Netflix (Nasdaq: NFLX) is the largest online movie rental service. Its primary revenue stream is a flat-rate DVD-by-mail service.
Netflix has over 10 million members providing them access to more than 100,000 DVD titles. 12,000 of these titles are also avaiable via an online streaming service dubbed Watch Instantly.
Key Business Metrics
According to their 10-k, Netflix management measures the overall health of their business using three key metrics:
- Churn - the monthly measure defined as customer cancellations in the quarter divided by the sum of beginning subscribers and gross subscriber additions, then divided by three months.
- Subscriber acquisition cost - the total marketing expense divided by total gross subscriber additions.
- Gross margin - monitors variable costs and operating efficiency.
- Reed Hastings - Founder, Chief Executive Officer
- Neil Hunt - Chief Product Officer
- Leslie Kilgore - Chief Marketing Officer
- Barry McCarthy - Chief Financial Officer
- Patty McCord - Chief Talent Officer
- Ted Sarandos - Chief Content Officer
View all management and their backgrounds at the Netflix Media Center.
Board of Directors
- Richard Barton - Zillow
- A. George "Skip" Battle - Ask
- Charles Giancarlo - Cisco Systems
- Timothy Haley - Redpoint Ventures
- Jay Hoag - Technology Crossover Ventures
- Greg Stanger - Technology Crossover Ventures
- Michael Schuh - Foundation Capital
Since creating the online DVD rental market in 1999, Netflix has grown subscribers at a 64% compound annual growth rate (CAGR.)
Netflix Swot Analysis
Motion pictures, including movies and television programs are distributed broadly through a variety of channels, including movie theaters, airlines, hotels and in-home. In-home distribution channels include DVD rental and retail outlets and web sites, cable, satellite and telecommunication providers offering basic and premium television, pay-per-view, and video-on-demand (VOD) and Internet delivery.
Currently, studios distribute their entertainment video content approximately three to six months after theatrical release to the home video market, three to seven months after theatrical release to pay-per-view and VOD, one year after theatrical release to premium television and two to three years after theatrical release to basic cable and network television. Internet delivered content is made available typically at the same time as pay-per-view or VOD; however, some content, such as television shows, are often made available for Internet viewing shortly after the original airing date.
Principal competitors include:
- DVD rental outlets and kiosk services, such as Blockbuster, Movie Gallery and Redbox;
- video package providers with pay-per-view and VOD content including cable providers, such as Time Warner and Comcast; direct broadcast satellite providers, such as DIRECTV and Echostar; and telecommunication providers such as AT&T and Verizon;
- online DVD subscription rental web sites, such as Blockbuster Online;
- entertainment video retail stores, such as Best Buy, Wal-Mart and Amazon.com;
- Internet movie and television content providers, such as Apple’s iTunes, Amazon.com, Hulu.com and Google’s YouTube.
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