A NETFLIX DEPRIVATION STUDY

NOFLIX
Jeremy Horton Focus Group Moderator Consumer Insight Researcher

Temi Iyaomolere Competition Researcher Presentation Coordinator

Tim Kosters Service Researcher Focus Group Moderator

Kayla Lavender Brand Researcher Presentation Coordinator

Priscilla Mon Target Market Researcher Presentation Coordinator

TABLE OF CONTENTS
The Case

3 5 6

Overview of Online Streaming History of Netflix Participants Results

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Creative Brief

THE CASE
REASON
Team Noflix was initially going to deprive participants of all paid online video streaming, but after discussing this service in class, we felt that limiting our study to Netflix would create a stronger angle and provide more insight into the brand. We chose Netflix because it is a large reason people still turn on their televisions. Netflix is inexpensive and easy to use, which is the perfect platform for college students who have limited finances and strict schedules. Cable TV is more expensive, and TV programs only air at certain times. This means consumers often have to schedule their daily activities around shows they want to watch. Netflix allows viewers to have the TV or movie experience without subjecting them to advertisements. Because of the lack of ads on Netflix, it would be interesting to see how advertisers target Netflix consumers. It would also be interesting to study consumers and exactly why they are brand loyal to Netflix. Only eight were left by the end of the study. Participants were deprived of Netflix for two weeks and were allowed to use online streaming alternatives, such as Hulu, YouTube and Vudu. They were provided with daily logs to record their thoughts, activities and other notes.

PARTICIPANTS

Participants were college-aged (18-26) and chosen using the snowball method.

RULES

For the deprivation study, we recruited 11 participants.

SECONDARY RESEARCH

ONLINE STREAMING
Streaming media is defined by Webopedia as a technique for transferring data so that it can be processed as a steady and continuous stream. For streaming to work properly, the computer receiving the data must be able to collect and interpret that data to the application that is playing the media being streamed. When the Internet saw increased network bandwidth, increased access to networks, more standardized protocols and an increase in the commercialization of the Internet in the early 2000s, streaming media became much easier and more popular. A brief list of the highlights of the development of online streaming: 1992 MBone developed 1994 Rolling Stones Concert is streamed using MBone 1998 Apple announces QuickTime 1999 Yahoo! buys Broadcast.com for $5.7 billion 2005 YouTube is created by former PayPal employees 2007 Netflix introduces streaming in addition to their DVD rental service Fast forward to today and media can be streamed live and/ or on demand. Media that is livestreamed is only available for viewing during the time of the live event, while on-demand media is stored on a server and can be viewed whenever the viewer decides to watch it. Netflix falls under this category, as it store a multitude of movies and television shows that can be watched at the users whim.

COMPETITORS
Hulu Amazon Prime YouTube Vudu

HISTORY OF NETFLIX
Marc Randolph and Reed Hastings founded NetFlix.com, Inc. in 1997. The website launched on August 29 of that year with 30 employees and 925 works available online. Initially Netflix charged a rental rate per work, but they switched to a monthly subscription method in 1999, which offered unlimited rentals for a monthly price. In 2000, Netflix created the personalized movie recommendation system that recommends movie choices to users based on their ratings of other works. The movie rental companys user count passed one million in 2002, only five years after its launch. By 2005, Netflix had reached 4.2 million subscribers. Netflix only offered movie rentals until 2007 when Netflix introduced online streaming. This allowed members to stream movies and television shows on their computers. The following year, Netflix teamed up with electronic companies to allow Netflix streaming on the Xbox 360, Blu-ray players, TV set-top boxes and Apple computers. By 2010 the company had expanded its streaming capabilities to the Apple iPad, iPhone and iTouch, the Nintendo Wii, the PS3 and other Internet connected devices. Up until 2010, Netflix was only a United States organization based in California. Netflix launched internationally in Canada, Latin America, the Caribbean, the United Kingdom, Ireland and the Nordics by 2012, the same year it passed 30 million global members. In March 2011, Netflix announced its intentions to acquire original content for streaming. It began with House of Cards, which debuted on Netflix in early 2013. Original programming on Netflix now includes popular series such as Arrested Development and Orange Is The New Black. As of 2013, more than 38 percent of Americans use Netflix. Netflix has more than 40 million streaming members worldwide and 900 employees at headquarters.

PRIMARY RESEARCH

PARTICIPANTS
Nicole Darling Age: 20 Usage: 1 hour or less per day Spencer Webb Age: 26 Usage: 2-5 hours per day

Roberto Lugo Age: 21 Usage: 2-5 hours per day

Justin Greco Age: 26 Usage: 2-5 hours per day

Kyle Morton Age: 22 Usage: 1 hour or less per day

John Sakwa Age: 20 Usage: 1 hour or less per day

Brittany Gillen Age: 23 Usage: 2-5 hours per day

Ola Iyaomolere Age: 19 Usage: 2-5 hours per day

RESULTS
Level of Difficulty

Participants

Alternate Services Used

RESULTS
CONSUMER INSIGHTS
Netflix > cable networks. For example, AMC, the channel that airs popular shows like The Walking Dead and Breaking Bad, has credited Netflix for playing a big role in how popular those programs have become. The Walking Deads third season was the top-rated scripted program during the last television season, a first for a cable channel. Being able to binge watch prior seasons of shows on Netflix allows the consumers to obtain a deeper appreciation and love for the show, influencing them to want to catch their favorite episodes live on cable programming. This boosts ratings for cable channels due to large volume viewership. Its almost safe to say that cable programming and Netflix inadvertently work with one another, ultimately benefiting both services. The cost of Netflix compared to cable programming is appealing to consumers. At a fraction of the cost per month, consumers have a wide variety of programming to choose from. From their favorite television series to their favorite movies past and present, they have a ton of options right at their fingertips. Consumers feel like theyre getting more for less. Netflix always keeps the consumer in mind with their business model. In the beginning Netflix was going to offer their customers a payas-you-go model for their service similar to products such as the GoPhone. This approach was becoming unpopular very quickly so Netflix flipped the script and offered unlimited viewing for a low monthly rate. This just goes to show that Netflix takes consumers voices and demands into consideration when developing their brand and service. Everyone has the ability to watch what they want, when they want. Netflix offers consumers an individualized approach to viewing television and movies by creating categories that are customized for each user by using algorithms to understand what types of content they like to watch.

THEMES

Involuntary Participation Some of our participants caved in to watching Netflix so they could be included in the conversation and inside jokes while hanging out with friends. Netflix allowed our participants to feel accepted. I really wanted to watch Netflix because my friends were making TV reference jokes I didnt know what they were talking about. Mindless Consumption A lot of Netflix users developed a habitual behavior of coming home and immediately turning on Netflix without thinking about it. This is becoming easier with the introduction of smart TVs, some of which have a Netflix button on the remote. Grabbing the remote and turning on Netflix is usually one of the first things I do when I get home. White Noise Wonderland Our research showed Netflix is used as background noise when doing things like reading, cooking and hanging out with friends. Silence drives people nuts. Its too quiet when Im cooking and the DVDs are too much work.

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CREATIVE BRIEF
WHY ARE WE ADVERTISING?
To promote Netflix as an irreplaceable alternative to cable television.

WHO ARE WE TALKING TO?

Students and young adults aged 18-34 who are just getting on their feet financially or are just plain flat broke but want to be entertained with their favorite content.

WHAT DO THEY CURRENTLY THINK?

Ive heard of Netflix and how affordable it is, but Ive also heard that theyre slow in putting up newer content. I want to watch exactly what I want to watch when I want to watch it. I dont wait for anything.

WHAT WOULD WE LIKE THEM TO THINK?

Netflix is my bestie. I dont know why I paid all this money for cable television for all these years.

WHAT IS THE SIMPLE MOST PERSUASIVE IDEA WE CAN CONVEY?

WHY SHOULD THEY BELIEVE IT?

Netflix is all the content you crave at a price you can afford.

There are 75,000+ titles available to watch whenever the heck you want to watch them. And it only costs $8 a month. Thats like two lattes at Starbucks.

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