CASE STUDY REPORT

OF

INDUSTRIAL ORGANIZATION
AND MANAGEMENT
By

BE20F06F017 Prerna Gaikwad

BE20F06F024 Gayatri Jagdale

BE20F06F040 Nandini Patil

BE20F06F062 Harshada Take

ASSIGNED BY
Ali sir

Department of Information Technology & Engineering

Government College of Engineering,

Aurangabad
(An Autonomous Institute of Government of Maharashtra)

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 Index

SR. CONTENTS PAGE

NO. NO.

1. BACKGROUND 3

2. STRATEGY 5

3. KEY SUCCESS FACTORS 8

4. SWOT ANALYSIS 10

5. FINANCIAL PERFORMANCE 13

6. LOOMING CHALLENGES 15

7. CONCLUSION 16

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BACKGROUND

● Netflix is the world’s leading Internet television network with over

50 million members in nearly 50 countries enjoying more than
two billion hours of TV shows and movies per month, including
original series.
● For one low monthly price, Netflix members can watch as much
as they want, anytime, anywhere, on nearly any
Internet-connected screen. Members can play, pause and
resume watching, all without commercials or commitments.
● Netflix is an American company that supplies on-demand
internet streaming media available to viewers in North
America, South America, and parts of Europe.
● Founded in 1997 in Scotts Valley, CA by Reed Hastings, and
Marc Randolph as a pay per rental of flat rate DVD’s model
through the mail at $.50 a rental, with no late fees – Started
with 30 employees, and 925 titles.
● They continue that service for now in the United States.
● Started subscription based service in 1999
● In 2009, they reached 10 million subscribers and had over
100,000 titles on DVD

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● Netflix is considered one of the most successful start up ever

– In 2000 offered to sell out to Blockbuster for $50 million

but BlockBuster turned the offer down.

– The rest of the story is that Netflix put Blockbuster out of

business.

● • Revenue in 2013; $4.37 billion

● • Market Capitalization in November 2014 of $23.2 billion
● • In 2005, 35,000 different film titles were available, and
Netflix shipped 1 million DVDs per day.

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STRATEGY
Hastings developed strategy which made Netflix the largest online
subscription service for streaming entertainment in the world.Netflix’s
strategy includes:
● Providing customers with a wide selection of DVD titles to view.
● Continually acquiring new content by establishing
relationships with entertainment providers
● Provide easy to use technology for customers to
use to orderand identify whatthey wish to view
● Providing options for subscribers between streaming
and mail services.
● Aggressive spending on marketing to continue to
raise brand awareness
● Promote rapid transition of the US subscribers to
streaming
● Expand Internationally

Netflix chose to outcompete rivals on the basis of differentiation by

offering a wider product selection, value-added services
and attractive styling.They also utilize technological superiority by
continuing to enter each new technology market as they are
made available.

In 2012, there were around 120,000 titles available for streaming

and had more titles than any other streaming service available
to the public.Since the beginning,Hastings had a focus on
gaining new content to make available to subscribers.He
made negotiations with multiple studios and networks and
usually paid licensing fees,direct acquisition or profit-sharing

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deals to be able to stream these titles through the online
service.
The proprietary software technology Netflix developed was a
largepart of the strategy. This software made it easy for a
subscriber to preview movies based on category, ratings and
various other filters.It also allowed for a subscriber to rate the
titles that they had previously viewed and receive
recommendations based on the titles they previously rated highly.
This service was and continues to be highly
successful with a goodportion of titles being
viewed coming from the recommendations provided.
Giving subscribers a choice between DVD-by-mail
and streaming services allows for those with
preferences of receiving the physical DVDs in the
mail. This helped to sustain those subscribers
who may not havehigh-speed Internet in certain
areas or who simply like receiving the DVDs in
the mail.

The main strategy to increase profits for the corporation was through
international expansion.Not all foreign markets have such strong
capabilities for streaming. In Latin America,
Netflix ran into multiple issues with lack of
Internet-capable devices being used, high-speed
Internet connections not being readily available and not
all households used credit cards as often in online
commerce.However,the company continues to move into new

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segments, diversify geographically and has had considerable
success in many areas..

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KEY SUCCESS FACTORS

1. Technology
Technology is the largest factor today affecting
industry members' ability to prosper in the
marketplace. It has a large impact on the particular
strategy elements, product attributes, resources, competencies,
competitive capabilities, and market achievements that
spell the difference between being a strong competitor
and a weak competitor and sometimes between profit
and loss. Technological advancements and reduction in
infrastructure resources will help lowerthe operational costs
for Netflix however they need to have great content
quality within its service offerings. As long as there
are innovative strategies executed, Netflix will be equipped
to handle this fierce competition.

2. Marketing
Marketing related key success factors can be an
important way to develop a company’s strategy.
These strategies can include proving better customer
service, customer guarantees, a user friendly website
and clever advertising. When a customer enters
a brick and mortar store they are able to physically see
the product that they are buying. Online ordering does
not share this luxury so Netflix needs to use

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their web site to be persuasive. Netflix must provide
easy access to all of their movie selections through
the use of search engines or categories to help the
user search for any movie.

3. Distribution
In orderfor Netflix to be successful in an Online
setting, they must have a distribution network that
allows for fast delivery of DVDs. Netflix has
strong mail delivery position and is well positioned for
Video on Demand business. The future of content
delivery is through streaming. According to Netflix CEO
ReedHastings, “Over the coming decades and across
the world, Internet TV will replace linear TV.
Apps will replace channels, remote controls will disappear,
and screens will proliferate. As Internet TV grows
from millions to billions, Netflix, HBO, and ESPN
are leading the way.

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SWOT ANALYSIS
Strengths:
● As an essential component of SWOT, a company's strength
is its asset to plan its expansion. Netflix has several
strengths that make them one of the top streaming services:
● Netflix has a strong brand reputation and has become a
household name by substituting some top-rated television
programs. The company has also shown exponential growth
in recent years.
● Netflix's original movies and TV shows offer ample
opportunities to budding filmmakers. The audience enjoys
the mode of the content presented by the platform as their
original content.
● The company has high adaptability. Netflix continually
modifies its service, based on the market and the viewers'
choice. It is the reason Netflix is currently high on demand.

Weakness: Most companies have several weaknesses

alongside their strengths. The companies may take strategies
based on their weaknesses. Though Netflix is one of the top
companies, there is a particular weakness that is working as a
hindrance to their growth:

● Netflix has limited copyright, which tolls upon their revenue.

The debts of the company are also increasing.
● There is a lack of original content in several countries.
Therefore they have less demand for high price

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 subscriptions in some countries.
● The company mostly depends on its North American
customer base.
● Netflix lacks sound customer care executives, which harms
customer service, leading to decreased customer
satisfaction.

Opportunities: The market is continually changing with

increased demands, which helps any company aspiring for
substantial growth. The need for OTT platforms is also rising,
which is a good sign for Netflix. So, some of the significant
opportunities that the firm can grasp from the current market are:

● As Netflix has a brand reputation, the great demand for OTT

platforms in the current market can allow the brand to
expand.
● Since Netflix is signing up for exclusive Netflix-only content,
they can bring in other product lines, including video games,
comic books, and more.
● Netflix is already a global presence. They can strengthen
their subscriber base by a strategic partnership with local
markets that will help them to capture the local market.
● The company can choose to work on new concepts that are
better than other OTT platforms. Netflix has already said no
to the traditional advertising-based business model, which is
an opportunity for them to provide good customer service.

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Threats: For all the companies in the market, there are specific
threats. The market has several OTT services, and the customers
may choose based on their parameters. Therefore, excelling in
almost all the possible parameters can be a solution to retain the
position as the best. Even in that case, the companies may have
to face the threats posed in the way of their expansion. As one of
the biggest OTT companies, Netflix is not an exception. So, the
threats and risks that Netflix is exposed to are:

● COVID-19 has affected the reproduction of new original

shows and movies. Like most parts of the entertainment
industry, Netflix is also affected by the pandemic. Gradually
with normalization, the condition will improve.
● The government regulations in certain countries can hold
them from expansion.
● Netflix is suffering majorly from content piracy. Many people
choose to watch the pirated version of the original series
available without paying, threatening the company.
● Another reason for fewer customers for Netflix is that many
people share one account simultaneously.

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FINANCIAL PERFORMANCE
For the nine months ended 30 September 2021, NetflixInc
revenues increased 20% to $21.99B. Net income increased from
$2.22B to $4.51B. Revenues reflect Europe, Middle East, and
Africa (EMEA) segment increase of 27% to $7.18B,Revenue per
Customer - Average DVD US increase of 9% to$14.49. Net income
benefited from Foreign ExchangeGain(Loss) increase from $397M
(expense) to $301M (income).

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LOOMING CHALLENGES
● Not enough money for Exclusive content
● House of Cards and Orange is the New Black are top offerings
but Not enough money to make exclusive content
● Licensing of popular TV series can be expensive
● Competitors : Amazon and Google are providing cheap
alternatives
● It may be expanding Internationally too fast
● Setting up the infrastructure to stream world wide is a costly
process
● Potential issues in content because they have to now get
licensing for new shows
● They have to add these shows to make these new
international clients satisfied with service

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CONCLUSION
In conclusion, Netflix has been extremely successful in
maturing and developing to adapt to the changing needs of
customers over time. While their original DVD-by-mail business
model was effective against competitors such as Blockbuster, the
rise of internet streaming’s popularity meant they had to adjust.
The comparison to Blockbuster is important, as they were a
company that failed to adapt and didn’t foresee the impact the
internet would have on the movie rental industry (Kellmurray, n.d.)
Netflix was then able to gain customer loyalty by providing things
Blockbuster didn’t, such as no late fees and only needing to go to
the mailbox to get the DVD (Kellmurray, n.d). When the popularity
of online streaming grew, Netflix embraced the change and used
it to their advantage to become the company they are today.

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