“Instructions/Tasks for all Cases:Read and understand the case.Read the specific chapter referenced above as Case Chapter Reference.Review the text-book index to locate Netflix and read all related information provided for Netflix.Visit the Case-specific web-site(s) to learn more about the company. Additionally substantiate your knowledge with more on-line research (use independent sites that are reporting on the company: an independent site would be one that is not owned and operated by an entity with a vested interest in the company you are researching)In many ways, the evolution of Amazon.com mirrors the evolution of E-Commerce. Review the E-Commerce in Action case study on Amazon.com on pages 578-587 (Chapter 9). The sections presented in this case study serve as a guideline and must be included in your case study report and presentation with content relevant to your specific case.
Section
1
Companys
Financial Analysis with special emphasis on the Revenue Model(s)

ADD FINANCIAL STATEMENT 2014 AND 1st QTR 2015 with narrative.

Revenue sharing is
the main model in video streaming which significantly decreases inventory cost
to zero. Another source of revenue for this company is rental revenue through
its DVD mailing service in addition to advertisements (Bowen, Daigle, Dion, & Valentine, 2014).
Netflix
announced on June 12, 2015 that it has entered into revenue sharing agreements with
the home entertainment divisions of DreamWorks SKG, Twentieth Century Fox and
Universal Studios. Netflix is the first
online renter of DVDs to have secured revenue sharing agreements with major
motion picture studios and distributors.
Through the revenue sharing
agreements, Netflix will have direct access to new DVD releases and will be
able to quickly make them available to its growing number of customers. To date, Netflix has secured revenue sharing agreements
with the majority of studios and film distribution companies, which together
account for 85 percent of the DVD home rental market. DreamWorks SKG, Twentieth Century Fox and
Universal Studios join existing Netflix revenue
sharing
partners Artisan Entertainment, Columbia Tri-Star Home Video, Lion’s Gate
Films, USA Films and Warner Home Video.(PRNewswire, 2015)
Analysis of Netflix web-site(s) with respect to E-Commerce
Netflix has
heavily invested in the creation of algorithms giving users content options to
select their preferred content. This makes it easier for users as they can
easily access their preferred content easily. Their website is user friendly
and content is categorized into genres and ratings. A subscriber can easily
find new content among their favorite genres. Their website is easy to navigate
and well designed. New customers can easily master the site without much hustle
thus benefiting from the companys collection. When new customers return to the
site after partial registration, they will not have to start over again. The
company has optimized the system enabling it to make recommendations to
subscribers. The company is also increasing titles in their e-commerce platform
giving subscribers more value for money.
Netflix website
has an array of weaknesses. One is the fact that the website is not accessible
from all countries globally. Many of its subscribers travel around the world
and feel there is a need to globalize this website. Poor public relations and
communication with consumers in relation to price and change in company structure
has dented the companys perception amongst consumers. This situation led the
company to lose consumers in addition to stock value. The company is utilizing
Amazon AWS cloud computing service for the storage of its content to stream to
consumers. Amazon is proving to be a major competitor to Netflix thus would
create a conflict of interest among the companies (Kharpal, 2015).

ADD MORE INFORMATION HERE
PLEASE FIND MORE DETAILS

Section 2
What are three
challenges that Netflix faces
One major challenge
that Netflix suffers is heavily relying on third parties for content. This saw
the company lose eight percent of its content after Starz declined to renew
their contract with the company. Starz offered a number of the companys
valuable content. The outcome was loss of variety of Sony and Disney movies. This
led to ten percent loss in the company stock value while a number of
subscribers canceled their membership. Netflix continues to face a challenge of
securing long term beneficial contracts with the content providers (Agnello, 2011).
The second
challenge is its DVD mailing component and its future. Mailing system for DVD
seems to be dying a slow death. The market is evolving to video on demand and
Netflix is the mother of subscription model that focuses on Video on Demand
(VOD) and DVD mailing. DVD mailing costs are much higher compared to online
streaming which is more popular thus the question on sustainability of DVD
mailing. Netflix tried to separate VOD and DVD mailing through a subsidiary Qwikster.
It is speculated that Qwikster was to be later sold. This dream did not
materialize as subscribers complained due to limited access to VOD content. This
proves the fact that Netflix needs more content through establishing longer
lasting relationship with content providers (Indiviglio,
2011).
The third
challenge Netflix is encountering is the extent of competition expected from
well established companies in the VOD industry. Companies such as Google, Apple
and Amazon are already investing heavily and poaching on Netflix senior members
of staff. These companies have deep pockets, well established brands and the
ability to fund innovations in VOD thus developing better products at cheaper
prices. Their financial muscle can also get them great content contracts that
are becoming a headache for Netflix (Kharpal,
2015).
What are the key elements of Netflixs strategy in
2014?
Netflix has put
in place various strategies in order to stay relevant in the ever changing
market with the threat of new entrant becoming real by the day. The company has
chosen to be the market leader by offering consumer a wider product selection
in addition attractive styling and value added services. Technology is surely
changing the landscape of the industry Netflix is operating in. Netflix
realizes this and has flexible business models that allow it to go into new
technology markets as they arise (Bowen, Daigle,
Dion, & Valentine, 2014).
Netflix
continues to strive in finding innovative ways to acquire new content for its
consumers. They aim at achieving this through establishing new relationship
with entertainment providers. This has been the companys tradition with
Hastings making negotiations with numerous studios and networks seeing the
company paying licensing fees, entering into profit sharing and direct
acquisition deals in order to increase its streaming title base for its
subscribers.
The company aims
at providing user friendly technology for its subscribers to utilize in
ordering and selecting what they would love to view. This has seen Netflix
develop proprietary software that enhanced a subscribers capacity to preview
movie with category, ratings amongst other filters. The software gave the
subscriber the power to rate titles they have viewed. This has proved to be
successful with viewers watching more what has been rated highly.
Netflix aims at
giving its subscribers an option between streaming and mail services. The two
options give subscribers a choice based on their preference and resources.
There are areas with slow internet and DVD-by-mail can work relatively well.
This can also work well amongst movie lovers who do not love technology. However,
the company is encouraging streaming services with an aim of cutting on postage
costs. Streaming services are cheaper to execute and maintain as opposed to
mailing services (Bowen, Daigle, Dion, &
Valentine, 2014).
Netflix aims at
marketing itself aggressively with an aim of continuously raising brand
awareness. This strategy has been extended to new markets globally in terms of
countries whereby Netflix is offering free-trials of up to one month to new
subscribers. The company has also increased payments to consumer electronic
partners (Bowen, Daigle, Dion, & Valentine,
2014).
The company aims
at increasing profits through international expansion. However, not all foreign
markets have a capacity for streaming due technical shortcomings. For instance,
in Latin America, the company encountered many challenges such as few internet
enables devices utilization, low speed internet access and no use of credit
cards for online transactions. There are instances of success in
diversification to new markets (Bowen, Daigle,
Dion, & Valentine, 2014).
What are the
implications of Netflixs new strategy for the cable television systems like
Comcast and Time Warner?
The case
outlines three main strategies in place at Netflix to execute and effectively
compete with cable television systems. Netflix initialized by getting content
on older series that were of little interest to cable network. The ideas behind
this were the T.V series had popular following in some demographic segments.
This strategy gives the company capacity to meet diverse needs and tastes of
subscribers. This target market is lost in cable T.V and is unique to Netflix.
A big number of
Netflix consumers preferred TV series as opposed to movies. This prompted the
company to replace two thousand movies with full T.V series. This means that
Netflix is focusing more on its subscribers interest and building content
towards these preferences. A big number of cable T.V consumers watch fewer than
ten channels but have to pay for more than one hundred channels. This means
that cable T.V users pay more than Netflix subscribers due to many unnecessary
channels.
Netflix has gone
a step higher and entered into content production industry. This can be
attributed to many challenges it faces solely relying on others for content
which is usually given to the highest bidder. This eliminates license costs
which are usually very high. Licensing costs are huge for Netflix and is one
reason the companys business costs are increasing by the day. When Netflix
makes big profit margins, content providers raise prices until their profits
margin diminish. In the first quarter of 2013, the company paid over one
billion U.S dollars in licensing costs. This number is expected to increase
over time (Turban, King, Lee, Liang, &
Turban, 2015).
Why is Netflix in
competition with Apple, Amazon, and Google, and what strengths does Netflix
bring to the market?
Netflix is
clearly has established itself as a powerful internet brand, however, it has a
number of powerful competitors. The companys success of its streaming services
has caught the attention of internet and technology giants such as Amazon,
Apple, Google and Yahoo. These firms have strong brands and are well
established on the internet. Apple is a market leader when it comes to movies
downloaded with customers having the power to own or rent a movie. In addition,
Apple owns iTunes which is the worlds biggest online store for purchase of TV
series, videos in addition music. In addition, Apple has an upgraded Apple TV
device that is for streaming video to T.V sets. This has seen it sign
agreements with Fox and ABC to avail their shows at ninety nine cents (Kopytoff, 2014).
Googles YouTube
took Netflix by the horn by hiring the companys vice president for content
acquisition. The company gave him the responsibility of licensing more
Hollywood movies and videos to enhance its online rental service. Google has
strong financial muscle, strong brand and strong technology capacity making it
a strong competitor of Netflix (Kharpal, 2015).

Amazon, an
e-commerce giant has ventured into streaming services. The companys aims at
doubling down on its investment for video streaming service on its original
programs. The company has gone ahead to release several of its own T.V series
for its online streaming service in addition to prime instant video. It has won
two awards for its series Transparent. It aims to invest more based on Amazon
instant video success in Europe with an aim of bringing more customers on
board. In 2014, it invested $1.3B on Prime Instant Video according to Jeff
Bezos (Kharpal, 2015).
Netflix is
generating less revenue per customer with increase in competition where
customers have cheaper alternatives. However, subscribers for the company are
growing at the rate of fifty percent per year which can be attributed to its
global expansion strategy. Netflix strengths lie in getting good content and
being a market leader in the industry. The company strives to get content
through an array of innovative means including going into production. In
addition, the companies brand in streaming services is strong. The level of
customer satisfaction level for the companys services is high (Kopytoff, 2014).

References

Agnello, A. J. (2011, September 2). Streaming Wild West:
Netflix Loses Starz, Competition Heats Up. Retrieved July 10, 2015, from
Investor place: http://investorplace.com/2011/09/netflix-stars-streaming-video-competition/#.VZ-GhZdLPIU
Bowen, R., Daigle, R., Dion, T., & Valentine, S. (2014).
Netflix Case study 2014.
Indiviglio, D. (2011, September ). How Does Netflix
Possibly Survive? Retrieved July 10, 2015, from The Atlantic: http://www.theatlantic.com/business/archive/2011/09/how-does-netflix-possibly-survive/245317/
Kharpal, A. (2015, June 17). Amazons doing THIS in battle
with Netflix, Apple. Retrieved July 9, 2015, from CNBC:
http://www.cnbc.com/2015/06/17/amazon-doubling-down-on-original-programs-for-video-streaming.html
Kopytoff, V. G. (2014, September 10). Shifting Online,
Netflix Faces New Competition. Retrieved July 9, 2015, from New York Times:

PRNewswire. (2015, June 12). http://www.prnewswire.com/news-releases/netflix-to-announce-second-quarter-2015-financial-results-300098192.html.
Retrieved from Netflix Announce Revenue Sharing Agreement with Dreamworks,
Twentieth Century Fox and Universial.
Turban, E., King, D., Lee, J. K., Liang, T.-P., & Turban,
D. C. (2015). Electronic Commerce: A Managerial and Social Networks
Perspective. New York: Springer.
Instructions/Tasks for all Cases:Read and understand the case.Read the specific chapter referenced above as Case Chapter Reference.Review the text-book index to locate Netflix and read all related information provided for Netflix.Visit the Case-specific web-site(s) to learn more about the company. Additionally substantiate your knowledge with more on-line research (use independent sites that are reporting on the company: an independent site would be one that is not owned and operated by an entity with a vested interest in the company you are researching)In many ways, the evolution of Amazon.com mirrors the evolution of E-Commerce. Review the E-Commerce in Action case study on Amazon.com on pages 578-587 (Chapter 9). The sections presented in this case study serve as a guideline and must be included in your case study report and presentation with content relevant to your specific case.Section
1Companys
Financial Analysis with special emphasis on the Revenue Model(s)ADD FINANCIAL STATEMENT 2014 AND 1st QTR 2015 with narrative.Revenue sharing is
the main model in video streaming which significantly decreases inventory cost
to zero. Another source of revenue for this company is rental revenue through
its DVD mailing service in addition to advertisements (Bowen, Daigle, Dion, & Valentine, 2014). Netflix
announced on June 12, 2015 that it has entered into revenue sharing agreements with
the home entertainment divisions of DreamWorks SKG, Twentieth Century Fox and
Universal Studios. Netflix is the first
online renter of DVDs to have secured revenue sharing agreements with major
motion picture studios and distributors. Through the revenue sharing
agreements, Netflix will have direct access to new DVD releases and will be
able to quickly make them available to its growing number of customers. To date, Netflix has secured revenue sharing agreements
with the majority of studios and film distribution companies, which together
account for 85 percent of the DVD home rental market. DreamWorks SKG, Twentieth Century Fox and
Universal Studios join existing Netflix revenuesharing
partners Artisan Entertainment, Columbia Tri-Star Home Video, Lion’s Gate
Films, USA Films and Warner Home Video.(PRNewswire, 2015)Analysis of Netflix web-site(s) with respect to E-CommerceNetflix has
heavily invested in the creation of algorithms giving users content options to
select their preferred content. This makes it easier for users as they can
easily access their preferred content easily. Their website is user friendly
and content is categorized into genres and ratings. A subscriber can easily
find new content among their favorite genres. Their website is easy to navigate
and well designed. New customers can easily master the site without much hustle
thus benefiting from the companys collection. When new customers return to the
site after partial registration, they will not have to start over again. The
company has optimized the system enabling it to make recommendations to
subscribers. The company is also increasing titles in their e-commerce platform
giving subscribers more value for money.Netflix website
has an array of weaknesses. One is the fact that the website is not accessible
from all countries globally. Many of its subscribers travel around the world
and feel there is a need to globalize this website. Poor public relations and
communication with consumers in relation to price and change in company structure
has dented the companys perception amongst consumers. This situation led the
company to lose consumers in addition to stock value. The company is utilizing
Amazon AWS cloud computing service for the storage of its content to stream to
consumers. Amazon is proving to be a major competitor to Netflix thus would
create a conflict of interest among the companies (Kharpal, 2015).ADD MORE INFORMATION HERE PLEASE FIND MORE DETAILSSection 2What are three
challenges that Netflix facesOne major challenge
that Netflix suffers is heavily relying on third parties for content. This saw
the company lose eight percent of its content after Starz declined to renew
their contract with the company. Starz offered a number of the companys
valuable content. The outcome was loss of variety of Sony and Disney movies. This
led to ten percent loss in the company stock value while a number of
subscribers canceled their membership. Netflix continues to face a challenge of
securing long term beneficial contracts with the content providers (Agnello, 2011). The second
challenge is its DVD mailing component and its future. Mailing system for DVD
seems to be dying a slow death. The market is evolving to video on demand and
Netflix is the mother of subscription model that focuses on Video on Demand
(VOD) and DVD mailing. DVD mailing costs are much higher compared to online
streaming which is more popular thus the question on sustainability of DVD
mailing. Netflix tried to separate VOD and DVD mailing through a subsidiary Qwikster.
It is speculated that Qwikster was to be later sold. This dream did not
materialize as subscribers complained due to limited access to VOD content. This
proves the fact that Netflix needs more content through establishing longer
lasting relationship with content providers (Indiviglio,
2011). The third
challenge Netflix is encountering is the extent of competition expected from
well established companies in the VOD industry. Companies such as Google, Apple
and Amazon are already investing heavily and poaching on Netflix senior members
of staff. These companies have deep pockets, well established brands and the
ability to fund innovations in VOD thus developing better products at cheaper
prices. Their financial muscle can also get them great content contracts that
are becoming a headache for Netflix (Kharpal,
2015). What are the key elements of Netflixs strategy in
2014?Netflix has put
in place various strategies in order to stay relevant in the ever changing
market with the threat of new entrant becoming real by the day. The company has
chosen to be the market leader by offering consumer a wider product selection
in addition attractive styling and value added services. Technology is surely
changing the landscape of the industry Netflix is operating in. Netflix
realizes this and has flexible business models that allow it to go into new
technology markets as they arise (Bowen, Daigle,
Dion, & Valentine, 2014). Netflix
continues to strive in finding innovative ways to acquire new content for its
consumers. They aim at achieving this through establishing new relationship
with entertainment providers. This has been the companys tradition with
Hastings making negotiations with numerous studios and networks seeing the
company paying licensing fees, entering into profit sharing and direct
acquisition deals in order to increase its streaming title base for its
subscribers. The company aims
at providing user friendly technology for its subscribers to utilize in
ordering and selecting what they would love to view. This has seen Netflix
develop proprietary software that enhanced a subscribers capacity to preview
movie with category, ratings amongst other filters. The software gave the
subscriber the power to rate titles they have viewed. This has proved to be
successful with viewers watching more what has been rated highly. Netflix aims at
giving its subscribers an option between streaming and mail services. The two
options give subscribers a choice based on their preference and resources.
There are areas with slow internet and DVD-by-mail can work relatively well.
This can also work well amongst movie lovers who do not love technology. However,
the company is encouraging streaming services with an aim of cutting on postage
costs. Streaming services are cheaper to execute and maintain as opposed to
mailing services (Bowen, Daigle, Dion, &
Valentine, 2014). Netflix aims at
marketing itself aggressively with an aim of continuously raising brand
awareness. This strategy has been extended to new markets globally in terms of
countries whereby Netflix is offering free-trials of up to one month to new
subscribers. The company has also increased payments to consumer electronic
partners (Bowen, Daigle, Dion, & Valentine,
2014). The company aims
at increasing profits through international expansion. However, not all foreign
markets have a capacity for streaming due technical shortcomings. For instance,
in Latin America, the company encountered many challenges such as few internet
enables devices utilization, low speed internet access and no use of credit
cards for online transactions. There are instances of success in
diversification to new markets (Bowen, Daigle,
Dion, & Valentine, 2014). What are the
implications of Netflixs new strategy for the cable television systems like
Comcast and Time Warner?The case
outlines three main strategies in place at Netflix to execute and effectively
compete with cable television systems. Netflix initialized by getting content
on older series that were of little interest to cable network. The ideas behind
this were the T.V series had popular following in some demographic segments.
This strategy gives the company capacity to meet diverse needs and tastes of
subscribers. This target market is lost in cable T.V and is unique to Netflix. A big number of
Netflix consumers preferred TV series as opposed to movies. This prompted the
company to replace two thousand movies with full T.V series. This means that
Netflix is focusing more on its subscribers interest and building content
towards these preferences. A big number of cable T.V consumers watch fewer than
ten channels but have to pay for more than one hundred channels. This means
that cable T.V users pay more than Netflix subscribers due to many unnecessary
channels.Netflix has gone
a step higher and entered into content production industry. This can be
attributed to many challenges it faces solely relying on others for content
which is usually given to the highest bidder. This eliminates license costs
which are usually very high. Licensing costs are huge for Netflix and is one
reason the companys business costs are increasing by the day. When Netflix
makes big profit margins, content providers raise prices until their profits
margin diminish. In the first quarter of 2013, the company paid over one
billion U.S dollars in licensing costs. This number is expected to increase
over time (Turban, King, Lee, Liang, &
Turban, 2015). Why is Netflix in
competition with Apple, Amazon, and Google, and what strengths does Netflix
bring to the market?Netflix is
clearly has established itself as a powerful internet brand, however, it has a
number of powerful competitors. The companys success of its streaming services
has caught the attention of internet and technology giants such as Amazon,
Apple, Google and Yahoo. These firms have strong brands and are well
established on the internet. Apple is a market leader when it comes to movies
downloaded with customers having the power to own or rent a movie. In addition,
Apple owns iTunes which is the worlds biggest online store for purchase of TV
series, videos in addition music. In addition, Apple has an upgraded Apple TV
device that is for streaming video to T.V sets. This has seen it sign
agreements with Fox and ABC to avail their shows at ninety nine cents (Kopytoff, 2014). Googles YouTube
took Netflix by the horn by hiring the companys vice president for content
acquisition. The company gave him the responsibility of licensing more
Hollywood movies and videos to enhance its online rental service. Google has
strong financial muscle, strong brand and strong technology capacity making it
a strong competitor of Netflix (Kharpal, 2015).
Amazon, an
e-commerce giant has ventured into streaming services. The companys aims at
doubling down on its investment for video streaming service on its original
programs. The company has gone ahead to release several of its own T.V series
for its online streaming service in addition to prime instant video. It has won
two awards for its series Transparent. It aims to invest more based on Amazon
instant video success in Europe with an aim of bringing more customers on
board. In 2014, it invested $1.3B on Prime Instant Video according to Jeff
Bezos (Kharpal, 2015). Netflix is
generating less revenue per customer with increase in competition where
customers have cheaper alternatives. However, subscribers for the company are
growing at the rate of fifty percent per year which can be attributed to its
global expansion strategy. Netflix strengths lie in getting good content and
being a market leader in the industry. The company strives to get content
through an array of innovative means including going into production. In
addition, the companies brand in streaming services is strong. The level of
customer satisfaction level for the companys services is high (Kopytoff, 2014). References Agnello, A. J. (2011, September 2). Streaming Wild West:
Netflix Loses Starz, Competition Heats Up. Retrieved July 10, 2015, from
Investor place: http://investorplace.com/2011/09/netflix-stars-streaming-video-competition/#.VZ-GhZdLPIUBowen, R., Daigle, R., Dion, T., & Valentine, S. (2014).
Netflix Case study 2014.Indiviglio, D. (2011, September ). How Does Netflix
Possibly Survive? Retrieved July 10, 2015, from The Atlantic: http://www.theatlantic.com/business/archive/2011/09/how-does-netflix-possibly-survive/245317/Kharpal, A. (2015, June 17). Amazons doing THIS in battle
with Netflix, Apple. Retrieved July 9, 2015, from CNBC:
http://www.cnbc.com/2015/06/17/amazon-doubling-down-on-original-programs-for-video-streaming.htmlKopytoff, V. G. (2014, September 10). Shifting Online,
Netflix Faces New Competition. Retrieved July 9, 2015, from New York Times:
http://www.nytimes.com/2010/09/27/technology/27netflix.html?_r=0PRNewswire. (2015, June 12). http://www.prnewswire.com/news-releases/netflix-to-announce-second-quarter-2015-financial-results-300098192.html.
Retrieved from Netflix Announce Revenue Sharing Agreement with Dreamworks,
Twentieth Century Fox and Universial.Turban, E., King, D., Lee, J. K., Liang, T.-P., & Turban,
D. C. (2015). Electronic Commerce: A Managerial and Social Networks
Perspective. New York: Springer.”