability, or both. Stories included Netflix series and films like Our Planet and the Academy
Award-winning My Octopus Teacher, to classics like The Day After Tomorrow and Chasing
Coral.

Many artists are motivated by the stories, characters, and importance of environmental stories
and we will continue to create compelling and engaging content that raises environmental
awareness.
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Ansoff Matrix Analysis

➔ Market Penetration
This is the most significant growth strategy of Netflix because it plays a vital role in the growth of
business activities and to expand business in the international market. According to Ansoff matrix
analysis, market penetration is a method of distributing a large number of the firm’s online services
to the market where it is already operating its business. The strategic target associated with this
plan is to generate high income and market share by attaining a competitive advantage. The market
share of the firm depends upon its generic strategy on how it sustains the level of competitive edge
to increase market share and to retain its existing consumers. Apart from this, few other factors
affect the company’s growth and market share. For example, how growth and generic strategies
based on the online business model are implemented by the firm. For instance, organizational plans
and market penetration strategies are defined through the marketing mix and 4ps of Netflix Inc.
Furthermore, implementation of growth strategies helps the firms in strengthening their business
which enables the organization to easily penetrate digital markets instead of strong competition.

➔ Market Development
This intensive growth strategy works as a secondary growth plan for the development of Netflix
organization. The market development plan is based on the introduction of the firm’s online
streaming system and authentic information to the customers of other international countries.
Market development across international borders may also be considered as a growth opportunity.
The primary objective of Netflix linked with market development is to increase the growth and
revenues of a firm by entering into new markets. The cost-effective strategy of Netflix that is selling
at a low price helps to strengthen the intensive growth strategy. The profitability of a firm depends
upon the implantation of the effectiveness of the company’s business model. That's why it is
important to attain a competitive advantage.

➔ Market Penetration
This is the most significant growth strategy of Netflix because it plays a vital role in the growth of
business activities and to expand business in the international market. According to Ansoff matrix
analysis, market penetration is a method of distributing a large number of the firm’s online services
to the market where it is already operating its business. The strategic target associated with this
plan is to generate high income and market share by attaining a competitive advantage. The market
share of the firm depends upon its generic strategy on how it sustains the level of competitive edge
to increase market share and to retain its existing consumers. Apart from this, few other factors
affect the company’s growth and market share. For instance, organizational plans and market
penetration strategies are defined through the marketing mix and 4ps of Netflix Inc.
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➔ Market Development
This intensive growth strategy works as a secondary growth plan for the development of Netflix
organization. The market development plan is based on the introduction of the firm’s online
streaming system and authentic information to the customers of other international countries.
Market development across international borders may also be considered as a growth opportunity.
Netflix has acquired a regional license from 42 states of Central America, South America and the
Caribbean, to sell its online media streaming. The primary objective of Netflix linked with market
development is to increase the growth and revenues of a firm by entering into new markets. The
cost-effective strategy of Netflix that is selling at a low price helps to strengthen the intensive
growth strategy. The profitability of a firm depends upon the implantation of the effectiveness of
the company’s business model. That's why it is important to attain a competitive advantage.
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Promotional strategy

➔ Influencer marketing

By partnering with influencers, Netflix can tap into a growing audience of Gen Z and Millennials,
who trust their friends more than salespeople. Netflix has even turned to influencer marketing to
promote its content. The company also collaborates with influencers to create buzz around its
shows. It shares promotional graphics with jokes and comments from popular personalities.

➔ Social media marketing

Netflix uses Twitter, Facebook, and Instagram to promote its content majorly. Netflix’s strategy on
Instagram is to entertain and engage its fans, and it works! Each post receives a high level of
engagement from its fans.

Its witty content has helped it win over fans in India. Besides that, the company also uses memes to
engage with its audience more casually. Netflix also understands the importance of interacting with
consumers to create lasting relationships.

➔ Email marketing

Netflix used email marketing as part of its digital marketing strategy. It is also a key component in
customer onboarding. Netflix new customers receive a series of emails that offer content
recommendations and encourage users to explore the platform. Netflix marketers spend hours
creating creative email marketing campaigns that engage and delight their recipients. They
continue to improve the customer experience with the best email marketing services.
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Competitors of Netflix
The world’s major internet television network makes a whopping revenue of $28 billion
with the giant per subscriber base of 213 million across 190 countries.

Netflix is globally the most popular media streaming company. Netflix, despite being the
market leader has a threat to its position due to the following list of companies:-

1. DISNEY HOTSTAR

The first major competitor of Netflix is Disney Hotstar with a major revenue of $17 billion.
Disney Hotstar was launched in 2019 and within two years the company was able to
capture a market share of 116 million paid subscribers across 53 countries.

2. HBO GO

The second competitor of Netflix is HBO GO. It is an American-based streaming company

owned by Home box office. The company was launched in May 2020 and has a subscriber
base of 70 million users.

3. HULU

The third major competitor of Netflix‘s Hulu. The company has an annual revenue of $3
billion, although the company is only able to operate in only 2 regions that is in the US and
Japan, still the company has captured a massive customer base of 40 million users.

4. AMAZON PRIME VIDEO

The last but the biggest competitor of Netflix is Amazon prime video. The company has
been able to generate a gross revenue of $25 billion which makes it one of the biggest
competitors of Netflix. The company has the rights to operate in 22 countries which has
helped them in gathering an enormous subscriber base of 200 million users.
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Market Share of Netflix

In December 2019, the market share of Netflix was dropping drastically in India, due to which the
company reduced its prices in the country, which helped them in regaining the market share.
Despite all of this, we can see that the company has been able to retain its position as a market
leader with a market share of 50.2%.

What sets Netflix Apart

1. ADAPTIVE STREAMING

Uses Machine Learning to recognize network conditions and adjust the video quality up or down
based on that.

2. ACCESS TO EXCLUSIVE CONTENT

No middlemen or intermediaries by directly distributing content

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CRM
(Customer relationship management)
Netflix is a growing company with many customers. We have to agree that Netflix is just a
convenient entertainment service. How would movie night turn out if you can’t find the right
movies for that specific night? You get to stream your favorite movies, shows, and series at your own
time with a subscription. So how does Netflix get potential customers, generate leads, and maintain
the satisfaction of their existing customers? The answer to that question is CRM technology or
software.

Netflix makes use of its in-house built software or technology that can help with its CRM.
Information on which systems they use might not be disclosed to the public but Netflix’s most
indirect marketing strategy that increases their sales is ‘word of mouth’. They can rely on word of
mouth to bring them new customers, then their CRM systems can help them build and maintain
the relationship they have with the potential customer.

Macro Environment Review

➔ Economic environment
● The fluctuating exchange rate affects its economy when buying other content.
● Increased competition in the streaming services poses a threat to Netflix with the uprising
of powerful rivals with high -quality content.
● The loyal customers of Netflix complain about a steady hike in the subscription price.
High quality content can be the solution to satisfy the viewers to make them realize the
content is worth the money.

➔ Social environment
● The splendid work environment works in favor of the company.
● Netflix and its CEO are known for their generous nature, and their kind gesture has
touched people. Not only do they allocate 2% of their annual income to the black
community , but they also support students with low family incomes.

➔ Environmental environment
● The company’s recent investment in joining hands with EPA showcases its willingness to
shift to renewable energy. Well this increased environmental awareness may lead to growth.
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● Other steps towards a sustainable future include reduced use of paper in office.

➔ Technological environment
● In Netflix , one can avail high - quality video with minimal data being spent. It is one of the
many advantages of the company.
● Hermes , the automatic translating software , is quite popular with Netflix users.

Why is Netflix struggling?

With 30 million customers worldwide and accessibility in over 40 countries, many believe that
Netflix is a company which is not experiencing any losses. However, while Netflix has done many
things right in the past such as being ahead of the trend of online streaming, the company is still
not hitting the mark in all areas of their business.

Having a variety of content within their product is an aspect in which Netflix is currently suffering.
While they offer a wide variety of TV shows and movies, they do not currently offer any music
options. Movies and television shows appeal to a specific audience and not including music, sports,
and news, greatly diminishes the potential market which Netflix could attract by having a more
diverse online content.

Technical issues are a major reason why Netflix continues to lose customers. Slow downloading
speed, errors in downloading, and pausing while watching all affects the customer quality and
satisfaction of the product.

One of Netflix’s biggest obstacles is the high costs of licensing when acquiring content for their
platform. Poor marketing choices and increases in prices are two other areas which are hurting
Netflix and the Netflix brand. While Netflix offers an ad-free online streaming system, the Netflix
company itself does not have many advertisements present leading to a low overall consumer
awareness about the product.

Increasing prices is another area of concern. When prices continue to increase without any major
benefits to the consumer, the customers get frustrated with the company and look elsewhere for
similar services.

Finally, entry barriers have hurt Netflix and slowed their potential growth. Netflix is a service
which can be accessed via a person’s television, computer, cell phone, or even tablet. However,
Netflix does not have any major partnerships that allow the Netflix application to be instantly
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placed on the device. All of these issues are extremely important and can greatly affect Netflix in the
short and long term future.

Goals
Netflix wants to increase their engagement on Instagram by 25 percent within three months.
They are dedicated to entertaining its consumers and sharing impactful stories. By increasing
engagement on Instagram, Netflix wants to build relationships with its subscribers and followers. It
is also advantageous to evaluate KPIs.

Netflix wants to create a loyal base of customers by making itself more achievable.
This means that Netflix should have the resources and the finances necessary for being able to
realize the organizational goals over the long haul.

And the last one, Netflix wants to become the best global entertainment distribution service
company.

The Netflix effect

The term Netflix Effect has come to refer to a number of things: the way in which the content is
curated, the content itself and its social and economic impact, new representation, and the
recommendations of its associated algorithms.
Before Netflix, consumers went to the movies, rented VHS tapes or DVDs and watched whatever
was on TV. Now, consumers can stream content instantly to any device, anywhere. Netflix has
changed how consumers access film and TV. They’re no longer tied to the TV and forced to sit
through commercials. Instead of paying for cable plans, a growing number of Americans are
cutting the cord and only using streaming services. Consumers prefer the flexibility of being able to
watch what they want when they want to.
Every company, no matter the industry, can learn from Netflix and apply the principles of
innovation, disruption and personalization. If they don’t, they run the risk of being disrupted by
the growing media giant that is Netflix.
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References

https://www.slideshare.net/DalesmyGonzalez/netflix-situation-analysis-71175130

https://ansoffs.com/ansoff-matrix-of-netflix/

https://www.trtworld.com/opinion/what-s-the-netflix-effect-42164

https://digitaluncovered.com/inside-netflixs-content-strategy/

https://www.androidauthority.com/what-is-netflix-2-1136891/

https://www.thestreet.com/technology/what-is-netflix-14789113