• Founder and CEO Reed Hastings co-founded Netflix in 1997. In 1991, Reed founded pure software, which made tools for software developers. • Chief Talent Officer Tawni Cranz joined Netflix In 2007 And Became the Chief Talent Officer in 2012 and now leads the team that continues to improve the company’s unique corporate culture, hires new talent and keeps the organization lean and flexible despite enormous growth. • Chief Communication Officer Jonathan Fried land joined Netflix in February 2011 from the Walt Disney Company, where he was SVP Corporate Communications. • Chief Marketing Officer Kelly Bennett became Netflix Chief Marketing Officer in 2012 after a decade at Warner Bros. • Chief Product Officer Neil Hunt has been at Netflix since …show more content…
Even though it increased sales and net income significantly, the company was unable to grow at a faster pace than its industry competitors. Netflix Inc. has very weak liquidity. Currently, the quick ratio is 0.45 which clearly shows a lack of ability to cover short term cash needs. The liquidity decreased from the same period a year ago, despite already having weak liquidity to begin with. This would indicate deterioration cash flow. During the same period, stockholders’ equity (net worth) has increased by 18.88% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future. Netflix revenue aggregate revenue is recognized during the period when it is derived from the goods sold, services rendered, insurance premiums or other activities that constitute an entity’s earning process. For the companies which provide financial services also includes investment and interest on income and gains obtained on sales and trading
Looking at the individual ratios seen in exhibit 1 and comparing it to the industry average shown in exhibit 2 gives a sense of where this company stands. Current ratio and quick ratio are really low and have been decreasing. For 1995, the current ratio is 1.15:1, which is less than the industry average of 1.60:1, however to give a better sense of where this stands in the industry, as seen in exhibit 3, it is actually less than the average of the bottom 25% of the industry. The quick ratio is 0.61 is less than the industry is 0.90. Both these ratios serve to point out the lack of cash in this company. The cash flow has been decreasing because, it takes longer to get the money from customers, but the company still needs to pay for its purchases. Also, the company couldn’t go over the $400,000 loan limit, so they were forced to stretch their cash.
Netflix was able to learn from other organizations mistakes and fill the gap by satisfying some unmet need in the market by being prepared and being in the right place at the right time with the right product/service while being transparent with their customers. Netflix is able to add value with its recommendation engine which is very good at predicting what types of movies people are likely to want to watch.
Netflix has a unique business model. The company strategy focuses on differentiation. Netflix works to outcompete its competitors through the differentiation of its service. Netflix places customer experience above all else. The company prides itself in knowing that customer experiences is directly related to company financial viability, and with that known, the company works to ensure that each user has a great experience with the Internet streaming service. Netflix is a brand that is focused, not one that simply tries to do everything. By focusing on the entertainment industry, Netflix is able to
The video rental industry began with brick and mortar store that rented VSH tape. Enhanced internet commerce and the advent of the DVD provided a opportunity for a new avenue for securing movie rentals. In 1998 Netflix headquartered in Los Gatos California began operations as a regional online movie rental company. While the firm demonstrated that a market for online rentals existed, it was not financially successfully. Netflix lost over $11 million in 1998 and as a result significantly changed the business model in 2000. The new strategy included focusing on becoming a nationally based subscription model and focusing on enhancing the subscribers experience on their website. The change in strategic focus has allowed Netflix to grow into the largest online entertainment subscriptions service in the United States with over 6.3 million subscribers (Netflix).
In regards to the corporation’s balance sheet, it is necessary to place an importance on liquidity ratios to demonstrate the company’s ability to pay its short term obligations such as accounts payable and notes that have a duration of less than one year. These commonly used liquidity ratios include the current ratio, quick ratio, and cash ratio. All three ratios are used to measure the liquidity of a company or business. The current ratio is used to indicate a business’s ability to meet maturing obligations. The quick ratio is used to indicate the company’s ability to pay off debt. Finally the cash ratio is used to measure the amount of capital as well short term counterparts a business has over its current liabilities.
The SWOT matrix of Netflix GO, goes hand in hand with Netflix itself. The strengths of Netflix GO heavily rely on the company itself. Currently Netflix is one of the biggest names in the entertainment industry and has established itself as a credible company. As of the third quarter of 2016, Netflix has very large customer base with 86.74 million worldwide subscribers ("Number of Netflix"). The retention of these customers is based off of two main factors. First, the customers have very large selection of television shows and movies with an amazing 13,000+ titles to select from (“Netflix TV Show”). Second, and most importantly subscription for annual subscribers who will use currently use Netflix and those who will use Netflix GO will being
Netflix says that they do not need to offer as many special bonuses because as the article states” If your employees are fully formed adults who put the company first, an annual bonus won 't make them work harder or smarter" (Nisen). They believe that if they hire people who put everything into the company the pay they offer will be enough. To figure out what they should be paid Netflix went out and scouted to see what people were making in similar jobs. At Netflix they do benchmarking. Benchmarking is when a company compares its practices to the competitors (Noe489). Netflix also realizes that there workers can be scouted. So instead of getting mad they tell the people to talk to the recruiter see what they will pay them then tell the HR department because to them that information is very valued and it may end up helping in the end (Bear).
In 2000 Blockbuster had the opportunity to purchase rival, Netflix but failed to envision Netflix’s potential. The founder of Netflix, Reed Hastings, met with then CEO of Blockbuster, John Antioco, to discuss selling a forty-nine percent stake in Netflix to Blockbuster. The deal would have cost Blockbuster a mere $50 million in comparison to their $6 billion yearly in revenue. At the time technological and dot com stocks had taken a serious tumble and Blockbuster was skeptical of Netflix’s future. Instead of acquiring Netflix, Blockbuster signed a twenty year deal with Enron to deliver pay per view movies. Enron filed for bankruptcy one year later. In 2004 Blockbuster launched their own DVD by mail service but it was too late to catch Netflix. Netflix has continued to grow and in 2010 surpassed Blockbuster in market share.
§ There are a large number of substitute products. Netflix is in the business of providing personal entertainment at an affordable cost. Since any other form of entertainment is considered a substitute, Netflix?s industry is in direct competition with all other forms of entertainment, whether it be reading, physical exercise, regular television, etc. If trends in popular culture move away from those related to movies, revenues may be affected.
As the firm moves forward, top managers must pay attention to staying unique to sustain a competitive advantage. Netflix does not own their content, nor do they have any tangible assets. Netflix is a part of a broad range of network users. As technology continues to grow exponentially, Netflix will have to be readily adaptive to change and innovation. Technology never stops growing and evolving, therefore, Netflix’s business platform should never stop growing and evolving. At the same time, they must be careful to remain user friendly and customer centric by keeping the technology at a level where users will not have to obtain a certain set of technological skill sets.
Social media activities are known to be effective tools to building program engagement as well as becoming a promotional net to attract more viewers. This would in turn build loyalty among viewers and increasing ratings growth. Netflix has spent little in advertising in relative to other companies and has always relied on word of mouth as our main marketing tool. Studies have shown that the power of word of mouth can be amplified and intensified through online and social media engagement.
...o maintain profitability and market share in the long-term it must align the Studios’ profit interests with its own. To accomplish this the first recommendation is for Netflix to vertically integrate with a studio. Vertical integration would reduce costs for both the Studio and Netflix by cutting out the transaction costs associated with negotiating licensing and distribution terms for streaming content. This would be especially beneficial to Netflix because their current streaming selection lacks diversity, depth and quality. A vertical integration would also benefit Studios in that they could replace obsolete DVD distribution channels with a brand name digital distributor. a back up recommendation is for Netflix to use its leveraging potential by taken on debt and continuing to aggressively negotiate profit sharing schemes with Studios, Networks, and Distributors.
Reed Hastings, co-founder of Netflix headquartered in Los Gatos, CA, began the company’s operations in 1997 after receiving an enormous late charge from a movie rental he returned long overdue. However, Hastings had the desire to be different than traditional movie outlets; whereas, customers had to drive to the location, pay a certain amount for each movie they rented, and were given a deadline in which to return the movie. Instead of using a method established by other video markets “to attract customers to a retail location, Netflix offered home delivery of DVDs through the mail” which eventually led to a booming business towards streaming forms of entertainment (Shih, Kaufman, & Spinola, 2009, p. 3). Today, Netflix exists along with several competitors; however, offers the most streaming content available for viewing, and continues to grow its subscriber base both domestically and globally. Although, direct and indirect competitors, acquisition costs, and several barriers present a financial threat for Netflix, the company has managed to grow with the acclamation of partnerships, expand to international territories, and vastly increase its price in shares of stock.
According to the history of movie rental, home video, and gaming, Netflix was the first company to introduce the movie rental service back in April of 1998 and offered more than 900 titles (Lardener, 2010). Ever since, the industry has become larger with new technology such as online streaming and next day delivery. Also, more competitors are now available and provide the same services, such as Amazon, Wal-Mart, blockbuster, and Redbox kiosks.
Video Rental and Streaming has partly been of the most significant avenues of the general home entertainment industry in the United States for many years. It promotes constructive development through various channels such as Information Technology, Public Multimedia and it also has a huge impact on people’s lives and their entertainment on demand. One of the best companies which provide this high-advanced service is Netflix, Inc (Netflix). It was incorporated on August 29th in 1997 in California by Reed Hastings & Marc Randolph; listed on NASDAQ as NFLX in 2002. Netflix is the world’s largest Internet subscription service streaming television shows and movies with over 40 million members in 40 countries (Netflix, 2013).