PDF Company Analysis: Netflix Company Description
[Pages:7]Company Analysis: Netflix Company Description
Company Profile Netflix is an internet subscription company that allows users to access movies and
television shows through DVD-by-mail and/or instantly through the use of a streaming device (Netflix, n.d.). Content is obtained through streaming license agreements made with studios, DVD direct purchases, and through DVD revenue sharing agreements. Netflix markets their services through online advertising, television and radio, and partnerships (Standard & Poor's, 2012). Products and Services
Netflix maintains a large library of movies and television shows that are made available to their members through DVD or unlimited online streaming with use of a computer or streaming device. Users can rate their viewed movies and television shows in order to receive precise recommendations for future viewing (Netflix, n.d.). Location 100 Winchester Circle Los Gatos, CA 95032 (408) 540-3700 (Netflix, n.d.) History
Netlix was co-founded by Reed Hastings and Marc Randolph and then launched in 1999. Then, in 2000, the personalized movie recommendation system was introduced to their members. After some time, in 2007, Netflix announces their new online instant streaming option to allow
greater flexibility to their subscribers. In 2008, Netflix partners with electronic companies to
allow streaming on the Xbox 360, Blu-ray disc player, and Apple computers. Through another
partnership in 2009, users are able to stream through the Nintendo PS3. Throughout 2010,
Netflix became available on the Apple iPad, iPhone and iPod Touch, the Nintendo Wii, and other
Internet connected devices. That same year, Netflix is revealed in Canada. Next, Netflix
becomes available in Latin America. Following that subscriptions were made available in the
Caribbean in 2011 and then in the United Kingdom and Ireland in 2012 (Netflix, n.d.).
Industry Description
Industry Classification
Primary Industry Classification
Dow Jones Industry Interactive Television
SIC
7841 Video Tape Rental
NACE
92.13 Motion picture projection
NAICS
53223 Video Tape and Disc Rental (Factiva, 2012).
Secondary Industry Classification
NAICS
517919
All Other Telecommunications
NAICS
532230
Video Tape and Disc Rental (Factiva, 2012).
Competitive Environment
Industry Competitors
, Inc.
, Inc.
Groupon, Inc. (Standard & Poor's, 2012)
Company Competitors
, Inc. Blockbuster LLC Redbox Automated Retail, LLC (Colbert, n.d.)
Key Employees Reed Hastings, Co-founder & Chief Executive Officer Neil Hunt, Chief Product Officer Jessie Becker, Interim Chief Marketing Officer David Wells, Chief Financial Officer Ted Sarandos, Chief Content Officer Jonathan Friedland, Chief Communications Officer (Netflix, n.d.)
Global Environment Throughout the past few years, Netflix has expanded their service from the United States to other countries globally. An advantage to their service is their technology-based online model which allows for easy access for worldwide production. At this time, memberships have increased worldwide due to the rising demand for online streaming (DataMonitor, 2011).
Risks Increasing costs of online streaming content is one of the first risks that Netflix faces. Online streaming requires legal sharing agreements with the studios that were not previously needed with DVD services. In addition, demand has increased with competition from other online video services; therefore, the studios have raised the prices of their content. Due to the increase from the studios, Netflix must increase member subscription prices (DataMonitor, 2011).
At the same time the increase in internet scams pose a serious risk for Netflix. Recently, a phony Netflix Android App has been in circulation. The issue is that it looks like the genuine Netflix app; however, it steals account information. This could have a serious impact on Netflix's reputation which could create a loss of consumer confidence and possible loss of memberships (DataMonitor, 2011).
Trends Since its origination in 1997, Netflix has grown tremendously in membership size. At the end of 20110, Netflix has 23 million members. In fact, within just ten years, their membership rate has risen more than 20 million. However, since the fee increase as well as the online / DVD division, Netflix has lost subscribers. While their loss is noticed, Netflix began launching their services globally; thereby reaching a larger audience and gaining subscribers (Netflix, n.d.). See figure A. for a comparison chart for Netflix profits from 2010 and 2011. Although Netflix has last subscribers within the past year, their future looks satisfactory. Netflix relies heavily on online consumer spending and the long-term outlook in this area is excellent. However, they must think of new ways to regain canceled memberships while continuing to grow globally (DataMonitor, 2011). According to Reed Hastings, there is a threeyear process in place to improve their services; however, they will not do anything dramatic to win back their lost members (Netflix Investors Retreat Over Growth Fears, Shares Plunge, Ian Sherr DOW JONES NEWSWIRES 24 April 2012 Dow Jones News Service, global.). Figure A.
Period End Date
Accounting Standard
Annual Income Statement: (USD, In
31-Dec-2011 U.S. standards (GAAP)
31-Dec-2010 U.S. standards (GAAP)
millions)
Net Sales or Revenue
Cost of Goods Sold incl. Depreciation
Cost of Goods Sold excl. Depreciation
Depreciation, Depletion and Amortization
Depreciation
Amortization of Intangibles
Gross Income
Selling, General and Administrative Expense
Research and Development
Other Selling, General and Administrative Expenses
Other Operating Expenses
Operating Income
3,204.58 2,039.90 1,200.28
839.62 43.75 795.87 1,164.68 779.61 259.03
520.58
0.00 385.07
2,162.63 1,357.36
1,018.66
338.70 38.10 300.60 805.27 527.72 163.33
364.39
0.00 277.55
(Factiva)
News
Video Privacy Protection Act
Netflix hired Greenberg Traurig, P.A. to lobby the U.S. Senate in early 2012 regarding
the Video Privacy Protection Act amendments. Netflix is attempting to amend the 1988 law that
prohibits disclosing video rental or sale records without a customer's written consent. They want
Congress to pass legislation that would allow members to be able to use Facebook in order to
share details about what they watch (Ramonas, 2012).
Lawsuit
A class action lawsuit has been filed against Netflix in United States District Court for
the Northern District of California on behalf of purchasers of the common stock of Netflix, Inc.
between December 20, 2010 and October 24, 2011. The Complaint alleges that Netflix violated federal securities laws. Specifically, through failing to disclose financial information about higher rates from content providers, rate increases, and license fees. All of these reasons affected the decision to raise subscription prices which resulted in loss of business and their stocks to plummet (Factiva, 2012).
Stock Ticker: NFLX (Factiva)
As of 5/4/12 the price is 73.45 which is dramatic drop from last year on May 31, 2011 (Netflix, n.d.). Figure B. reflects the extraordinary decrease over a year. Figure B.
(Factiva, 2012)
Conclusion
Netflix is still a profitable company with an inventive idea; however, with some bad
business decisions, they lost a great portion of their customer base which drove down the price of
the stock shares. In order to recover, they must come up with a way to bring back their lost
customers while adding new users. Most likely their new business will occur by targeting new
countries which will help their business to grow. At the moment, I do not feel that it is wise to
invest in Netflix since they took such a dramatic turn for the worse within one year and do not show any sign of soon returning to their former glory.
References Colbert, C. (n.d.) Hoovers. Retrieved from DataMonitor. (2011). Netflix, Inc. Company Profile. Retrieved from Factiva. (2012). Retrieved from Factiva. (2012). Dow Jones Company Report. 1-6. Retrieved from Factiva (2012). Newman Ferrara LLP; Newman Ferrara LLP Pursues Securities Fraud Claims
Against Netflix, Inc. and Reminds Investors of March 13, 2012 Deadline. Investment Weekly News. Retrieved from Netflix. (n.d.). Retrieved from Ramonas, A. (2012). Netflix bolsters lobbying team. The National Law Journal. 34(35). Retrieved from Standard & Poor's NetAdvantage. (2012). Retrieved from
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related download
- pdf netflix inc nflx
- pdf nominees for the 38th annual news documentary emmy awards
- pdf this list of available apps on the now tv box and now tv
- pdf q4 results and q1 forecast
- pdf exclusive employee offer t mobile s best plan amplified
- pdf company analysis netflix company description
- pdf fios tv texas residential channel lineup and tv guide frontier
- pdf welcome to your new statement
- pdf new and expanded employer paid family leave policies 2015 2017
- pdf exclusive employee offer amplified miami dade
Related searches
- sample company analysis marketing plan
- ratio analysis accounting pdf download
- company financial analysis project
- real analysis pdf book
- system analysis pdf book
- power systems analysis pdf grainger
- company president job description sample
- company job description template
- mathematical analysis pdf rudin
- company financial analysis template
- sample company financial analysis report
- company analysis template