Netflix Executive Summary

Executive Summary

As we all know, recently the company has faced problems due to our poor decisions, which have decreased confidence in the company and of shareholder value along the way. The business model of renting DVDs by mail delivery played a vital role in company’s early success (Netflixno 318). Netflix has decided to move towards streaming business because the company understands that streaming has the future. It also understands that obtaining streaming rights extremely expensive and it needs to generate more revenue to pay for additional titles. In order to inject the money into streaming business, along with growing expenses for streaming content, on July 12, 2011, the company had increased the price on DVD and online streaming services. Shortly after the price increase, the company announced that it would split into two companies- one to handle online streaming, and the other to handle DVDs by mail (Godinez, 2011). After the outburst by subscribers, the company abandoned the split and decided to keep the DVD and online services together. In addition, in February 2012, the company had lost the contract with Starz due to the huge increase on the streaming license fees, which was more than six times what the company paid in 2008.
In order to survive and rebuild the business, we need to restructure the business model. I propose the below solutions to improve our business.
• Negotiate price with Starz and sign a new contract.
• Add advertisements to the streaming content.
• Implement different pricing and packages for streaming and DVD rentals.
• Offer a better selection of movies and TV shows.
• Offer pay per view for new releases.

In order to reconstruct the business, Netflix needs to come up with a better selection of movies, TV shows, and add hot new releases to the streaming content. We would increase the price of DVD rental plans in smaller amounts, because customers may not even notice a smaller price increase but would react seriously for...