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How can Netflix improve its growth strategy?
KLC Consulting
Louise Kendaru, Nathalie Kauz,Ashley Claw, Arbre’ya Lewis, Trent Large
The online movie market in the U.S. is an
$11 billion industry.
Source: http://selectusa.commerce.gov/industry-snapshots/media-entertainment-industry-united-states.html
This industry targets a ‘mass market.’
It is a highly competitive industry.
There are a number of key players in this industry.
Through online services they disruptively innovated the movie rental industry.
Netflix created this streaming market and became its leader.
Overall, Netflix has been very successful.
Netflix has been expanding internationally.
To deliver their content, their strategy is to build the infrastructure, rather than buying
access to pre-existing infrastructure.
Their ‘build’ strategy has incurred huge debt.
Expansion in 2011 caused their 2012 profit to plummet.
After expansion into Europe, profit increased.
Why is this?
Foreign cultures react differently to American content.
Building global infrastructure costs significantly more than buying.
Building is a high risk strategy when the country’s reaction to Netflix is uncertain.
We recommend buying before building to gauge market reaction before investing in.
infrastructure.
Netflix should build if and when their service is well
received
Netflix has high risk “build” strategy to
expansion
It is unclear how different geographical markets will react to
their service
A “buy” strategy when entering a geographical
market will limit risk
Any Questions?
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