Netflix Research

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NETFLIX UNIFICATION

Presented to:

Reed Hastings, Chief Executive Officer
Netflix

Prepared by:
Jocelyn Casetllon, Autumn Champlin & Audris Hung

Submitted: May 7, 2012

TABLE OF CONTENTS

TITLE PAGE………………………………………………………………………….. i MEMO OF TRANSMITTAL…………………………………………………………. ii EXECUTIVE SUMMARY…………………………………………………………… iii INTRODUCTION………………….…………………………………………………..5-6
Scope of the research……….…………………………………………………...5
Background of the problem….……………………………………………….…6

POSSIBLE SOLUTIONS…………………………………………………………….6-10
New Plan prices……….…………………………………………………….…..6 Reinstate previous plan and increase price gradually…………………………...7 Change to streaming only, eliminating shipping prices…………………….…...9

CONCLUSION………………………………………………………………………...11 RECOMMENDATIONS……………………………………………………………….11 REFERENCES……………………………………………………………………….…12

LIST OF TABLES AND ILLUSTRATIONS
Stock price drop due to price increase…………………………………..5

NETFLIX MEMORANDUM
DATE: May 7, 2012
TO: Michael Shaffer, President of Sales & Video Streaming
FROM: Autumn Champlin, International Manager of Public Relations SUBJECT:PRICE CHANGES TO ALLEVIATE CUSTOMER FALLOUT ________________________________________________________________________ The quick advancing technology has allowed for a vast majority of Netflix potential customers to greatly enjoy streaming movies and films directly from their home. There are many different devices that would allow for this video streaming to take place. Devices including the PS3, X-Box 360, Wii, Apple products, Internet-connected TV’s, and laptops are able to stream these movies without clicking a remote more then three times!

After intense research on this type of service, we have released that streaming is one of the fastest growing markets. However many subscribers still enjoy renting the actual DVD or Blu Ray as new films become available. This report gives some recommendations on how to increase customer profits and the companies overall reputation. Some of the recommendations include changing the prices of their well known bundles, reducing the prices currently and gradually increasing them over time, and the last plan would be to change all films/shows to streaming.

All people involved in compiling this report are dedicated in helping Netflix reach its profit potential. We would like to present this report to you and to senior management next Monday. Please send me an email at contactus@netflix.com, requesting additional information or to schedule the time for a presentation.

EXECUTIVE SUMMARY
Purposes of the Report

This report is to analyze the changes Netflix has adopted in the last year. It will also discuss the separation of the online streaming and DVD- mail package which has directly affected the profit of the company in a negative way. Most important, it will provide recommendations to solve the business problem that Netflix has been suffering due to separating these plans.

NETFLIX increase in prices

Netflix announced the increase in the price for the online and mail- order movie rental in September, 2011. The goal of the company was to increase revenue to raise funds for expansion and the acquisition of new content. However, the estimated customer loss was drastically higher than expected.

One of the largest competitors for Netflix is Blockbuster. Blockbuster’s no extra charge for Blu-ray disc caused conflict with Netflix’s DVD rental. Although Blockbuster has physical stores, there are not many left in the market. Even though Netflix separate its plans of online streaming and DVD rental; it is still cheaper than Blockbuster. Even if Netflix has many competitors in the market the company still holds about 61% of the U.S market share.

Recommendations for Increasing Customer Base and Revenue

At this point Netflix has...
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