netflix business plan with swot for spain
DESCRIPTION
Business plan to launch Netflix in Spain with SWOT analysis. Contact me: [email protected]TRANSCRIPT
Miriam Clark DowdMy blog: http://bit.ly/fourpointo © 2010 Miriam Clark Dowd
Objective4.000 members in Barcelona at the end of FY 2011
(€482.000)Month 1 2 3 4 5 6 7 8 9 10 11 12 TotalMbrs 0 300 600 800 1.200 1.800 2.500 2.700 3.000 3.500 3.700 4.000 4.000
Members per month 2011
Revenue € - € 6,000 € 12,000 € 16,000 € 24,000 € 36,000 € 50,000 € 54,000 € 60,000 € 70,000 € 74,000 € 80,000 € 482,000
Benefit € - € 3,750 € 7,500 € 10,000 € 15,000 € 22,500 € 31,250 € 33,750 € 37,500 € 43,750 € 46,250 € 50,000 € 301,250
35003700
4000
Members per month, 2011
1800
25002700
3000
0300
600800
1200
1 2 3 4 5 6 7 8 9 10 11 12
2© 2010 Miriam Clark Dowd
Internal AnalysisCompany Historyp y y
1997 Netflix launches
1998 Online DVD storefront opens
1999 Netflix won’t penalize members with late fees, rather they will pay a fixed fee each month
2000 Recommendation system is launched, CinewatchUnlimited DVD rentail available
2001 Netflix reaches a commercial agreement with BestBuy
2002 Netflix goes public (IPO)DVD players penetrate 50% of homes in the USA
Each user can create an online profile2005 Each user can create an online profileWalmart and Netflix reach an commercial agreementNetflix and Tivo join forces to acquire and distribute DVDs
2006 Blockbuster announces it will launch an online storefront similar to that of NetflixTrailers available on Netflix.com
2007
Netflix reaches 7 subscribers1 million member opinions are available onlineNetflix reaches 75% of market shareOnline streaming of videos launches on Netflix.com
3
2008 Netflix and Microsoft come to an agreement to stream Netflix movies on Xbox Live
2009 Netflix distributes its one-billionth DVD© 2010 Miriam Clark Dowd
State of Finances1 600 000
1,400,000
1,600,000
1,000,000
1,200,000
an
d
600,000
800,000
$ T
ho
usa
200,000
400,000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Facturacion Total 1,339 5,006 35,894 75,912 152,806 270,410 500,611 682,213 996,660 1,205,34 1,364,66
Total de Gastos 1,311 4,373 24,861 49,907 79,136 179,010 330,010 464,550 626,985 786,168 910,234
0
RevenueExpenses
4
Beneficio Bruto 28 633 11,033 26,005 74,670 91,400 170,601 217,663 369,675 419,172 454,427
© 2010 Miriam Clark Dowd
pBenefit
Organigrama
5© 2010 Miriam Clark Dowd
Infrastructure
Value Chain Analysis• Effecient and organized infrastructure• 90 warehouses in USA with the same technology and operating system
Human Resources• Employees generally very content and enjoy many benefits and rights within the company
Technological Development• Netflix always looks for new technology that will improve the service, which includes the recommendationsystem and storefront
Realización
Internal Logistics & Operations
• Effecient and complete logisticssystem• Website storefront more
External Logistics
• 95% of usersreceive DVD within 24 hours in working days
Services
•24x7 customer service
•Online help
Marketing & Sales
• 41% of operatingexpenses go tomarketing• Website storefront more
advanced that what’s available onthe market
hours in working days
• 2 millon DVDsshipped every day
•Online help
•Some members are not happy that new customers seem tohave priority on certainDVDs (improved with
marketing
• Marketing strategyvery good and veryeffective
DVDs (improved withstreaming option)
© 2010 Miriam Clark Dowd
Distribution
• 95% of users receive their DVD in 24 working hours
• 2 millon DVDs shipped every day
• In Q3 2008, 42% of members usedstreaming to watch at least 15 minutes of video
• Streaming via: Netflix.com, Xbox 360, Tivo and Apps
7© 2010 Miriam Clark Dowd
Client ABCNetflix has 1 000 000 subscribers in the USA
State # Warehouses # Clients
California 7 855 556
Netflix has 1,000,000 subscribers in the USA, distributing the product from 90 warehouses across the country
A
California 7 855,556Florida 7 855,556New York 6 733,333Pennsylvania 4 488,889Texas 4 488,889
Total Clientes 3,422,223
State # Warehouses # Clients
Alaska, Arizona, Arkansas, Colorado, Hawaii, Idaho, M i M l d, ,
State # Warehouses # Clients
Georgia 3 366,667Kentucky 3 366,667 C
Maine, Maryland, Michigan, Minnesota, Mississippi, Montana, Nebraska, New 1 each
Approx. 122,222 per
f
B
Missouri 3 366,667North Carolina 3 366,667Ohio 3 366,667Tennessee 3 366,667Wisconsin 3 366,667Alabama 2 244,444
Hampshire, New Jersey, New Mexico, North Dakota, Oklahoma, Oregon, South Carolina, Utah,
facility
B Alabama 2 244,444Connecticut 2 244,444Illinois 2 244,444Indiana 2 244,444Iowa 2 244,444Louisiana 2 244,444
Vermont
Total Clientes 2,811,111
8
Massachusetts 2 244,444Nevada 2 244,444Washington 2 244,444
Total Clientes 1,955,552© 2010 Miriam Clark Dowd
Client ABCMajority of members are members are
women
No large
No children
differencebetween mbrage groups
Average salary> $30k
Majority haveattendedcollegecollege
9© 2010 Miriam Clark Dowd
Client ABCContent Streaming
• In Q3 2008, 42% of members used streaming to watch at least 15 minutes of content.
• Represents an increase of 22% over Q32007
• The majority watched more than 15 minutes
10© 2010 Miriam Clark Dowd
Communication & Advertising
• Online advertising• Advertising on envelopes• Direct mail• EmailingEmailing• Virtual gift cards• Gift cards• Radio and TV advertising• Magazine advertisingMagazine advertising• Free streaming offers• Various contests• Free Trial
11© 2010 Miriam Clark Dowd
Communication & Advertising
1 400 000
1,600,000
Yearly Marketing Spend
1 000 000
1,200,000
1,400,000
600,000
800,000
1,000,000
$ M
iles
200,000
400,000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Facturacion Total 1,339 5,006 35,894 75,912 152,806270,410500,611682,213996,6601,205,341,364,66
Marketing 4,052 14,070 25,727 21,031 35,783 49,949 98,027 141,997225,436218,212199,713
0
RevenueMarketing
12
Total gastos de explotación 11,181 30,664 68,590 62,394 85,447 86,928 151,247214,647 304457 327,399332,921
© 2010 Miriam Clark Dowd
Al l Expenses
Communication & Advertising
G&A
Marketing as % of all operating expenses
Shipping & Handling
31%
10%
31%
Marketing41%
Tecnology & R+D18%
13
18%
© 2010 Miriam Clark Dowd
External Analysisñ H i C t l ñDVDs in Cataluña
% of homes with a DVD player
Units:% of all homes
TOTAL 73 4
No DVD24%
Homes in Cataluña
Sou73,4
Home with 1 person 47,6
Home with 2 people 66,5
Home with 3 people 82,2
Home with 4+ people 89,0
DVD76%
urce: In
stituto
Na
% of homes that have a DVD player
Units:% of all homesBoth sexes 73 4 % of homes in Cataluña with DVD
acional
de E
stadísBoth sexes 73,4
Men 77,2Women 67,4Age: Total 73,4Under 25 years 80,125-44 years 88 4 50
60708090
100
stica, Spain
25-44 years 88,445-64 years 80,465+ years 41,4Nationality: Total 73,4Spanish 73,2Foreign
01020304050
TOTAL < 1 100 De 1 101 De 1 801 > 2 700 No
14
Foreign 75,7From EU country 75,7From country outisde EU 75,7
TOTAL < 1.100 euros
De 1.101 a 1.800 euros
De 1.801 a 2.700 euros
> 2.700 euros
No sabe/no contesta
© 2010 Miriam Clark Dowd
Demographics of Barcelona
• GDP per capita – 23,108 EUR / ~1,900 month
• 1 593 075 residents
BCN Population Pyramid1 octubre 2009
• 1,593,075 residents
• Population: 1,615,908 in the metropolitan area
• Barcelona has 100 km ², with nearly15.867 people per km ²
66 72 78 84 90 96
p p p
• Population density on par with Nueva York & París
• 10 DistrictsDi t i t1 Ci t t V ll 30
36 42 48 54 60 66
Edad
• District1: Ciutat Vella• District2: Eixample.• District3: Sants-Montjuic.• District4: Les Corts. .• District5: Sarrià-Sant Gervasi.• District6: Gràcia
0 6
12 18 24 30
• District6: Gràcia.• District7: Horta-Guinardó.• District8: Nou Barris.• District9: Sant Andreu.• District10: Sant Martí de Provençals.
70000 50000 30000 10000 10000 30000 50000 70000
Men Women
Millions of people
15
Source: Instituto Nacional de Estadística, Spain
© 2010 Miriam Clark Dowd
Economic Environment• The current economic crisis has had a negative impact on
consumer confidence
• The recession period in Europe has caused highunemployment rates and a decline in personal finances
• The economic situation will be slow in 2009
• Brussels predicts that the paro in Spain will reach 19% in 2010
• The IMF forecasts the GDP of spain to decline, to -2% in 2009
• Totan unemployment in Spain = 3.808.353 people.
• Spanish households have reduced the number of shopping trips they make by 3,1% and they spend 2,3% less per family (Nielsen) Source: Instituto Nacional de Estadísticas, Spain
16© 2010 Miriam Clark Dowd
• 64% of Spaniards use illegal websites to share and download content on the Internet well
Social and Cultural Environment• 64% of Spaniards use illegal websites to share and download content on the Internet, wellabove the European average of 56%
• 24% of people are not concerned about internet security online, and 30% rarely check thattheir antivirus software is up to date
• For 90% of young people, watching TV is one of their preferred free-time activities
• Moves are the content most preferred by young people (42%), followed far behind by TV series (13%) and sports programs (13%)
h //b i /http://baquia.com/
l f l
Pasear, estar en la calle
Main Free-Time Weekend Activities
Source:
Go for a walk
Visit with family
11Descansar, no hacer nada
Ver la tele, video, DVD
Estar con la familia
% Mujeres% Men% W
Institu
toN
aciona
y
Watch TV, videos or DVD
Rest, do nothing
Asistir especatculos culturales (ie cine)
Ir de bares, cafes
Leer% Hombres% Women
alde E
stadística
Read
Go out for coffee/drinks
Attend cultural events (iecinema)
17
0 10 20 30 40
culturales (ie cine)
© 2010 Miriam Clark Dowd
cinema)
Legal and Technological Environment
Intellectual property rights are most vulnerable in the cultural and past-time sector.
Legal
Music and cinema are the most important and they suffer directly from theconsequences of piracy and bad intellectual property policies and laws.
La Federación para la Protección de la Propiedad Intelectual (FAP) is dedicated tothe defense of intellectual property rights governing audiovisual work and the defense of intellectual property rights governing audiovisual work and entertainment software.
TechnologyTechnology
The increasing presence of various video formats presents a significant threatwith substitution in the form of pirated DVDs, especially grave for distributorsand brick and mortar shops and brick and mortar shops.
However, continued purchase and use of CDs and DVDs will continue .
18© 2010 Miriam Clark Dowd
Sector Analysis– Music and Video
Sector Characteristics
• Competetition: Strong• Buyer power: StrongBuyer power: Strong
• Low cost and many options• Businesses: many, but a few monopolize the sector• Market entry: Easy• Brand loyalty: LowBrand loyalty: Low
19© 2010 Miriam Clark Dowd
Competitive AnalysisGroup 1• Digitae• MediaXPress Cine• El Corte Ingles• Pirating
Group 2• Apple/ iTunes• FNAC• Xbox Zune• PlayStation• Canal+
Group 3• Rental Kiosks
• Canal+• Ono
High PriceEl Corte Ingles
Digitae MediaXPress
Canal+
Show Delivery
Netflix
Fast liKiDelivery Delivery
i i
Xbox Zune
Kioscs
20Low Price
Pirating
© 2010 Miriam Clark Dowd
Competitive Analysis
Market Quota, Spain
21© 2010 Miriam Clark Dowd
Competitive Analysis
22© 2010 Miriam Clark Dowd
Competitor AnalysisMediaXpress Digitae Pirating Xbox Zune Corte Ingles Kioscos Canal+
Level of Competition
High – Direct High – Direct High – Direct High Medium Medium Low
Facturacíón2008
NA NA 136 millones de euros perdidas en 2007
Microsoft$16.37 billones W ld id
17,898 millones E
NA 2,428.61 Eur
2007 en Catalunya
Worldwide Euros
Owner Techfoundries Private withinvestors
Various Microsoft El Corte Ingles
Various Prisa
Markets Spain Spain Global Global Spain Spain Spain & France
Members 6,000 8,000 300 milliondownloads, 2009
1 million Xbox soldin Spain
225 locations
Products DVD 6,000 titles
DVD>8,000 titles
Movies, videogames,software
DVD, videogames, etc.
DVD Movies, Series
Brands Diode, InOutTV The Pirate Bay (#3), Cinexpress
Varios Varios
Churn 10-12%5% for courier
10-12% N/A N/A N/A N/A N/A
MarkeatingSt t
20,000 clients Agreementith MSN
Word of mouthLi k
Segmentali t l th
Advertising,ili t
Word of th
Advertising, ili tStrategy with MSN
Spain , Amena, Detallistas
LinksSEOOnline ads
incremental growth mailings, etc mouth mailings, etc
Distribution Single site in Barcelona
Postal 2+DVDs in one envelope
Streaming, downloads
Streaming Stores in Spain
Street TV / Canal+ DVR
Strenghts Courier by SMS OK websiteSEO +
FreeShare contentAdvertising $$
Microsoft ownedZune agreementLow price
26% offline market quota
Location, subscriptionnot necessary
HD; at home; partially pay forSatellite TV
Weaknesses CorreosNo SEOBad website
Cost of DVDsCorreosBad website
Illegal Late market entry, low offer
Location Price
23
Opportunities Improve online ads
Download toown VOD;Games; Ads
No limit to users Increase # of movies Agreementwith Digitaeor similar
Advertising Offer more HD moviesAdvertising
Threats TV ; SEOUnknown
Unknown New laws Online streaming High price Low selection Online market
Market Changes & Advancements
New Technology
• Online video streaming, such as Cuatro Play, Cinexpress & Xbox 360
• DVR technology to record and rewatch
• Xbox 360 offers streaming. Xbox 360 & Playstation offer downloads.
• Market is changing - Bluray will replace DVD soon
K t SKeys to Success
• Increase number of movies available (incl. HD)
A ibl i t t• Accessible price structure
• Fast shipping
I t lli t li d t
24
• Intelligent online order system
© 2010 Miriam Clark Dowd
Distribution Analysis
Correos of Spain Courier
Not reliable Reliable
Lost discs account for –1.5 - 7% of all shipments
Lost discs account for <1%sf all shipments
Shipping speed not guaranteed Shipping speed guaranteedpp g p g pp g p g
3-4 days longer in Summer 1-2 days
DVDs can be stolen from mail Guaranteed delivery but usuallyh t i th DVDDVDs can be stolen from mail someone has to receive the DVD
Negative user preception SMS orders
# 1 reason users cancel th i b i titheir subscription
25© 2010 Miriam Clark Dowd
Market AnalysisMarket Value
New access channels to this type of content, such as pirating, have been the mainreasons that sale and rental of movies have declined so drastically.
Market Value Forecast
In 2013, it’s forecast that the marketing will have a value of 4,529 million, a decline of 22,9% from 2008.
26© 2010 Miriam Clark Dowd
Market Analysis
27© 2010 Miriam Clark Dowd
SWATStrengths WeaknessesStrengths Weaknesses
• Strong business model• Higher value-add than competition• Relationship with US distributors• Effective marketing campaigns
• Netflix nknown in market• Copyrights in Europe• Spanish market unknown to us
• Effective marketing campaigns• Internal and External logitics• Website• Children’s content••
Opportunities Threats
• High demand for online streaming in HD • Postal serivce not reliable enough• High demand for online streaming in HD • Increase in online spending• Direct competition has poor business
model
• Postal serivce not reliable enough• Consumers don’t trust the postal serivce• Competition: pirating/streaming• Target marketing not aware of posibilities
of business modelof business model• Movie rental market in steep decline• Many options at a low price• Easy market entry
28© 2010 Miriam Clark Dowd
Basic StrategiesTargeting y SegmentationTargeting y Segmentation
Target Market
Men and women, 25-45 years old in Barcelona who:Men and women, 25 45 years old in Barcelona who:• Rent movies as hobby• Love movies• Have access to Internet • Have a DVD player
• We will try to target people with a busy lifestyle and who are unhappy with video rental stores/kiosks as well as the quality of streaming / pirating onilne
Target Market Men Womeng
In Catalña 2,506,710 1,291,269 1,215,441
25-45 y/oLive in BCN city 9.25% 119,466 112,450
Movies Hobby 19% hombres24% mujeres 22,698 24,739
Have DVD 88.40% 20,065 21,869
Total 20,066 21,869
Total 41,935
29© 2010 Miriam Clark Dowd
Positioning Strategy = reliable fast high quality
Basic StrategiesPositioning Strategy = reliable, fast, high-quality
• Fast and convenient service with a large selection• HQ streaming
Rent HD moves• Rent HD moves
High PriceEl Corte Ingles
Digitae MediaXPress
Canal+
Slow Delivery
Netflix
Fast liKiDelivery Delivery
i i
Xbox Zune
Kioscos
30Low Price
Pirating
© 2010 Miriam Clark Dowd
Basic StrategiesCompetitive Strategy
• Differentiation by reliablity, speed and high quality• Web technolgoy – more advanced than competition• Advanced and intelligent ordering system• Client satisfaction• Quality of product• Market recognition (in USA)
Prizes Netflix has won
• Feb 2010 - #1 online retailer in client satisfaction - American Customer Satisfaction Index
• #1 client satisfaction in online sales websites, from 9/10 surveys – 2005, ForeSee Results.
• Jan 2007 - Retail Innovator of the Year - National Retail Federation• Dec 2007 - #1 online retailer - Nielsen Online. • Dec 2008 - Netflix Player Roku named one of the Top 10 gadgets of the year –
TIME
31© 2010 Miriam Clark Dowd
Product Overview
Product Personality CharacteristicsPackaging,
design, photo, logo
Guarantees, Warnings
Fun Ratings recommendations and USA 3-day shippingDVD Convenient
Up-to-dateFast
Ratings, recommendations and the option to share your movielist with friends on website
USALanguage: ESCatalán, EN
3 day shippingSafe websiteHuge selection
Streaming
FunConvenient Ratings, recommendations and
the option to share your movieUSALanguage: ES
ImmediateHigh-qualityStreaming Up-to-date
Fast
the option to share your movielist with friends on website
Language: ESCatalán, EN
g q ySafe website
ActionsActions• No change to packaging• Same brand colors• Add “franquicia pagada” to envelope
T l t d b it t ES• Translate wrapper and website to ES
32© 2010 Miriam Clark Dowd
Product Overview
© 2010 Miriam Clark Dowd
Price OverviewPrice range Promotions Discounts Price-based Promotions
Half the price of direct competition Ongoing Free Trial promotion None 15 day trial – 3 DVDs &
unlimited streaming
Higher thanstreaming and pirating
Ongoing Free Trial promotion None 15 day trial – 3 DVDs & unlimited streaming
• We will aim to offer the most competitive price possible within the market, but without ever losing reliability or shipping speed (20 EUR/month)
34© 2010 Miriam Clark Dowd
Distribution Overview
Canal Type Location Sales points, location, # Transportation, type Canal Strategy
PUSH / PULL
Send via F C Courier; Direct Netflix.com Netflix.com Send via F.C. Courier; Return by Correos PULL
Directa Netflix.com Netflix.com Streaming to computer orXbox 360 PULL
Acciones
• Reach agreement with courier companyO i t b f i i d f C ( ti l t l i )• Organize return by franquicia pagada from Correos (national postal service)
35© 2010 Miriam Clark Dowd
?Distribution Overview
?
36© 2010 Miriam Clark Dowd
Advertising and CommunicationObjetives
Brand awareness 4.000 clients in Barcelona (2011)
A simple and efficient advertising and promotion campaign
Advertising - Marketing online
• Social Networking – Netflix Facebook groupsand others de Netflix)
• Invite a friend (like Spotify)
• SEO and SEM
• Apps – USA Netflix App translation
• Online banner advertising in appropriatewebsites
*80% of US members heard of Netflix through word of mouth
37
*80% of US members heard of Netflix through word of mouth
© 2010 Miriam Clark Dowd
Advertising and CommunicationPR – Press Releases
• Announce launch in Spain• Send promotional items to bloggers along with invitations for Free Trial
Direct Marketing – email Campaigns
• Three emails offering free trial for 15 days sent to list of people who go to themovies once per month (purchased/rented)
38© 2010 Miriam Clark Dowd
Advertising and CommunicationActions
• Translate website to ES
• Direct Marketing ecto – Three emails offering free trial for 15 days sent to list of people who go to the movies once per month (purchased/rented) – 10,000 peoplein BCN
• Press Releases – About launch of company and freebies to bloggers
• Online Marketing – iPhone App - translate to ES
• Online Marketing – Banners – online at ServiCaixa, Dooplan, The Pirate Bay and Alluctv.org
• Social Networking Netflix Facebook page from USA translate to ES• Social Networking – Netflix Facebook page from USA, translate to ES
39© 2010 Miriam Clark Dowd
Advertising and Communication
40© 2010 Miriam Clark Dowd
Advertising and Communication
41© 2010 Miriam Clark Dowd
© 2010 Miriam Clark Dowd