From To

Netflix expands its Netflix wins its first

partnership with Academy Award
Netflix introduces a consumer for Best
personalized movie electronics Documentary Short
recommendation companies to Subject and hits
system, which uses stream on the PS3, 100 million
Netflix members’ Internet connected members globally.
ratings to accurately TVs, thus Netflix launched Netflix expands its
predict choices for surpassing 10 its first slate of international Rate of
Reed Hastings and all Netflix members. million members. original originals. subscription
software executive Netflix programming doubles as people
Marc Randolph co- introduces including "House are locked in their
found Netflix to streaming after of Cards," and homes during
offer online movie hitting 5 million "Orange Is the COVID-19
rentals. subscribers. New Black." pandemic.

1997 2000 2007 2009 2013 2017 2020

Content Spend
15 Billion dollars 2.5 Billion dollars
(2019)

Subscribers 182.8 million 54.5 million

Demographics GenZ and young demographic Family content and mass market

Content production Customer acquisition

Business Focus
(Original content ) (Leveraging existing content)

Existing content 4000 movies and 47000 TV episodes 500 movies and 7,500 TV episodes
 Business Model Canvas
• Key Partners
•  Key Activities • Value Propositions • Customer Relationships • Customer Segments

Production Licensing
Self service

GenZ
Producers & Actors Wide variety of content
Data Analytics Marketing (Family & Kids)

• Key Resources UI (online)

• Channels
Broadcasters & Stream anywhere
Millennials
Cable companies (All you can
watch)
Talent Brand

Online

AWS
Data capabilities
(Recommendations)
• Cost Structure • Revenue Streams

Production
costs Maintenance Marketing Infrastructure Subscription model Product placement
(AWS)
 Business Model Canvas
• Key Partners
•  Key Activities • Value Propositions • Customer Relationships • Customer Segments

Production Operations
Actors Producers Experience oriented

Wide variety of content

(Family & Kids) Mass Market
Marketing (emphasis on family content)
UI (online)
• Key Resources
• Channels
Subsidiaries Merchandise
(McD &
Subway)
Talent IP
Creative high quality
content TV Theatres Kids

Game designers
(Microsoft & Sony) Brand Theme parks Theme parks
Online

• Cost Structure • Revenue Streams

Publishing
Advertising
Licensing
Production
Royalties Maintenance Marketing Infrastructure Theme park revenue
costs
Successful original content (BoJack horseman, Orange is the New Black, Stranger Things, House of Cards)
Pushing new originals by recommendations and marketing
Breadth of content (Star Wars, Pixar, Marvel and National Geography)
Tried and tested legacy content
DISNEY+ VS NETFLIX
Pay TV vs Streaming

Netflix continues to dominate the market

and surpass pay-TV in usage, but the
company's growth has noticeably slowed
in recent years. Amazon Prime and
Hulu, on the other hand, continue gain
market share.
Increasingly fewer pay-tv subscribers are
solely watching TV through their
cable subscription—77% are accessing TV
content on the internet, up from 72% in
2018. Pay-TV users also account for the
lion's share of streaming subscription
growth:
 USA-Customer Market overview
Users by age: In the year 2019 a share of 32.9% of users is 25-34
years old.

General trends observed:

Users by Income: In the year 2019 a share of 36.6% of users is
in the low-income group
Smartphone segment dominated the
overall over-the-top market in 2019 and is
expected to remain dominant 
76 percent of the population is satisfied by
the current video content, consumers are
still looking for the next big thing. 
Half of consumers say they intend to
subscribe to new entrants in the market,
such as the just-launched Disney+ and
Apple TV+ and the much-anticipated HBO
Max and NBCU’s "Peacock."
Americans prefer video streaming over cable
Seventy percent of U.S. households have at least one subscription

An average American subscriber watches 3.4 services.

For each one, they pay an average that would total a monthly bill
of $29. That’s less than a third of the average monthly cable bill
of$107

Reasons for people leaving any video streaming service:

People didn’t find the service a good value for their money

Didn’t find enough content they liked

 USA Market overview
Revenue
The average revenue per user (ARPU) in the Video Streaming
segment is projected to amount to US$213.50 in 2025

Market Share
Netflix has 30 percent of USA
video streaming market till 2019

Customers
In the Video Streaming segment, the number of users
is expected to amount to 157.0m by 2025
The video streaming wars are intensifying
Consumers are willing to spend more to get
the content they want, which is good news for
brands launching new streaming services. Half
of all consumers surveyed indicated some level
of interest in subscribing to at least one of the
new video services being launched in the next
six to 12 months.
However, unaided awareness of new streaming
services could use improvement. When asked if
they could name any new market entrants, 51%
of consumers said they couldn’t think of any.
Disney+ was the one customers were excited
about when prompted with brand names for
level of interest, which isn't surprising given
Disney's significant promotional campaign
for its launch this past November
 Customer’s perception of Competitors
Disney+ subscribers are attracted to its historically family-friendly selections:
• 59% are motivated by original content
• 49% are motivated by exclusive content
• 28% believe they’ll always be able to find something enjoyable to watch
• 22% say they’ll subscribe because the content appeals to their family

Apple+ subscribers are motivated by the company’s reputation for easy-to-use products:
• ­48% say they’ll subscribe because of its original content
• 31% are motivated by exclusive content
• 30% think it’ll be easy to use

Primed by HBO’s production history, consumers have high expectations for HBO Max’s expansive
content library:
• 56% are motivated by original content, like Game of Thrones and Sex and the City
• 48% are motivated by exclusive content, like Friends, South Park and The Big Bang Theory
 NETFLIX’S COMPETITIVE ADVANTAGE
Analytic profiles
Viewer preferences integrated with
external data sources to form Analytical
profiles. These can be utilized across
multiple use cases
Viewing patterns
Netflix has access to huge amount od
data regarding viewing patterns in
relation to the characteristics of shows
(100+ data points on each title)
Targeted Use Cases
What are the business use cases that
Netflix should focus on
Why are these use cases important
How to increase customer engagement
through recommendations
Management Fortitude
Management’s willingness to learn
about customers by valuing the data
analytics capabilities
Machine Learning
Data fed into ML algorithms to access
critical scores
Developing new algorithms and
predicting models to understand
customer preferences
 Advantages of Disney
Disney’s 2019 box office dominance increased after  the early
success of Frozen 2 and Star Wars: The Rise of Skywalker,
which was released before the end of the year.
Huge franchises
• Most of the promotion of the streaming service
has tied into these franchises – whether it’s the
new Star Wars show The Mandalorian, the
promise of future tie-ins to the Marvel
Cinematic Universe, or just the company’s vast
library of classic films
• Disney forecasted 60 original projects per year
over the long-term prioritizing quality
Unique Brand Value
• The company has the unique advantage of
having its own distinct and popular brand
Superior Content Monetization Capabilities
• When Disney develops successful content, it
can extract value across a wide array of
businesses
• Disney+ represents just another link in the
chain for Disney, 
 Should Netflix worry about Disney? Yes!
Disney is a major media marketing company
After completing the merger with Fox, Disney will control 21 percent of Netflix’s current content
Disney owns 60 percent of Hulu, the third largest subscription streaming service in the U.S
Lower price point of $6.99 per customer – Can be treated as an “add-on” to other subscription instead of “one
or the other”. Disney is offering 7 screens instead of 5 offered by Netflix
Created a bundled deal for $12.99 monthly, where customers get Disney+ with ESPN+ and Hulu (also owned by
Disney).

Should Netflix worry about Disney? No!

Disney+ content is skewed towards family audiences, while Netflix is known for its bold and unconventional
shows.
Netflix inked a multiyear deal with Nickelodeon to bring in more kid-oriented content
Disney+ has a year-long deal with Verizon, which has a free offer. About 34% of the Disney subscribers are on
Verizon’s free year-long offer. When the offer expires, we’ll get an accurate view of Disney+ subscriptions.
Disney would not be able to be able to cater to the demands of customers who are used to “Binge-watching”
 What will happen to Disney-Netflix deal?
Netflix has put out
Movies released in five original series
between 2016-18 by based on Defenders
Disney didn’t renew Disney would come back
Netflix’s contract characters in
on Netflix temporarily
partnership with
2019 2026 Disney.
In 2018, Netflix
cancelled three of
2016 November 2019 them: Daredevil,
Netflix – the only place to Disney plus was Luke Cage and Iron
watch Disney movies (3- introduced Fist, followed by the
year contract with other two
Disney) cancellations in
2019.
The top two movies of 2017 and the Starting with Disney's 2019 Disney Plus will build a
top three movies of 2016 and 2018 slate of movies, all those large permanent library of
were all from Disney, and Netflix has films are destined for original content, and it will
been the place to binge them all Disney Plus continue to funnel all its
making Mary Poppins as the last newest releases to Disney
Disney movie on Netflix Plus and nowhere else
 A competitor Analysis – Apple TV+
• Launched on November 1st, 2019 in over 100 countries & regions
• Focussed long term strategy of building original shows, movies and
documentaries. Reported current spending on original content is $6 billion
Service • Entertainment service to be availed through apple tv app on iPhone, iPad,
Overview apple TV, Mac and other platforms
• Predatory Pricing of $4.99 per month which is much less than Netflix and
comparatively lesser than Disney+ too

• A strong ecosystem – Own hardware, devices, operating system, browser,

safari, store, card
Current strength
• A loyal customer base – A total of 1.5 billion apple active devices in the
of Apple
market by Q1 2020, 900 millions iPhone users in the world
• A total of 100 million increase in Apple devices in the last one year and up by
400 million devices over the preceding three years.
 Apple TV+ - Connecting the past & the Present
2001 - 2019 2019 onwards

Plummeting profits in Plummeting profits in

PC market for apple iPhone market for apple

Launch of iPod – A an Segment growth prospects

ecosystem with digital possible through services
music library Connecting the past with the present industry

Disrupted the Sony Enter into OTT industry

Music industry with huge investment in
original content
Launch of iPhone in
2007

Disrupted the device What is the likely

market by becoming strategy for Apple with
market leader Apple TV ?
 Apple’s likely strategy for Apple TV
• Remarry its product & services market , make customers hooked through its product
Aim segments & create an all consuming ecosystem
• Enter into a new adjacency to create a sustainable future growth

• Relook at the pain point of the customers with multiple OTT platform subscription in near
future. With non- linear TV technology, apple can make an intelligent virtual assistant which
could serve across multiple OTT platform and deliver the target content. Billing, collection
How and redistribution at the backend with content owners

• Partnership with content developers along with its own original content to keep the
customers attached to its platform

Impact
on • Reduction in loyal customer base of Netflix
Netflix
 Recommendations for US

• Disney would be largely getting subscribers who

are willing to drop in and out between seasons of
their favourites. These can not be loyal customers
and Netflix should not invest more in acquisition
of these customer Multi-sided platform approach
• Disney+ would be just an add-on • Allow third parties services to
• Since, the video streaming market is getting sell their products or services
within the Netflix’s services
saturated, more engaging platform is required to but outside Netflix's
subscription
reduce customer churn rate. Can focus on • Marketers, Developer of cloud
gaming
multisided platform strategy for this • Gain revenue through
transaction fee model
 Development of Entertainment industry - India
A growing market Robust Demand
Advantage Rapidly growing young population
Total Media and Entertainment Market Size (US$ India with increased 4G usage
billion)
40 Attractive Opportunities
35 FY21 P; 33.56 Policy Support
Indian digital media industry
30 FDI limit increased from
25 FY17; 20.23 FY18; 21.18 FY19; 23.34 CAGR of 23.5% during 2017-
74% to 100%. National
20 20
15
Digital Communications
10 Policy 2018 for affordable
5 digital services
0 Higher Investments
FY17 FY18 FY19 FY21 P
FDI inflow reached US$
Market Size (US$ billion) 9.2 billion in 2 decades.

Size of Major Industry Segments FY19 (US$ Size of Major Industry Segments FY21P (US$
billion) billion)
Shift of entertainment industry from
21%
4%2%% Television 21%
5% 2%% Television
5% Print 5% Print
TV and Print media to Digital Media
Filmed Entertainment 5% Filmed Entertainment will pick pace with the advent of 5G
11% 41% Digital Entertainment
44% Digital Entertainment Digital deployment, with data consumption
Animation & VFX Animation & VFX
Entertainment – 15% Live Events
11% Online Gaming set to grow from 3.5GB per user to
A rising trend Online Gaming
Out of Home media
Radio 10%
Out of Home Media
Radio
17.5GB per user by 2022.
20% 14%
Music Music
UNDERSTANDING THE INDIAN CONTEXT
1 2

• With launch of Jio, Internet prices came down drastically

• This was also the phase when Netflix’s global subscriber base increased at higher rate
as compared to that of US
• Netflix decided to enter Indian market in 2016
• India was 2nd largest Internet market at the time
• More than 35 streaming providers exist
 INDIAN STREAMING SERVICES MARKET

1 2

• Hotstar had occupied the

major share of the market
size
• In Q1 2018, Hotstar unique
installs were over 20M,
whereas that of Netflix
was 1.2M
• Netflix was charged at
3 4 ~$7/month as compared
to Hotstar which was
priced at $3/month
• Streaming market
potential of $2.25B is
expected by 2023
 COMPETITIVE BENCHMARKING - HOTSTAR STORY IN
INDIAN MARKET
1 3
2 4
• Over 400M subscribers
have downloaded Hotstar
(2X growth between 2018
& 2019)
• 3X video consumption
between 2018 and 2019
• Y-O-Y growth has been
observed in viewership of
the key sports events
• Hotstar is catching up with
the TV viewership (Similar
patterns are observed
indicating the viewership
behavior patterns)
COMPETITIVE BENCHMARKING - HOTSTAR
CATALOGUE
COMPETITIVE BENCHMARKING - HOTSTAR
PARTNERSHIPS
• Hotstar has array of
channels from Star
Family, HBO, FoxLife,
ShowTime, AVP News,
9xM, LifeOK
• Each of these
channels are cater to
different audience as
per the taste of the
audience
• The catalogue covers
different domains of
content ranging from
soap and sports to
news and reality
shows.
 Market share ~10% ~50%

Netflix global content + Original content Game of Thrones, Friends, The Big Bang

Top content
(House of cards, Orange is the new black) Theory, and Modern Family. 

Demographics GenZ and young demographic Family content and mass market

Current Pricing INR 199+499+649+799 (monthly) INR 399+1499 (annually)

Presence Tier 1 cities Only

Tier 1, Tier 2 and Tier 3
 Revenue and 250Mn
Penetration in
Cost Model Subscribers by
Tier 2 & 3
2025

Interactive CEO
content, Multi- CEO
sided platform CFO
technology CFO
CMO Regionali
CMO -zation of
Partnership
Content
CTO with OEM,
CTO ISP, DTH
Content
Content

COO
COO
Recommendations
 Marketing Strategy - India
Market so far
Target Group Market Share

Age: 17 – 45 yrs
DNA: Some
English
speaking upper
middle class
and up
TG size: 100 million

Market Cap: 2 million

(2% in TG)

Age: 17 – 45 yrs Market to capture

DNA: Regional
Parameters Awareness Interest Desire Action
Content
consumer lower Target Market Central Advertising Affordable Original Remarketing
middle class Capture: 3-5% Focus positioning Content
and up (~15 million)
Percentage 20% 30% 40% 10%
TG size: 600 million Spend
DATA BACKED STRATEGY FOR
NETFLIX (1/6)

Strategy for Netflix

1 2 3
Focus on daily soaps Focus on Regional Focus on taste of Indian
(Subscribers & Content) Content audience
DATA BACKED STRATEGY FOR
NETFLIX (2/6)

Strategy for Netflix

4 5 6
Content based on Pop
Addition of News Content Addition of Sports content
culture
DATA BACKED STRATEGY FOR
NETFLIX (3/6)

Strategy for Netflix

7 8 9
Integrate Netflix with Capitalize the regional
Make Netflix ‘Social’
plugins (Partnerships) ethos
DATA BACKED STRATEGY FOR
NETFLIX (4/6)

Strategy for Netflix

10 11 12
Region specific catalogue Multiple popular sports
Bundling of offerings
and recommendations content
DATA BACKED STRATEGY FOR
NETFLIX (5/6)

Strategy for Netflix

15
13
Primary Focus should still 14 Focus should be on taste Marketing and Sales effort
be on original of audience from Tier 2 & in Tier 2 and Tier 3 should
programming Tier 3 cities be ramped up
DATA BACKED STRATEGY FOR
NETFLIX (6/6)

Strategy for Netflix

16
Consider a freemium model with advertisers as 3rd side of the platform that would subsidize the user
(audience) side of the platform
 Netflix Partnerships in India – Capturing the late majority
The Television Industry

Core Asset Core Services

Primary users Tertiary users

OEM-OTT Partnership Internet Service Providers

Cable Operators

Low priced Smart TV Manufacturer

-Netflix Bundled service User Base: 7.2 Mn STBs User Base: 11 Mn STBs User Base: 54.9 Mn
Industry Size: 15 million CAGR: 23% CAGR: 6.6% CAGR: 9.1%
Industry Size growth: 15%
Demand Growth: 25%
 Technology Considerations
Identifying Focus areas
Device
Indians spend 30% of their phone
time and over 70% of their mobile
data on entertainment.
Penetration of mobile app is 13%.
Technologies
Predictive analysis
67% said they would pay a premium
for download option.
Good-to-haves
High adoption rate of HDR-capable
mobile phones and smart TVs.
Dolby Atmos to enable a theater-like
in-home audio experience.
Actionable items
Device
A mobile focussed strategy in the
DNA and delivery of content.
Technologies
Improve machine learning to
understand customers better
Ensure future proof technology
infrastructure through continued
collaboration with tech players
Improve server capacity and tech
infrastructure to support high quality
streaming & decrease downtime & ultra
low distortion audio
Explore oracle cloud 2.0
 Revenue Model - Netflix
Mobile Only plan
Traditional Subscription
• Low pricing model
model on mobile • Continue with traditional
platform. subscription model
• Pay-as-you-go • Increase the number of
model for mass
window in one account
audience • Bundle the Netflix
subscription plan with
other services
Multi-sided platform approach
– long term
• Allow third parties services to
sell their products or services
within the Netflix’s services
but outside Netflix's
subscription
• Marketers, Developer of cloud
gaming
• Gain revenue through
transaction fee model
Netflix has successfully been
able to generate a good
subscriber base in India and
over the world with its
traditional approach of three
level subscription plan. With
competitors like Disney coming
in the market with contents,
scalability power and lost
leadership pricing model,
Netflix needs to reinvent its
revenue generation model to
stay competitive in the industry.
Eg. Merchandising for revenue,
Advertisers as 3rd side of platform
Cost Model - Netflix
Amortized Cost as
percentage of revenue for
content with time

Cost of Original Programming and Licensing

One of the major cost heads for Netflix in the
form of Amortization of content

Customer Acquisition Cost

This is also a significant cost head for Netflix as Customer Acquisition costs
they provide free subscription for a month to all
the new users

Cost of Infrastructure
Cost of Infrastructure is another important cost
head, but efficiencies are achieved due to
economies of scale

Cost of Marketing and Other overheads

Cost of Marketing comes due to expansion
in new markets and Overheads reduce Y-O-Y
due to economies of scale (calculated as % Admin and General Expenses (Add. Marketing Expense per user
of revenue) Marketing Expenses in red) with time
 Cost Model – Netflix (US Figures)
Content:
• In 2019 video streaming service Netflix spent 15.3 billion U.S. dollars on video content, and estimates suggest that the
company's content budget could surpass 17 billion in 2020. Netflix allocates over 80 percent of its content spending to
original content production.

Customer Acquisition:
• Netflix spent $312.7 million on U.S. marketing in the fourth quarter, up 48% year over year. That works out to a
whopping $204 for each net new paid subscriber.
• International marketing spending also jumped, but that increase was more in line with subscriber growth. Netflix
spent $417.6 million on international marketing, up 63% year over year. But it paid less than $60 in marketing for each
new paid subscriber.

Technical backend:
• Netflix spends around $9.6 million per month on AWS
• Netflix spends the most on Amazon EC2 ($3 million/mo) and much less on AWS Elastic Load Balancer, Amazon
CloudFront, and other AWS products. Intricately also shows us that Netflix spends $1 million/mo or more on
Microsoft Azure, Heroku, and Akamai.
 RECOMMENDED STRATEGY FOR NETFLIX IN INDIA

Bundling Partnerships
• Bundling can be an • Partnerships need to be
Content Pricing effective way to target formed with established
• The content should be • The pricing should be customers in a customized players in the industry as
made more ‘Indian’ reduced in order to gain manner they will bring the existing
• Add regional shows, sports the subscription base • Based on viewership audience to the platform
content, pop culture • Netflix can go for a free patterns, shows can be
shows, and make original version with limited bundled
programming that is content to anchor and
relatable to people from familiarize the audience
Tier 2 and Tier 3 cities with the platform
• Have content that is • Pricing can be further
relatable to mid-age refined to address different
Marketing New source of Revenue
population audience needs
• Netflix needs to • As compared to US market,
• Pay-as-you-go model can
aggressively market in Tier Indian market is very price
be applied to increase the
2 and Tier 3 cities where it sensitive
user base as the current
has limited presence • Users need to be
pricing options are very
subsidized by pulling in
expensive for many Indians
advertisers
 Netflix – Global Business plan till 2025

Heavy investment on in-house content-

based model Move towards the clones of US
250 million
• Strength of Netflix- 24 Oscar • English-speaking, wealthy markets with
subscribers
nomination in 2020 high broadband penetrations that look like
• Resubscription from 13% customer due the US (e.g. Australia, the UK and the
to third season release of Stranger Nordics).
Things
• 8/10 top shows on Netflix were new
releases Mobile First strategy
• For emerging market like India
182 million and southeast Asia.
subscribers • Lower ARPU in these areas will
Poach good content creator & generate more subscriber
producers
• Netflix is already investing heavily by
likes of showrunners like David Benioff
& D.B. Weiss on their side
• David letterman to introduce new
show for Netflix
Produce more localized • Total investment in this area is $15
content billion Local language Giants
• Data driven content development • Market like Japan, South Korea, Italy and France
• Increase serial engagement and have high broadband penetration and
watchlist connection
• This areas come under wealthy segment and can
generate good subscriber base