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Netflix India Challenge

As a consultant hired from one of the top US based


consulting firms you looked over the case files in front of
you. Your client Netflix had decided to expand its
geographical base to India. The announcement was to go to
the press next week. The board of Netflix were studying the rise of tech savvy Indians who were now a
significant percentage after the penetration of smartphones in India. India has a user base of more than
100 million+ Internet users. With 4G about to become a nationwide reality soon, they felt it was the
right moment for them to penetrate the Indian market. Netflix has decided to enter Indian market in the
first half of 2016. As principal consultant to this case you need to go through the following case and
come up with the strategy for Netflix to enter the Indian market.
You are expected to prepare Netflix strategy for India broadly covering the below issues

How should Netflix address the broad challenges identified by Netflix (in details below)?
How should Netflix differentiate itself among its competitors below?
At what touch points should Netflix engage with its potential customers?
How should Netflix do the pricing of its services?
Success Factors for NetFlix story in India?

Competitors
BigFlix
Big Flix is a Reliance Entertainment owned movie on demand service in 2008. It is Indias first m ovie on
demand service. It allows users to stream or download movies at any time. Since its inception as a movie
streaming service in January 2012, the BigFlix catalogue had grown to over 2,000 films by April 2014
while the paying subscriber base had grown to over 100,000. By May 2013 BigFlix had reached 1 million
registered users. It was touted to be Indias answer to Netflix. Its pricing is as below

Youtube
Googles video streaming service gives options to Content distributor provides on demand solution and
has 2 revenue options for its customers, either via advertisements in between or fixed charge per movie.
Largely lot of Indian distribution content is available onYoutube for free or paid and lot of meida house
use Youtube as promotion medium. Movies are available from Rs 50 to Rs1000 per movie

DTH players
The most widely available medium for content viewing especially after the digitization effort by
Government of India. They provide a host of movies on demand on nominal charges of Rs. 20-100 per
movie and Rs 200-400 per month for live TV. And have now started providing options of recording
shows and movies and hence user enjoy a sense of convenience to watch content at their own time.
Major Players include Tata Sky, Videocon DTH, Dish TV etc

Apps like Hotstar, SonyLIV


They are the answer to the smartphone savvy population that wants content directly on their phone at
any time they want. Distribution houses like Star, Sony, Zee have identified this segment as their next
most important target and are popularly catering with host of apps like Hotstar, Sony LIV. The recent

success of starsports.com app which saw more than 5 million+ downloads and provides ad based and
subscription based service for users

DVD Rental Stores


Still the most popular medium among the non tech savvy junta, but majority of DVD Rental Stores sell
and rent Pirated DVDs at cheaper prices of 40-50 Rs per rental with each DVD containing 3-4 movies.
They are one of the biggest threats to the legal DVD markets. But also their sales have declined in urban
areas with the rise of torrents and online streaming with the rise in easy access to fast internet

Challenges
The challenges identified by Netflix in India are
1) Low Internet Speeds
2) Internet Piracy
3) Segmentation based on Geography and Language( Bollywood, Tollywood etc)

Company Overview
Netflix, Inc. is an online subscription service streaming television (TV) shows and movies. The company's
subscribers can watch unlimited TV shows and movies streamed over the Internet to their TVs,
computers and mobile devices, as well as receive digital versatile discs (DVDs) delivered to their
homes.The company primarily operates in the US. It is headquartered in Los Gatos, California and
employed 2,189 people as of December 31, 2014, of whom 261 were part-time employees. The
company recorded revenues of $5,504.7 million during the financial year ended December 2014
(FY2014), an increase of 25.8% over FY2013. The operating profit of the company was $402.6 million in
FY2014, an increase of 76.3% over FY2013. The net profit of the company was $266.8 million in FY2014,
compared to the net profit of $112.4 million in FY2013.

Business Description
The company operates through three business segments: domestic streaming, international streaming
and domestic DVD.
The domestic and international streaming segments derive revenues from monthly subscription services
consisting of streaming content.The international segment derives revenues from monthly subscription
services in Canada, Latin America, the UK and Ireland, Finland, Denmark, Sweden, the Netherlands,
Norway Germany, Austria, Switzerland, France, Belgium, Luxembourg, Australia and New Zealand.

The domestic DVD segment derives revenues from monthly subscription services consisting of DVD by
mail.
The company ships and receives DVDs across the US. Netflix maintains a network of shipping centers
that allow the company to provide fast delivery and return service to subscribers. The company delivers
DVDs directly to the members' addresses by mail with a postage-paid return envelope. Netflix also
streams movies and TV shows instantly to members' TVs, computers and mobile devices over the
internet. In addition, the company streams content on other internet-connected devices, including
digital video players and TV set-top boxes. Netflix has agreements with various cable, satellite and
telecommunications operators to make its service available through the TV set-top boxes of these
service providers

Revenue Analysis
The company generates revenues through three business segments: domestic streaming (62.3% of the
total revenues in FY2014), international streaming (23.8%) and domestic DVD (13.9%).
In FY2014, the domestic streaming segment recorded revenues of $3,431.4 million, an increase of 24.7%
over FY2013. The international streaming segment recorded revenues of $1,308.1 million in FY2014, an
increase of 83.6% over FY2013. The domestic DVD segment recorded revenues of $765.2 million in
FY2014, a decrease of 16% compared to FY2013.

Pricing
They offer three types of streaming membership plans. In the U.S. the basic plan is priced at $7.99 per
month and includes access to standard definition quality streaming on a single screen at a time. The
most popular streaming plan, which includes access to high definition quality streaming on two screens
concurrently, is priced at $8.99 per month for members who joined after the second quarter of 2014
when they had increased the membership fee from $7.99 per month. Existing members were
grandfathered in at $7.99 for two years, as long as they remain a member. The premium plan, which
was introduced in the second quarter of 2013, is priced at $11.99 per month and includes access to high
definition and ultra-high definition quality content on four screens concurrently. Internationally, pricing
for the three types of membership plans is structured similar to the U.S. and ranges from the U.S. dollar
equivalent of approximately $6.00 per month to $19.00.

Sources
Netflix.com Annual Report, Marketline report on Netflix.com, BigFlix.com, Tatasky.com, Starsports.com,
Youtube.com. All rights reserved with respective owners. No copyright infringement intended

Submission Deadline: 21st July 10 am


Round 2 Guidelines
Participants should submit their analysis in the form of a presentation with not more than 8 slides
(including cover slide)
Font size should be at least 12
Format of presentation: .ppt/.pptx. No other formats will be accepted.
Entries have to be submitted @ consults@email.iimcal.ac.in ;
Naming convention: TeamName_Sec#. # to be replaced by the class section Eg: JokaR_SecA
Please make necessary assumptions wherever required and state them in your presentation
The finals will be held on 21st July 2015 5pm
In the Final round, you will present your case to the faculty judges.(10 minutes presentation, 5 min
QnA)
The decision of the judges will be final and no correspondence will be entertained