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CASE 11

Netflix’s 2020 Strategy for Battling

Rivals in the Global Market for ®

Streamed Video Subscribers

Arthur A. Thompson
The University of Alabama

H
eading into 2020, Netflix was demonstrating of its own self-produced original content (feature films,
significant competitive muscle in attracting ­multi-episode series, and documentaries). Netflix mem-
millions of new subscribers across the world bers, as well as households subscribing to rival content
to its service for streamed internet content, despite providers, could not only watch as much streamed con-
the entry of formidable new competitors in 2019 and tent as they wanted—anytime, anywhere, on nearly any
announcements of more to come in 2020. Netflix Internet-connected screen—but they could also play,
grew its paid membership base from 139.3 million pause, and resume watching, all without commercials.
at year-end 2018 to 167.1 million worldwide at year- In its April 2019 report of Netflix’s financial and
end 2019; it expected to add another 7 million new operating results for the first quarter of 2019, manage-
paid subscribers in the first quarter of 2020. Netflix ment said Netflix subscribers were watching more than
was addressing the growing competition in the 165 million hours of the company’s content offerings per
global market for streamed entertainment content day. In reporting the company’s quarterly performance
by increasing its releases of new original content and during the remainder of 2019, Netflix management did
strengthening efforts to grow its user base in high- not disclose the total viewership hours per day, saying
opportunity country markets. only that daily viewership hours worldwide were grow-
Over the past nine years, the company had suc- ing. The company tracked viewership of each title.
cessfully transformed its business model from one In the United States, Netflix still had 2.1 million
where subscribers paid a monthly fee to receive an members as of December 31, 2019 who, because of
unlimited number of DVDs each month (delivered limited Internet service or just personal preference,
and returned by mail with one to three titles out at a continued to receive DVDs solely by mail (but the
time) to a model where subscribers paid a monthly numbers of mail-only subscribers had been declining
fee to watch an unlimited number of movies and TV monthly as members transitioned to streaming).
episodes streamed over the Internet. During the same Netflix’s swift growth to 61 million paid subscrib-
time frame, Netflix had expanded its geographic cover- ers in the United States and its promising potential for
age to over 190 countries, making it the world’s lead- rapidly growing its base of international subscribers
ing Internet television network. During the past five far past 100 million (some industry analysts believed
years, Netflix had made another adjustment in its busi- Netflix had a clear path to 350 million subscribers
ness model, shifting from a content library consisting worldwide by 2025) pushed the company’s stock
mainly of titles licensed from the movie studios, broad- price from $270 at the beginning of 2018 to $380 in
cast TV networks, and other sources that produced
them to a content library that increasingly consisted Copyright ©2021 by Arthur A. Thompson. All rights reserved.
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Netflix’s 2020 Strategy for Battling Rivals in the Global Market for Streamed Video Subscribers

CASE 11 Netflix’s 2020 Strategy for Battling Rivals in the Global Market for Streamed Video Subscribers C-141

the second week of February 2020. (Netflix’s all-time and internal cash flows needed to finance an
high stock price was $423 in July 2018). Already sol- ever-larger annual stream of original content that
idly entrenched as the global leader in paid member- would please subscribers and also (2) enable the
ships for streamed content, the principal questions company to be attractively profitable over the
for Netflix in 2020 seemed to be: long-term.
• Whether the company had sufficient competi- Financial statement data for Netflix for 2015
tive and financial strength to combat the efforts through 2019 are shown in Exhibits 1 and 2. Netflix
of larger, resource-rich rivals looking to steal sub- had never paid a dividend to its ­shareholders
scribers away from Netflix. and the company had declared it had no pres-
• Whether the company could grow its subscriber ent intention of paying any cash dividends in the
base fast enough to (1) produce the revenues foreseeable future.

EXHIBIT 1 Netflix’s Consolidated Statements of Operations, 2015–2019 (in millions,

except per share data)
[(g) For tables, all underlines should be the length of the longest numerical entry in each column, which
may sometimes vary from column to column; align vertically on $ and ones digits; set end parenthesis to
the right of the ones digit and no underline; underlines should be continuous, no breaks for commas or
parentheses]

2015 2016 2017 2018 2019

Revenues $6,779.5 $8,830.7 $11,692.7 $15,794.3 $20,156.4

Cost of revenues (almost all of which relates to
amortization of content assets) 4,591.5 6,257.5 7,659.7 9,967.5 12,440.2
Gross profit 2,188.0 2,800.8 4,033.0 5,826.8 7,716.2
Operating expenses
Technology and development 650.8 780.2 1,052.8 1,221.8 1,545.1
Marketing 824.1 1,097.5 1,278.0 2,369.5 2,652.5
General and administrative 407.3 315.7 863.6 630.3 914.4
   Total operating expenses 1,882.2 2,421.0 3,194.4 4,221.6 5,112.0
Operating income 305.8 379.8 838.7 1,605.2 2,604.3
Interest and other income (expense) (163.9) 30.8 (591.5) (378.80) (542.0)
Income before income taxes 141.9 260.5 485.3 1,226.5 2,062.2
Provision for (benefit from) income taxes 19.2 73.8 (73.6) 15.2 195.3
Net income $122.6 $186.7 $558.9 $1,211.2 1,866.9
Net income per share:
Basic $0.29 $0.44 $1.29 $2.78 $4.26
Diluted 0.28 0.43 1.25 2.68 4.13
Weighted average common shares outstanding
(in millions)
Basic 425.9 428.8 431.9 435.4 437.8
Diluted 436.5 438.7 446.8 451.2 451.8

Note 1: Some totals may not add due to rounding.

Source: Company 10-K reports for 2010, 2017, and 2019.
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C-142 PART 2 Cases in Crafting and Executing Strategy

EXHIBIT 2 Selected Balance Sheet and Cash Flow Data for Netflix, 2015–2019
(in millions)
2015 2016 2017 2018 2019

Selected Balance Sheet Data

Cash and cash equivalents $1,809.3 $1,467.6 $2,822.8 $3,794.5 $5,018.4
Current assets 5,431.8 5,720.3 7,670.0 9,694.1 6,178.5
Total current and non-current
content assets 7,218.8 14,682.0 20,112.20 20,107.5 $24,504.5
Total assets 10,202.9 13,586.6 19,012.7 25,974.4 33,975.7
Current liabilities 3,529.6 4,586.7 5,466.3 6,487.3 6,855.7
Long-term debt* 2,371.4 3,364.3 6,499.4 10,360.1 14,759.3
Stockholders’ equity 2,223.4 2,679.8 3,582.0 5,238.8 7,582.2
Cash Flow Data
Net cash (used in) provided by operating
activities $(749.4) $(1,474.0) $(1,785.9) $(2,680.5) $(2,887.3)
Net cash provided by (used in) investing
activities (179.2) 49.8 34.3 (339.1) (387.1)
Net cash provided by (used in) financing
activities 1,640.3 1,091.3 3,077.0 4,048.5 4,505.7

*All of Netflix’s long-term debt consisted of senior unsecured notes that were issued at various points in time and had various maturity
dates and various fixed rates of interest.
Sources: Company 10-K Reports 2011, 2015, 2017, and 2019.

THE FAST-CHANGING source/website with streaming capability and

content to stream. The upcoming introduction
MARKET FOR STREAMED of 5G mobile phones was widely expected to
ENTERTAINMENT dramatically increase the time consumers used
their smart phones to watch streamed content,
In 2020, the world market for streamed entertainment particularly broadcasts of live sporting events,
(movies, episodes of TV shows, and live-streamed breaking news, and assorted other programs of
events) was undergoing rapid and disruptive change. interest.
There were three big change drivers: 2. A fast-moving and likely permanent shift in
1. Increasingly pervasive consumer access to both consumer preferences worldwide for watching
wired and wireless high-speed Internet connec- content streamed directly to whatever device they
tions. Worldwide rollout of 5G (fifth generation) wanted to use at whatever times they wanted to
wired and wireless digital networks promised to watch, rather than being locked into watching
increase data connection speeds by 3 times those their favorite programs at the time they were
of the 3G and 4G digital networks currently serv- broadcast on TV channels. Cable and satellite
ing most households and individuals across the firms were losing subscribers annually, partly
world. Wired and wireless high-speed data con- because these subscribers were unhappy about
nections greatly increased the ease with which having to pay what they considered an out-
households and individuals could use a TV, sized price for a multi-channel package con-
desktop computer, portable computer, or smart- taining more channels than they watched and
phone, coupled with a growing array of apps, partly because they could access their favorite
to instantly connect to any Internet-accessible programs from a growing number of streamed
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CASE 11 Netflix’s 2020 Strategy for Battling Rivals in the Global Market for Streamed Video Subscribers C-143

sources (and also subscribe to one or more preferences worldwide for watching content
streamed content sources with sizable content streamed directly to whatever device they wanted
libraries containing ongoing releases of new to use at whatever times they wanted to watch it,
original content), thereby giving them an attrac- and rapid entry of new streamed content provid-
tively wide variety of content selections at a ers like AT&T’s HBO Max, Disney+, Comcast’s
lower overall cost that could be watched when- new Peacock offering, ViacomCBS, Apple TV+,
ever they wished. and dozens of others in various geographic
3. The mounting vigor with which well-known, regions looking to compete with Netflix and
resource-rich companies were launching strategic Amazon’s Prime Video had combined to unleash
initiatives to (a) build bigger and more attractive an increasingly intense competitive global battle
content libraries—sometimes by merging with or among streaming providers to become serious
acquiring the owners of attractive content librar- contenders in the global market for subscriber-
ies, sometimes by licensing a bigger assortment based streamed content—a market that was widely
of attractive titles from various content owners, expected to be “the wave of the future,” include
and sometimes by establishing in-house content billions of individuals and households, and be
development and production capabilities and highly disruptive to the businesses of traditional
(b) launching marketing campaigns to publicize cable and satellite providers, whose subscriber
and promote the content libraries they had assem- counts had declined annually for several years.
bled in an effort to secure a large enough base of College graduates and many millennials typically
paid streaming subscribers to cover the costs of avoided subscribing to cable providers because
their content libraries and streaming service and of the “high” monthly prices and the growing
earn a profit. availability of cheaper substitutes for viewing the
programs they really wanted to watch or were sat-
During the past decade, the market for in- isfied with watching.
home entertainment other than broadcast and cable In 2019, a study by the Motion Picture
TV programs had evolved rapidly as households Association of America (MPAA) reported that
with high-speed Internet service and/or Internet- the number of streamed video subscribers grew to
connected TVs or DVD players quickly shifted away 613 million in 2018 (an increase of 27 percent over
from subscribing to Netflix’s DVDs-by-mail ser- 2017), while the number of cable subscriptions
vice or else renting or buying physical DVDs with worldwide dropped 2 percent to 551 ­million.1
the desired content to almost exclusively watching However, cable subscriptions generated the big-
streamed movies, previously broadcast episodes of gest revenues ($118 billion), followed by satellite
TV shows, YouTube videos, and titles in the original subscriptions and streaming video subscriptions.
content libraries of paid-subscriber providers, and According to the MPAA study, in 2018 80 percent
other types of streamed content. This was because of people in the United States watched cable pro-
streaming had the advantage of allowing household grams, with 70 percent also watching streamed
members to access and instantly watch the movies, programs. The MPAA report further noted that
TV episodes, and other available content they wanted the number of views/transactions of TV and film
to see, which was much more convenient and often programs streamed from subscription-based pro-
cheaper than patronizing a nearby rent-or-purchase viders, pay-per-view sources, and ad-supported
location getting DVDs by mail from Netflix. This sources jumped from 76.4 billion in 2014 to
shift had permanently undercut the once-thriving 182.1 billion in 2018, a four-year increase of
businesses of selling movie and music DVDs and/ 238 percent. The increase was partly due to an
or renting DVDs at local brick-and-mortar locations increase in the number of scripted original dra-
and standalone rental kiosks (like Redbox in the mas across all sources from 390 in 2014 to 496
United States) or delivering/returning DVDs by mail in 2018.
(as at Netflix). Exhibit 3 shows the percentage of Internet users,
By 2020, faster internet speeds, the fast- by country, who watched online video content on
growing and likely permanent shift in consumer any device as of January 2018.
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EXHIBIT 3 The Percentage of Internet capabilities of the chief rivals Netflix expected to
battle in competing for streamed entertainment sub-
Users in Selected Countries
scribers in countries across the world.
Who Watched Online
Video Content on Any
Device as of January 2018 Amazon’s Prime Video
Amazon competed directly with Netflix via its
Percentage of Internet Users Amazon Prime membership service. In 2020, indi-
Watching Online Video viduals and households could become an Amazon
Country Content on Any Device Prime member for a fee of $119 per year or $12.99
Saudi Arabia 95% per month (after a one-month free trial); there was
China 92%
a discounted price for students of $59 per year of
New Zealand 91%
$6.49 per month. Membership in just Prime Video
was $8.99 per month. Going into 2020, Amazon
Mexico 88%
announced that it had over 150 million Amazon
Australia 88%
Prime members globally.2 While Amazon had origin-
Spain 86%
ally created its Amazon Prime membership program
India 85% as a means of providing unlimited two-day shipping
Brazil 85% (more recently, one-day shipping in many locations
United States 85% and two-hour grocery delivery in 2,000 cities) on
Canada 83% Prime-eligible items to customers who ordered mer-
France 81% chandise from Amazon and wanted to receive their
Germany 76% orders quickly, in 2012 Amazon began including
South Korea 71% movie and music streaming as a standard benefit
Japan 69% of Prime membership—Amazon’s video streaming
service was called “Prime Video.” Amazon Prime
Source: Statista, www.statista.com (accessed April 10, 2018). members were not, however, eligible to view every
title in the Prime Video library for free; titles that
were not Prime-eligible could be watched on a pay-
per-view basis or else purchased. Going into 2020,
A SAMPLING OF NETFLIX’S many Amazon Prime members did not utilize their
Prime Video membership benefit (Amazon did not
COMPETITORS IN THE disclose the overall percentage). Another video bene-
GLOBAL MARKET FOR fit of Amazon Prime membership was the ability to
subscribe to over 100 premium channels with Prime
STREAMED VIDEO Video Channels subscriptions.
SUBSCRIBERS In 2010, Amazon established Amazon Studios
to oversee the development and production of
Going in 2020, Netflix’ principal direct competitors new in-house original movies and multi-episode
included Amazon’s Prime Video, AT&T (with its series; approximately 200 new original titles
Warner Media and HBO Max subscription options), were released during 2015–2018. A 2019 report
Disney+, Apple TV+, Comcast’s new Peacock offer- by Streaming Observer, an independent news site
ing, and A new ViacomCBS streamin option, and covering streaming industry news and reviews of
AppleTV+, CBS All Access, all of whom had pro- movies, said that Amazon’s Prime Video content
fessed or exhibited a strategic intent to rank among library contained 17,461 titles versus 3,839 for
the industry leaders—YouTube was not considered a Netflix and 2,336 for Hulu.3 However, according
direct competitor because its free and paid video con- to the same Streaming Observer report, Netflix had
tent was distinctly different from the titles offered by 592 titles that were “Certified Fresh” by Rotten
Netflix and its direct competitors. Following is a brief Tomatoes (the leading online aggregator of movie
description of the media resources and competitive and TV show reviews) versus 232 such films on
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CASE 11 Netflix’s 2020 Strategy for Battling Rivals in the Global Market for Streamed Video Subscribers C-145

Prime Video and 223 on Hulu. Additionally, the assorted online sites; merchandising licensing cover-
report said almost 16 percent of all movies on ing a wide range of product categories and licens-
Netflix were “critically acclaimed” compared to ing of Disney’s wide-ranging intellectual property;
just 1.3 percent on Prime Video. motion picture production and distribution under the
But in 2017 and continuing forward, Amazon Walt Disney Pictures, Twentieth Century Fox, Marvel,
began a strategic initiative to upgrade its content Lucasfilm, Pixar, Fox Searchlight Pictures, and Blue
library, with both higher caliber new original con- Sky Studios banners; and direct-to-­consumer stream-
tent and licensed content. Amazon paid the National ing services which included Disney+, ESPN+,
Football League $65 million a year for three seasons Hulu, and Hotstar.
starting with 2017 season to live stream Thursday Starting in 2018, Disney made a series of strategic
Night Football games globally to Prime Video mem- moves to strengthen its capabilities to enter the video
bers in 200 countries (these broadcasts attracted streaming market by acquiring 100 percent control of
more than 18 million total viewers over 11 games in streaming provider Hulu, which at the time had about
2017). Amazon Studios spent a reported $250 ­million 25 million subscribers in the United States. At the time,
for licensing right to Lord of the Rings, with plans Hulu was a joint venture co-owned by Walt Disney
for spending up to $1 billion to produce 5 ­seasons (30 percent), Fox (30 percent), Comcast (30 ­percent),
of episodes. Amazon Studios spent an estimated and Time Warner (10 percent), but Disney put a deal
$5–$6 ­billion on original content videos in 2019, in place in late 2018 to buy Fox’s 30 percent share of
releasing new titles monthly, including new seasons Hulu and then, months later, AT&T sold its 10 percent
of Tom Clancy’s Jack Ryan, Emmy-winning The of Hulu to the Disney-Comcast owners of the Hulu
Marvelous Mrs. Maisel, Bosch, Sneaky Pete, Good joint venture for $1.43 billion. In May 2019, Comcast
Omens, Carnival Row, The Man in the High Castle, The and Disney announced an agreement whereby Disney
Boys, Emmy-winning Fleabag, The Romanoffs, Patriot, would have full 100-percent control of Hulu, starting
American Gods, Preacher, and The Grand Tour. Prime immediately. The Disney-Comcast agreement speci-
members watched double the hours of original ­movies fied that Comcast would continue to allow Hulu to
and TV shows on Prime Video in the fourth quarter carry all NBCUniversal content as well as live-stream
of 2019 compared to the fourth quarter of 2018, and NBCUniversal channels for Hulu’s live TV service
Amazon Originals received a record 88 nominations until late 2024 (Comcast was the 100-­percent owner
and 26 wins at the Oscar, Emmy, and Golden Globe of NBCUniversal). The deal called for Comcast’s
awards shows.4 ownership stake in Hulu to be officially sold to Disney
starting in January 2024.
The Walt Disney Company, Hulu’s strategy for attracting subscribers had
been to attract subscribers by charging a subscrip-
Disney+, Hulu, and ESPN+ tion fee of $5.99 per month for regular stream-
The Walt Disney Company in 2020 was a leading ing (interspersed with ads) and $11.99 per month
diversified international family entertainment and for commercial-free streaming; new subscribers
media enterprise with businesses that included the also got a one-month free trial. These two options
ABC branded broadcasting network; multiple cable entitled subscribers to watch current season epi-
channels (the ESPN family of five domestic chan- sodes of popular TV shows (the day after they aired
nels and 15 international channels, three domes- on ABC, NBC, Fox, and a few cable channels—no
tic Disney branded channels and approximately CBS shows were included) plus an estimated 43,000
100 Disney branded international channels, three back-season episodes of 1,650 TV shows and 2,500
FX channels, Freeform, National Geographic, and movies. In addition, Hulu offered plans that included
50 percent ownership of A&E, which offered its not only its video streaming service, but also pack-
own entertainment programming and operated four ages that included 60+ live TV and cable channels
other cable channels); ABC Studios, Twentieth (that included sports, news, and entertainment) for a
Century Fox Television, and Fox 21 Television which monthly fee of $54.99 and options to add on HBO®,
produced many of the company’s TV shows; theme Showtime®, Starz®, and Cinemax®. In March 2020,
parks and resorts; Disney Cruise Lines; the sale of Disney launched FX on Hulu” that featured every
Disney-related merchandise at The Disney Stores and season of many originals that aired on FX over the
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C-146 PART 2 Cases in Crafting and Executing Strategy

past 17 years and that, going forward, would include ESPN+ was a conglomeration of live sports programs
new original scripted series by FX Productions shown (select live MLB, NHL, NBA, MLS, and Canadian
exclusively to Hulu subscribers. In recent years, con- Football League games, as well as multiple college
sumers disenchanted with the Further expansions sports games, PGA golf events, Top Rank Boxing
are planned for Europe and Latin America in late matches, Grand Slam tennis matches, United
2020 through 2021, as Disney’s existing international Soccer League games, cricket and rugby games,
streaming distribution deals with competing services English Football League games, and UEFA Nations
expire. Reaming prices of cable subscriptions had League games that were not broadcast live on any of
come to consider Hulu as their “go-to” choice, and ESPN’s family of channels (ESPN, ESPN2, ESPNU,
it was widely considered the best streaming provider ESPN Classic, ESPNews, ESPN Deportes, Longhorn
for watching TV shows. Nonetheless, Hulu had been Network, SEC Network, and ACC Network). ESPN+
a money-losing operation every year since its stream- was only available to viewers in the United States; the
ing service began operations in March 2008. regular subscription fee for ESPN+ was $49.99 per year
Disney debuted its new Disney+ streaming ser- or $4.99 per month. ESPN+ had 7.6 million subscrib-
vice on November 12, 2019, in the United States, ers in the United States as of February 2020, up from
Canada, and The Netherlands at low introductory 3.5 million paying subscribers in November 2019—the
prices of $69.99 per year or $6.99 per month. A week big increase was mainly due to the bundling promotion.
later, Disney+ was made available in Australia. New Disney management expected to have between
Zealand, and Puerto Rico and then further expanded 60 and 90 million Disney+ subscribers worldwide
to select European countries in March 2020. by 2024—the same year it believed the service would
Additional expansions were planned for Europe and become profitable. The majority of those subscribers
Latin America in late 2020 through 2021, as Disney’s were forecast to be outside the United States.
existing international streaming distribution licens-
ing agreements with competing services expired. AT&T’s Two Video Streaming
Disney+ offerings centered on existing film and Subscription Options: Warner
television content from Walt Disney Studios (includ-
ing the Star Wars series), the three Disney TV chan- Media and HBO Max
nels, Pixar, Marvel, National Geographic, and 20th In June 2018, AT&T completed its $108.7 billion
Century Fox, plus forthcoming new original content acquisition of Time Warner, whose businesses con-
from these same sources. Disney’s longstanding repu- sisted of global media and entertainment leaders
tation for family entertainment attracted an unexpect- Warner Bros. and WarnerMedia Entertainment.
edly large rush of new subscribers in the first three Warner Bros. business assets included the film stu-
months—50 million worldwide as of April 10, 2020. dios and content libraries of Warner Bros. Pictures,
This big subscription gain was partly due to the fact New Line Cinema, Castle Rock Entertainment, and
that, due to a deal between Disney and Verizon, DC Films; a television production and ­syndication
whereby certain Verizon subscribers could sign up for company; animation studios and their film
a free one-year subscription to Disney+ until June 1, ­libraries; and publishing company DC Comics. The
2020, if they agreed that when the free 12-month sub- WarnerMedia Communication Group included such
scription expired their Disney+ subscription would assets as: the studios and film libraries of Home Box
auto-renew at $6.99 per month, and they would be Office (HBO); broadcast and cable channels CNN,
charged monthly on their Verizon bill unless the sub- TBS, TNN, and TruTV; pay TV channels Cinemax,
scription was cancelled with Verizon. The 50 million Cartoon Network, Boomerang, and Turner Classic
number also included 8 million subscribers in India Movies; and digital media company Otter Media.
who were able to access Disney+ through Hotstar, a AT&T’s new HBO division had 140 million sub-
streaming service owned by Disney. scribers who had access to HBO network’s seven
Concurrent with the launch of Disney+ in 24-hour multiplex channels through their cable or
November 2019, Disney began offering a bundle satellite provider (or as an add-on through Hulu); the
of Disney+, (ad supported) Hulu, and ESPN+ for ­add-on price paid to cable/satellite provider (or to
$12.99 per month with no free trial included at both Hulu) was $14.99 per month, cancellable at any time.
the Disney+ and Hulu websites in the United States. All such HBO subscribers could download a free
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CASE 11 Netflix’s 2020 Strategy for Battling Rivals in the Global Market for Streamed Video Subscribers C-147

downloadable HBO GO app that could be used to originals—the crown jewel of the originals was said to
access the HBO GO website; then, after entering be House of the Dragon, a 10-episode story about the
their user name and password for their account at Targaryens centuries prior to the Game of Thrones.
whatever provider to whom their HBO subscription
fee was paid, the HBO subscriber could click on the Comcast’s New Peacock
desired HBO content and view it on mobile phones,
laptops, and computers. AT&T/HBO had no inter- Streaming Service
est in offering HBO GO access to people who were In January 2020, Comcast and its subsidiary
not already HBO subscribers because HBO’s princi- NBCUniversal, jointly announced the launch of a
pal revenue source was a percentage of the monthly new Peacock subscription video streaming service
fees that its 140 million subscribers across the world that would become available at no additional cost for
paid their cable/satellite company (or Hulu) for Comcast’s more than 20 million Xfinity X1 and
access to HBO programming as part of their total Flex cable subscribers on April 15 and then launch
subscription package. July 15 for everyone else. The free tier of Peacock
AT&T executives believed Time Warner’s busi- (Peacock Free) contained more than 7,500 hours of
nesses nicely complemented AT&T’s core businesses ad-­supported programming, including next-day access
in mobile, broadband, cable and satellite TV, and tele- to first season TV shows broadcast on NBC, a collec-
phone communications in the United States, mobile tion of Universal movies, and access to back seasons of
services in Mexico, and pay TV services in 11 coun- such iconic NBC shows as Saturday Night Live, Family
tries in South America and the Caribbean. AT&T’s Movie Night, and Vault. However, Comcast subscribers
cable and satellite TV operations lost a combined and Cox cable subscriber could opt instead to subscribe
4 million subscribers in 2019, bringing the number of to Peacock Premium, which included 15,000 hours of
total subscribers for AT&T’s various cable and satel- content, early access to NBC’s 2 late night shows, live
lite (DIRECTV) packages down to 19.7 million. NBC sports programming, and non-televised Premier
However, it was AT&T’s strategic plan in 2020 League soccer games. There were two price tiers for
to achieve nationwide coverage of 5G by mid-year; Peacock Premium: a $4.99 per month version that
launch its new HBO Max streaming video service in included ads and a $9.99 version with no advertising.
May 2020 with a goal of securing 50 million subscrib- Steven Burke, a Comcast Executive Vice President
ers in the United States and another 25 to 40 million and Chairman of NBCUniversal believed NBCUniversal
international subscribers by 2025; and curtail the was uniquely positioned to create a streaming platform
loss of subscribers to AT&T’s cable and satellite ser- that would monetize its content library and enable
vices via simplified product packages and bundling NBCUniversal to play a leading role in the on-demand
opportunities with such other AT&T communica- video streaming world:5
tion products as higher-speed broadband service, Comcast management decided to use NBC’s
home security and monitoring packages, telephone familiar peacock logo as the logo for the company’s
services, and possibly discounted HBO Max subscrip- new subscription-based streaming service to remind
tions. The announced monthly price for the HBO customers that NBC was a network with great program-
Max streaming service was $14.99, the same price ming and to drive interest back to NBC’s popular event-
currently being paid by HBO Now’s roughly 5 ­million type TV programs (The Masked Singer, The Last Voice,
direct subscribers. Plans were for current HBO sub- America’s Got Talent) and NBC’s live sports program-
scribers through cable/satellite providers and direct ming, which included the 2020 Summer Olympics. Top
HBO Now subscribers to be provided bundled access management at Comcast and NBCUniversal believed
to HBO Max for free. AT&T expected that HBO Now that while streamed video might indeed be the future
subscribers would quickly migrate over to HBO Max, of watching TV and movies, the cable business would
which would help grow total HBO Max subscriptions remain profitable for years to come (despite the
to 36 million by the end of 2020. likely permanent declines in the number of cable and
HBO Max was expected to launch with roughly satellite subscribers worldwide) and, further, that free
10,000 titles from the WarnerMedia film libraries ad-­supported viewing was likely to remain far more preva-
of its various movie studios, all of HBO’s content, lent and popular with consumers than subscription-­
a number of licensed shows, and 20+ fresh Max supported viewing. Comcast management believed
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C-148 PART 2 Cases in Crafting and Executing Strategy

that bundling Peacock Free for customers with assets approaching $50 billion and 2019 revenues
Comcast cable subscriptions would help reduce the of ­­$27.8 billion. The new company’s main assets
number of customers dropping the company’s cable included Paramount Pictures film studio and a
service and switching to a rival streaming provider. library of 3,600 movies; the CBS broadcasting net-
Hence, they saw no good business reason to create a work and its library of 140,00 TV episodes, a stream-
streaming platform with strategy elements that would ing platform called CBS All Access that provided
help undermine the profitability and longevity of approximately 4.5 million subscribers in the United
company’s cable business. States, Canada, and Australia with access to current
During a Peacock Investor Day presentation on and back season CBS TV shows, CBS Sports (NFL,
January 16, 2020, a NBCUniversal officer cited a survey college football, and college basketball games),
where consumers were asked “Which new streaming other recently-aired programs on CBS broadcast
service are you likely to try—one that is free with some properties; a number of CBS-affiliated television
ads or one that is paid with no ads?” Eighty ­percent stations; CBS Television Studios and CBS Studios
responded “free with some ads,” and 20 ­percent International; cable television networks MTV,
responded “paid with no ads.” These results were a Nickelodeon (watched in 600 million households
factor in convincing the Comcast-NBCUniversal man- around the world), BET, Comedy Central, CMT
agement team to position Peacock as an ad-­supported (Country Music Television), Showtime, The Movie
streamer of premium content in what they viewed Channel, VH1, Flix, and TEN (a high profile chan-
as a mostly vacant market niche (among rival video nel in Australia); free ad-supported video-on-demand
streaming providers, only Hulu offered consum- platform Pluto TV with 100+ live TV channels and
ers a ­low-priced, ­ad-supported streaming option). thousands of TV shows and movies; 50 percent co-
Moreover, the Peacock strategy was to help secure ownership with AT&T’s WarnerMedia subsidiary of
a competitive edge by having an industry-low aver- The CW Television Network (commonly referred to
age of five ­minutes of ads per hour, which contrasted as just The CW); Nickelodeon Animation Studio; an
sharply with TV broadcasting where there were assortment of international and regional networks
16–20 minutes of ads per hour and premium video and operations that provided the company with the
streaming where there was an average of eight minutes capability to engage in video streaming in many coun-
of ads per hour.6 And Peacock Free’s ad-supported tries; and book publisher Simon & Schuster. CBS’s
streaming of premium content helped differentiate media properties alone made it a global media titan,
it from the three competitively strong subscription- with some 4.3 billion watchers of its broadcast and
based providers—Netflix, Amazon Prime Video, and pay TV programs in 180 countries at year-end 2019.
HBO Max. Peacock ­management believed it would In early 2019, before the merger, Viacom had
have little difficulty ­selling ads for Peacock’s content, purchased Pluto TV for $360 million and proceeded
given that NBC, ABC, CBS, FOX, and some 250 to expand its offering of 100 ad-supported channels
other channels had advertising-based business mod- by adding 43 channels in the fourth quarter of 2019,
els representing 92 percent of total viewership.7 including 22 Spanish and Portuguese ones that were
NBCUniversal said it would invest $2 billion in popular in Latin America and Brazil; Pluto’s sub-
Peacock over 2020 and 2021, with goals of reach- scriber base grew over 70 percent in 2019 to a total
ing between 30 and 35 million active users in the of over 20 million going into 2020. On December 20,
United States by 2024, generating $2.5 billion in new 2019, ViacomCBS announced it was buying a 49 per-
­revenues with average revenue per subscriber of $6–$7, cent ownership stake in Miramax Pictures for an
and achieving break even on Peacock’s streaming ser- upfront payment of $150 million and an agreement
vice on an earnings before interest, taxes, depreciation, to invest $225 million in Miramax for movie and
and amortization (EBITDA) basis. television productions over the next five years. The
deal also specified that ViacomCBS’s Paramount
Pictures would become the exclusive distributor for
ViacomCBS and CBS All Access the Miramax library of 700+ films and have a first-
Viacom and CBS completed their long-expected look at Miramax’s new content creation.
and often contentious merger in December 2019, In February 2020, ViacomCBS executives were
creating a multinational media conglomerate with in the final stages of readying plans to launch a new
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CASE 11 Netflix’s 2020 Strategy for Battling Rivals in the Global Market for Streamed Video Subscribers C-149

video streaming service built around the CBS All planning to spend about $4.2 billion on original pro-
Access streaming service, that would be expanded gramming by 2022.
to include a broad pay “House of Brands” product While Apple had yet to disclose subscriber num-
offering comprised of a wide assortment of titles bers for its TV+ service, an analyst at Wall Street
from Viacom’s multiple libraries and selected pop- firm at Sanford C. Bernstein had estimated that, as
ular shows on BET, Nickelodeon, MTV, Comedy of February 2020, fewer than 10 million of the eli-
Central, Showtime, and perhaps others. Further, the gible consumers purchasing a new Apple device had
new streaming service would draw heavily upon the opted to sign up for a free 12-month trial of Apple
capabilities of Paramount’s and Miramax’s movie TV+.9 It was speculated that Apple TV+’s failure
and television production studios, Nickelodeon’s to resonate with consumers was largely due to its
Animation Studio, and perhaps other ViacomCBS unusually limited content offerings. In December
operations to develop and produce new original con- 2019, one of the analysts participating on an expert
tent. Going into 2020, ViacomCBS had global pro- panel hosted by UBS (a well-known global financial
duction studios that were currently turning out over services firm) said that Apple TV+ “needs a mega-
750 shows with 43,000 episodes.8 hit original series to ultimately retain subscribers,”
ViacomCBS said the base tier of the new stream- adding that the company “may likely have to ultim-
ing service would be ad-supported, but there would ately also acquire an asset with a big backlog of cat-
be two higher-end tiers: an ad-free version and a pre- alog content—most of which will be very expensive
mium version that included Showtime. It was specu- at this point.”10
lated that ViacomCBS’s new streaming service could
be the final significant streaming offering that hit the YouTube TV
market as traditional media companies repositioned
themselves and recast their strategies in preparing for In April 2020, Google’s YouTube subsidiary was
a post-cable TV future. offering a YouTube TV streamed entertainment ser-
vice that included about 70 TV and movie channels
for a fee of $50 per month. The service could be
AppleTV+ accessed on smart TVs, streaming boxes, computers,
Apple launched its Apple TV+ video streaming ser- and mobile devices. As of early 2020, YouTube TV
vice on November 1, 2019, in over 100 countries that had over 2 million subscribers.
could be accessed on smart TVs connected to an
Apple TV box or on new TV models that had the
Apple TV app already installed, or Apple devices NETFLIX’S BUSINESS MODEL
with a downloaded Apple TV app. Pitched as Apple’s
strategic means of competing directly with Netflix,
AND STRATEGY IN 2020
Amazon Prime Video and Disney+, the new Apple Since launching the company’s online movie rental
TV+ service streamed Apple’s original programming service in 1999, Reed Hastings, founder and CEO
only through Apple TV-capable devices. An Apple of Netflix, had been the chief architect of Netflix’s
TV+ subscription could be shared with up to six subscription-based business model and strategy that
family members. At $4.99 per month (or free for one had transformed Netflix into the world’s largest
year with the purchase of a new Apple device), the online entertainment subscription service. Hastings’s
cost of Apple’s streaming service was lower than the goals for Netflix were simple—build the world’s best
monthly subscription service for most of its video Internet service for entertainment content, keep
streaming rivals. improving Netflix’s content offerings and services
At launch, there were just nine Apple Originals faster than rivals, attract growing numbers of sub-
available to view; the number had increased to a scribers every year, and grow long-term earnings
total of 20 multi-episode shows and five films as of per share. Hastings was a strong believer in mov-
June 2020. However, Apple had committed to add- ing early and fast to initiate strategic changes that
ing new originals every month and 26 new origi- would help Netflix outcompete rivals, strengthen its
nal series and seven films were in development for brand image and reputation, and fortify its position
release later in 2020 and 2021. Apple was reportedly as the industry leader.
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A Quick Overview of the EXHIBIT 4 Netflix’s Rapidly-Executed

Evolutionary Changes in Netflix’s Entry into New Geographic
Subscription-Based Business Areas
Model and Strategy, 1999–2019 Entry into New Geographical
Year
Netflix had employed a subscription-based business Areas
model throughout its history, with members having
September 2010 Canada
the option to choose from a variety of subscription
September 2011 42 countries in Central America,
plans whose prices and terms had varied over the South America, and the Caribbean
years. Originally, all of the subscription plans were
January 2012 United Kingdom, Ireland
based on obtaining and returning DVDs by mail,
October 2012 Denmark, Sweden, Norway, Finland
with monthly prices dependent on the number of
September 2013 Netherlands
titles out at a time. But as more and more households
September 2014 Austria, Belgium, France, Germany,
began to have high-speed Internet connections, in
Luxembourg, Switzerland
2007 Netflix began bundling unlimited streaming
March 2015 Australia, New Zealand
with each of its DVD-by-mail subscription options,
September 2015 Japan
with the long-term intent of encouraging subscrib-
ers to switch to watching instantly streamed content October 2015 Spain, Portugal, Italy
rather than using DVD discs delivered and returned January 2016 Rest of the world—some
130 countries (but excluding
by mail. As increasing numbers of subscribers gained the People’s Republic of China,
access high-speed Internet connections, most quickly North Korea, Syria, and Crimea)
switched over to unlimited streaming subscription
plans, enabling Netflix to avoid incurring the order Source: Company 2017 10-K Report, p. 21.
fulfillment costs and postage costs associated with
servicing DVD-by-mail subscribers. About two-thirds
protect aspiring local providers of Internet-streamed
of Netflix subscribers in the United States had transi-
content from foreign competition. Recognizing its
tioned to streaming-only plans by year-end 2011, and
dim entry prospects, in 2017 Netflix negotiated a
fewer than four percent of Netflix’s subscribers in
licensing arrangement to exclusively provide some of
the United States were on DVD-by-mail plans at the
its original content to a fast-growing Chinese company
end of 2019.
named iQiyi (pronounced Q wee), the leading pro-
A third major shift in Netflix’s strategy began
vider of online entertainment services in China with
in 2010 when Netflix started to expand its stream-
some 106 million subscribers (as of September 30,
ing service internationally, beginning with Canada.
2019) and a reported 500 million monthly active
Entry into other countries followed quickly, as shown
users watching an average of 12 hours each month on
in Exhibit 4, and Netflix became a truly global com-
the company’s platforms.11 Use of a licensing strategy
pany in 2016. Despite dedicated efforts, going into
was attractive to Netflix because it provided a means
2020 Netflix had failed to surmount the barriers
of gaining content distribution in China and building
erected by the Chinese government that prevented its
some awareness of the Netflix brand and Netflix con-
entry into the People’s Republic of China, the world’s
tent, but the licensing arrangement was expected to
most massive market for entertainment. For the past
generate only small revenues for some years to come.
five years, the Chinese government had steadfastly
The U.S. government had instituted restrictions pre-
refused to issue Netflix a license to operate in China,
cluding all U.S.-based companies from having oper-
preferring instead to control the content its citizens
ations in North Korea, Syria, and Crimea.
were allowed to see—for example, government cen-
Netflix estimated that it usually took about
sors required that an entire series of a multi-episode
two years after the initial launch in a new country or
offering had to be approved before it could begin to
geographic region to attract sufficient subscribers
be shown on an online platform. Aside from the cen-
to generate a positive “contribution profit”—Netflix
sorship issue, most observers believed the Chinese
defined “contribution profit (loss)” as revenues less cost
government was blocking Netflix’s entry in order to
of revenues (which consisted of amortization of content
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CASE 11 Netflix’s 2020 Strategy for Battling Rivals in the Global Market for Streamed Video Subscribers C-151

assets and expenses directly related to the acquisition, supplement its internal efforts by entering into multi-
licensing, and production/delivery of such content) and year collaborative agreements with outside develop-
marketing expenses associated with its domestic stream- ers and producers not owned by its rivals to license
ing and international streaming business segments (the portions of their existing titles to Netflix and to pro-
company ceased all marketing activities related to its duce new original content that would be owned by
domestic DVD business prior to 2015). Netflix or licensed to Netflix.
A fourth important shift in Netflix’s business Netflix started streaming its first original content
model and strategy began in 2011–2012. CEO Reed title, House of Cards, in February 2012; House of Cards,
Hastings and other senior Netflix executives real- a political drama that ran six seasons, was a major
ized that there were low barriers to entry into the hit with subscribers, garnered acclaim from critics
subscription-based video streaming business for and reviewers, and received 213 awards nomina-
movie producers and TV broadcasters that had over tions (Golden Globe, Primetime Emmys, Screen
the years amassed big libraries of attractive content. Actors Guild, and others) and 35 overall wins during
Indeed, many of the titles that Netflix was streaming 2013–2018. Netflix’s spending for new original con-
to subscribers were being licensed from these very tent mushroomed during the ensuing years, with total
same entities, and the license fees for these titles were spending for new content of $12 billion in 2018 and
rising rapidly, as content owners recognized that $15 billion in 2019, of which roughly 85 percent was
their title libraries had significant value to Netflix, estimated to be for original content. Spending for 2020
Amazon, and others who were in the streamed enter- was projected to be $17.3 billion on a cash basis, with
tainment business and that they commanded sig- 85 percent or more being allocated to original ­content.12
nificant bargaining power to raise licensing fees as One Wall Street analyst projected that Netflix’s spend-
current licenses expired. Netflix executives further ing for new content could rise to $26 billion by 2028.13
foresaw that the company was likely to be put at a
significant competitive disadvantage when these con-
tent owners came to the conclusion they could make Netflix’s Strategy in 2020
bigger profits from their content libraries by starting While over 4.5 billion (57.7 percent) of the world’s
up their own video streaming businesses to com- population of 7.8 billion people used the Internet as
pete against Netflix for subscribers in many country of January 2020 (an increase of 298 million since
markets rather than licensing titles to Netflix. Reed January 2019)14, Netflix viewed the size of the near-
Hastings and his executive team believed that when term market potential for securing streaming sub-
content-rich rivals entered the streamed entertain- scribers worldwide (including China) as being the
ment business (as they were certain to do at some approximately 1.1 billion people/households cur-
point) and triggered a head-on competitive battle for rently having high-speed wired and wireless internet
subscribers that the winners would be those com- service.15 Surveys conducted during 2019 indicated
panies that potential subscribers viewed as having that the worldwide average amount of time indi-
attractive and fresh content they were willing to pay viduals spent using the internet on any device was
monthly or annual fees to watch. Furthermore, they 6 hours and 43 minutes, equal to more than 100 days
were certain that when these rivals emerged, they of online time per year.16 The worldwide average
would discontinue renewing their licenses for popu- fixed internet download speed in December 2019 was
lar programs (especially TV shows) with Netflix, pre- 73.6 million bits per second (mbps) and the world-
ferring to use these titles to attract new subscribers to wide average mobile internet download connection
their own streamed entertainment services. speed was 32.0 mbps.17 These speeds were expected
These realizations resulted in Netflix undertak- to climb steadily toward 100 mbps (or more) by 2025,
ing a long-term strategic initiative to change its port- thereby making it feasible for hundreds of ­millions
folio of titles from mainly all licensed to a portfolio more households with fixed internet connections to
of titles that was increasing comprised of original watch streamed content and paving the way for a rap-
content created, produced, and owned by Netflix. idly rising percentage of people worldwide to access
The company immediately moved to develop and streamed content on their smartphones or other
continually strengthen its in-house content creation mobile devices—going into 2020 there were some
and production capabilities, but it also elected to 3.5 billion users of smartphones.
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C-152 PART 2 Cases in Crafting and Executing Strategy

Netflix’s strategy going into 2020 was focused As of September 2019, international pricing for
squarely on: the three plans ranged from approximately $3 for a
mobile-only plan to $22 per month per U.S. ­dollar
• Growing the number of global streaming subscrib-
equivalent for a premium subscription plan in
ers, particularly in those countries/geographic
Switzerland; in many countries, the monthly prices
regions with the biggest growth opportunities.
of standard and premium plans were in the range of
• Continuing to enhance the appeal of its library $9–$14 per U.S. dollar equivalent.19 Netflix execu-
of streaming content, with growing emphasis on tives expected that the prices of the various subscrip-
exclusive original movies and original series pro- tion plans in each country would likely rise over time,
duced in-house and in collaboration with selected thereby helping boost the global monthly average
outside movie and TV show producers. revenue the company received per paying subscriber
• Increasing partnerships with movie and television above the 2019 average of $10.82.
producers in specific countries to produce original Netflix began testing a cheaper mobile-only
content for audiences in that country’s language. $3 per month plan in 2018 in India, one of its key
• Focusing marketing and advertising on the par- developing markets because of the size of India’s
ticular countries and geographic regions deemed population and heavy use of mobile devices for video
to have the biggest subscriber growth potential. streaming. The $3 mobile-only plan test in India
• Continuing to introduce mobile-only subscription was successful in boosting subscriber growth and in
plans in countries where a big percentage of the increasing member retention, prompting Netflix to
population used mobile devices to watch stream- expand its low-priced mobile offering to Malaysia
ing content. and Indonesia in 2019; the test in these countries
similarly impacted subscriber growth and member
retention. In December 2019, Netflix began testing
Subscription Pricing Strategy subscription discounts of up to 50 percent if new sub-
Going into 2020, Netflix offered three types of scribers signed up for three-, six- and 12-month plans;
streaming membership plans. Its basic plan, cur- the goal was to gauge the impact of both lower prices
rently priced at $8.99 per month in the United and multi-month plans on new signups and member
States, included access to standard definition quality retention and thereby learn more about which types
streaming (640 × 480 pixels) on a single screen at a of mobile-only subscription plans tended to produce
time. Its standard plan, currently priced at $12.99 per the biggest gains in subscriber revenues. Netflix
month and included access to high-definition quality indicated that mobile-only plans were likely to be
streaming (1080 × 720 pixels) on two screens concur- tested in additional countries in 2020, principally in
rently. The company’s premium plan, currently priced large-population countries where wired high-speed
at $15.99 per month, included access to 4K ultra-high Internet connections were not widely available and
definition quality (3,840 × 2,160 ­pixels) content on where mobile devices were frequently or exclusively
four screens concurrently. Netflix recommended used for video streaming.
three mbps of download speed for standard defini- In January 2020, Netflix CEO Reed Hastings
tion streaming, five mbps for high definition and indicated the company had no interest in adding
25 mbps for 4K Ultra HD. During 2019, all three plans an ad-supported subscription plan, largely because
were attracting healthy numbers of new ­subscribers— of the difficulties in convincing advertisers to shift
none of the three clearly stood out as “most popu- some of their advertising dollars to Netflix’s stream-
lar” worldwide. Netflix management believed this ing platform. In Reed Hastings view, Google,
indicated “we’re providing a range of options at a Facebook, and Amazon had tremendously powerful
range of price points that allow consumers in the capabilities in online advertising because they gath-
markets that we serve to sort of select into the right ered data about the browsing and purchasing habits
model.”18 However, over the past 5–8 years, there had of people while they were online (and their personal
been a very gradual shift towards the highest-­priced data as well) from many sources and provided it as
premium plan, a trend likely being driven by more service to their advertisers. The valuable user-related
households purchasing big-screen ultra-high defini- data advertisers got from Google, Facebook, and
tion TVs. Amazon allowed them to effectively target their ads
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CASE 11 Netflix’s 2020 Strategy for Battling Rivals in the Global Market for Streamed Video Subscribers C-153

and realize a bigger return on their advertising expen- watchlist, and then display those titles in each cluster
ditures. The detailed data that Netflix collected on in an order that started with the title that Netflix’s
every subscriber’s viewing history and title prefer- algorithms predicted the subscriber was most likely to
ences was of no value to advertisers and provided enjoy down to the title the subscriber was predicted to
zero competitive benefit in taking advertising dollars least enjoy. In other words, the subscriber’s ratings of
away from “the big three.” So, for Netflix to attract titles viewed, the titles on the subscriber’s watchlist,
$5 to $10 billion dollars in advertising to support an and the title ratings of all Netflix subscribers deter-
ad-based subscription plan posed formidable chal- mined the order in which the available titles in each
lenges that Netflix executives firmly believed the cluster or genre were displayed to a subscriber—with
company should not try to surmount.20 one click, subscribers could see a brief profile of each
title and Netflix’s predicted rating (from one to five
Netflix’s Strategy to Develop stars) for the subscriber. When subscribers came
upon a title they wanted to view, that title could be
and Employ Viewership watch-listed for future viewing with a single click. A
Tracking and Recommendation member’s complete watchlist of titles was immedi-
Software to Enhance Its ately viewable with one click whenever the member
visited Netflix’s website. With one additional click,
Engagement with Subscribers any title on a member’s watchlist could be activated
For some time, Netflix had developed proprietary for immediate viewing. Netflix management saw its
software technology that allowed members to easily title recommendation software as a quick and per-
scan a movie’s length, appropriateness for various sonalized means of helping subscribers identify and
types of audiences (G, PG, or R), primary cast mem- then watch titles they were likely to enjoy. Netflix’s
bers, genre, and an average of the ratings submitted subscriber tracking data indicated that 80 percent of
by other subscribers (based on one to five stars). subscribers’ watch choices came from their personal
With one click, members could watch a trailer pre- recommendation engine.
viewing a movie or original series or TV show if they Netflix invested in developing new software
wished. Most importantly, perhaps, were algorithms capabilities and refining existing capabilities every
that created a personalized “percentage match” for year. As of 2020, Netflix had data pertaining to:
each title that was a composite of a subscribers’ own
• The titles each subscriber had viewed in the past
ratings of previously viewed titles, titles the member
several days, the past week, the past month, the cur-
had placed on a “watchlist” for future viewing, and
rent calendar year, the past calendar year, and the
the overall or average rating of all subscribers (sev-
entire period the subscriber had been a member.
eral billion ratings had been provided by subscribers
over the years). • The subscriber’s ratings of each title.
Subscribers often began their search for titles by • The titles on the subscriber’s watch list.
viewing a list of personalized recommendations that • The number of times each title had been viewed
Netflix’s software automatically generated for each by all subscribers in both each country and world-
member. Each member’s list of recommended titles wide the past several days, the past week, the past
was also partly the product of Netflix-created algo- month, the current calendar year, the past calen-
rithms that organized the company’s entire content dar year, and the entire period that title had been
library into clusters of similar movies/TV shows and on Netflix.
then sorted the titles in each cluster from most liked • The total number of hours subscribers spent
to least liked based on subscriber ratings. Those sub- watching Netflix titles for each month of each
scribers who favorably or unfavorably rated similar year in each country and worldwide.
movies/TV shows in similar clusters were categorized
as like-minded viewers. When a subscriber was online
and browsing through the selections, the software Content Strategy
was programmed to check the clusters the subscriber Going into 2020, Netflix had bulked its original
had previously viewed, determine which selections in content offerings up to a total of 1,197 titles, but its
each cluster the customer had yet to view or place on streaming library still included 3,751 licensed movies
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C-154 PART 2 Cases in Crafting and Executing Strategy

and 1,569 television shows.21 New seasons of five to guide decisions of which titles to stream to which
original series and sequels to two original movies countries and then to make changes in each coun-
had already been announced for showing in the first try’s title mix as shifts occurred in the viewing hours
quarter of 2020, following an unusually heavy slate devoted to particular genres and the popularity of
of new originals released in the last two quarters of newly released titles.
2019. Reed Hastings said the company’s fourth quar- However, to increase subscriber satisfaction
ter 2019 slate of releases “set a new bar for the variety with its streamed offering to each country, Netflix
and high quality of films we produce to appeal to our was continuing a long-term initiative to steam title
members’ many diverse tastes.”22 offerings to more and more countries in their native
Three high-profile shows —Parks and Recreation languages so that subscribers could enjoy better
(Peacock), Friends (HBO MAX), and The Office enjoy Netflix’s programs. In the last quarter of 2019,
(Peacock)—were all set to leave Netflix and return to Netflix localized the language of its streaming ser-
rivals during 2020 as current licenses expired. While vice to Vietnam, Hungary, and the Czech Republic
the loss of these programs was a setback, Netflix (Czechia). Furthermore, Netflix was engaged in an
management was not unduly disturbed; its chief con- ongoing effort to license content from local produ-
tent officer explained:23 cers of movies and TV shows and bundle them with
the titles Netflix was streaming to that country from
We’ve had, over the years, incredibly popular product its own title collection. In late 2019, Netflix added
come on and off the service . . . . . And typically, what new locally-bundled titles in partnership with Sky
happens is our members, through our incredible per-
Italia, Canal+ in France, KDDI in Japan, and Izzi
sonalization, deep library, and broad library, are able
to find their next favorite show. And [what will] will
in Mexico.
happen with Friends fans, [is that] some of them will A related shift underway in Netflix’s content
find it elsewhere, and some of them will find their next strategy in 2020 was the increased emphasis being
favorite show [on Netflix]. placed on growing the number of titles (1) produced
in languages other than English, (2) filmed in a
To help offset the losses of these popular shows, greater number of different locations, and (3) built
Netflix had reportedly spent $100 million for a around local country storylines. This shift was being
multi-year license to stream Seinfeld episodes to driven not only by the positive local subscriber
its subscribers. response to new films and series produced in local
Netflix streamed different sizes and combina- languages and containing locally-appealing con-
tions of portfolio titles to different countries. This tent but also by Netflix’s tracking data that showed
was because its title tracking data revealed there were many of these titles had gained popularity in other
very big differences in the 20 to 30 most-watched countries. A new 2017 Brazilian science-fiction show
titles from country to country. This was partly produced in Portuguese for Brazil, to the surprise of
because of (1) the different languages spoken in dif- Netflix executives, had scored well with audiences
ferent countries and the varying percentages of sub- around the world—this was Netflix’s first instance
scribers that understood storylines produced in one of a local-language program working well in loca-
language versus another and (2) varying subscriber tions where other languages dominated. Local lan-
preferences from country-to-country for some types/ guage films produced in India, South Korea, Japan,
genres of movies, series, and documentaries versus Turkey, Thailand, Sweden, and the United Kingdom
others. Netflix’s tracking of program viewership were among the most popular 2019 titles. An origi-
showed clearly that a strategy of streaming much the nal Spanish series titled La Casa de Papel, which was
same number and combination of titles to all coun- retitled Money Heist in English-speaking countries
tries was inferior compared to a strategy of custom- and was scheduled to begin its fourth season dur-
izing the types of titles streamed to each country to ing 2020, had developed a wide audience, appear-
match up well with what its tracking data showed ing on the top ten most watched titles in more than
subscribers were watching and to discontinue stream- 70 countries. As of January 2020, Netflix had glob-
ing of titles not watched or watched very infrequently. ally released 100 seasons of local language, original
As a consequence it had become standard practice at scripted series from 17 countries and had plans for
Netflix to use its title-viewing data for each country over 130 seasons of such programs in 2020.
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CASE 11 Netflix’s 2020 Strategy for Battling Rivals in the Global Market for Streamed Video Subscribers C-155

As a consequence, in 2020 Reed Hastings and calculated to please subscribers, boost subscriber
Netflix’s other content programming executives were retention, and help drive subscriber growth. Netflix
focused on creating a portfolio of forthcoming titles had further learned from its viewership tracking data
for every taste, every mood, and every region of the and subscriber growth statistics that media reports
world. A conscious effort was being made to sched- of critically-acclaimed reviews of Netflix titles, cou-
ule releases of premium quality new original films pled with media reports of Netflix titles receiving
and original series scattered fairly evenly across the numerous nominations and awards, were important
year and across all genres so as to provide subscrib- positive factors in steering existing subscribers to
ers in all parts of the world with an ongoing stream of watch these titles and stimulating subscriber growth.
fresh new titles that looked interesting to watch and Netflix’s original content programs in 2019 pulled
proved very enjoyable after watching them. in 24 nominations for the 2020 Academy Awards,
Netflix began ramping up its capabilities to cre- more than any other studio. From 2013 through
ate new original animation films in 2017. Its first big February 2020, Netflix original titles had received
new feature, Klaus, was released in late 2019, and 296 nominations and 83 wins24—an indication of
was an instant audience pleaser in countries across the progress the company had made in creating and
the world and an Oscar nominee for Best Animated producing top notch original series and films. As
Feature. Two new big theatrical-scale animated fea- far as Netflix top executives were concerned, the
tures were on tap for release in 2020; Reed Hastings more viewer hours spent watching Netflix originals,
believed both would be competitive with any ani- the more critically-acclaimed reviews of its original
mated films shown at movie box offices. Animated titles, the more award nominations, and the more
films traveled more predictably across countries than award wins, the better. All contributed to improving
other types of titles. subscribers’ experiences with Netflix, higher com-
Netflix management also relied heavily on pany’s revenues and operating margins, bigger inter-
its viewership tracking data for each title to guide nal cash flows from operations, and more funds
decision-­making on how to allocate upcoming available for creating more new original content
expenditures for new original content. For example, going forward.
if season one of a new original series was highly Content development projects announced for
popular with subscribers, the series was renewed for 2020 included a multiyear pact with Nickelodeon for
a second season, and if a new series failed to spark animated originals; a multiyear film and TV deal with
widespread viewing and garnered only small audi- “Game of Thrones” creators David Benioff and Dan
ences, with declining views of succeeding episodes, Weiss; and a three-year deal with a South Korean
the series was canceled. If a new original series or media conglomerate for originals and licensed titles
film was viewed by 40 to 70 million subscribers in and titles from another Korean film producer. Netflix
the first few weeks or months or if its viewership built announced in January 2020 that 30 employees in The
significantly over a 4-to-12 month period, manage- Netherlands were being transferred to Rome, Italy,
ment was likely to invest in the development of a sec- for the purpose of opening a new office to strengthen
ond season of the series and perhaps a new original its local content creation partnerships in Italy and
series or movie in the same genre (action, suspense work on growing the number of new movies and ser-
thriller, science fiction, or adult comedy) for release ies made in Italy.
in the following year. Netflix released two romantic-
comedy films in 2019 that proved quite popular with Marketing and Advertising
subscribers and quickly decided to follow-up with
sequels to both titles in the first half of 2020. It had Strategy in 2019–2020
several action films scheduled for 2020 as follow-on Netflix spent $2.65 billion on marketing and advertis-
releases for a much-viewed action film released in the ing in 2019, up from $2.37 billion in 2018. Netflix used
last quarter of 2019. multiple marketing approaches to attract subscribers,
Going into 2020, Netflix was continuing its but especially online advertising (paid search listings,
efforts to upgrade the content and production qual- banner ads on social media sites, and permission-based
ity of all new originals—the objective was to present e-mails), and ads on regional and national television.
subscribers with premium entertainment content Advertising campaigns of one type or another were
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underway more or less continuously, with the lure of Business Segment Reporting—
one-month free trials and announcements of new and
forthcoming original titles usually being the promin-
New Metrics for 2020
ent ad features. Netflix’s expenditures for digital and Until the fourth quarter of 2019 Netflix had reported
television advertising were unreported in 2019 but its performance for three business segments: domestic
were $1.8 billion in 2018 and $1.09 billion in 2017. streaming, international streaming, and domestic DVD.
Other marketing costs in 2019 included: Management used this business segment classification
for purposes of making operating decisions, assessing
• Costs pertaining to free trial subscriptions.
financial performance, and allocating resources. The
• Payments to mobile operators across the world to company’s performance in each of these three business
create quick and easy-to-use procedures for smart- segments for 2015 through 2019 is shown in Exhibit 5.
phone users to access Netflix streamed or down- However, beginning with the fourth quarter of
loadable programming. Netflix believed it was 2019 and going forward, management decided the com-
particularly important to make mobile streaming pany’s operations had evolved into a single business—
from Netflix instantly accessible to those people global streaming operations—and revealed that top
who basically only wanted to have their relation- management, especially the CEO, had begun making
ship with Netflix on a mobile device. operating decisions, assessing financial performance,
• Promotional campaigns for new original titles to and allocating resources based on the performance of
generate more density of viewing and conversa- its streaming operations in four geographic regions:
tion around each title. Such campaigns involved the United States and Canada (UCAN), Europe, the
sending emails to subscribers at least weekly and Middle East, and Africa (EMEA), Latin America
often more frequently calling attention to titles (LATAM), and the Asia-Pacific (APAC). The com-
highly matched to a title viewed the previous day, pany provided a breakdown of its performance in each
previous several days, or previous week. E-mails of the four regions for 2019—see Exhibit 6.
were also sent regularly to announce the avail- Reed Hastings made special mention of the fact
ability of new releases that matched well with the that while subscription prices were different in every
subscriber’s viewing history. When users were country around the world and while management def-
browsing various titles in various genres of inter- initely took note of the average monthly revenues per
est, there was always a row of titles with the head- subscriber in each country and region, Netflix was
ing “Because you watched [title] just under rows not managing its business to boost ­average revenue
of titles on the subscriber’s watch list. per subscriber in each country. Rather, management
On several occasions, Netflix CEO Reed was managing to maximize revenues worldwide.
Hastings called attention to the growing importance Hastings said:26
of marketing efforts calling a subscriber’s atten- Obviously, as we have lower-priced mobile offers, that’s
tion to titles closely matched to recently viewed going to bring down a blended [average revenue per
titles or to help make certain new titles a bigger hit subscriber] in a country or in a market. But if we’re
in a particular nation or among a particular demo- doing that in a revenue-accretive way, we think that’s
graphic segment. These were deemed valuable con- great for our long-term business. We’re growing sub-
tributors to heightening subscriber satisfaction with scribers, and we’re growing revenue.
the entertainment value Netflix was providing and In the first quarter of 2020, as governments in
also aiding subscriber retention and the acquisi- many countries instituted home confinement orders
tion of new subscribers. Further, because Netflix to stem the spread of coronavirus (COVID-19),
operated in so many countries, Hastings was a Netflix’s global streaming membership surged by a
big fan of experimenting with different marketing quarterly record 15.8 million to a total of 182.9 ­million
approaches in different markets and thereby learn- paid subscribers. School-closings and work-from-home
ing more about what worked well in marketing policies on the part of many organizations caused
Netflix’s original content and differentiating Netflix mushrooming demand for home entertainment and
from rival streaming providers.25 Those approaches a jump in the average number of daily viewing hours
that were successful became candidates for use in of Netflix members. In March 2020, Internet usage
other locations. became so great that a number of governments and
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CASE 11 Netflix’s 2020 Strategy for Battling Rivals in the Global Market for Streamed Video Subscribers C-157

EXHIBIT 5 Netflix’s Performance by Business Segment, 2015–2019 (in millions, except

for average monthly revenues per paying member and percentages)
Domestic Streaming Segment 2015 2016 2017 2018 2019

Paid memberships at year-end 43.4 47.9 52.8 58.5 61.0

Paid net membership additions 5.6 4.7 4.9 5.7 2.6
Average monthly revenue per paying membership $8.50 $9.21 $10.18 $11.40 $12.57*
Revenues $4,180.3 $5,077.3 $    6,153.0 $    7,646.6 $    9,243.0
Cost of Revenues (Note 1) 2,487.2 2,855.8 3,319.2 4,038.4 4,867.3
Marketing costs      313.6      412.9           603.7       1,025.4       1,063.0
Contribution profit (Note 2) $1,375.5 $1,712.4 $    2,078.5 $    2,582.9 $    3,312.6
Contribution margin 33% 34% 34% 34% 36%
International Streaming Segment
Paid memberships at year-end 27.4 41.2 57.8 80.8 106.1
Paid net membership additions 11.7 14.3 18.5 22.9 25.3
Average monthly revenue per paying membership $ 7.48 $ 7.81 $ 8.66 $ 9.43 Note 3
Revenues $1,953.4 $3,211.1 $    5,089.2 $    7,782.1 $10,616.2
Cost of Revenues (Note 1) 1,780.4 3,042.7 4,359.6 5,776.0 7,449.7
Marketing costs      506.4      684.6          832.5       1,344.1       1,589.4
Contribution profit (Note 2) $    (333.4) $    (516.2) $        (102.9) $                662.0 $    1,577.1
Contribution margin (17)% (16)% (2)% 9% 15%
Domestic DVD Segment
Paid memberships at year-end 4.8 4.0 3.3 2.7 2.2
Average monthly revenue per paying membership $ 10.30 $10.22 $10.17 $ 10.19 Note 3
Revenues $                    645.7 $                    542.3 $             450.5 $             365.6 $            297.2
Cost of Revenues (Note 1) 323.9 262.7 202.5 153.1 123.2
Marketing costs            —            —                          —                          —                            —
Contribution profit (Note 2) $     321.8 $     279.5 $       248.0 $       212.5 $       174.0
Contribution margin 50% 52% 55% 58% 59%
Global Totals
Paid memberships at year end 75.6 93.1 117.2 142.0 169.3
Global average monthly revenue per paying
membership $ 8.15 $ 8.61 $ 9.43 $10.31 $10.82
Revenues $6,779.5 $8,830.7 $11,692.7 $15,794.3 $20,156.4
Operating income 305.8 379.8 838.7 1,605.2 2,604.2
Operating margin 5% 4% 7% 10% 13%
Net income $122.6 $186.7 $ 558.9 $1,221.2 $1,867.0

* Includes United States and Canada, due to a Q4 2019 change in Netflix’s reporting of its geographic business segments.
Note 1: Cost of revenues for the domestic and international streaming segments consist mainly of the amortization of streaming content
assets, with the remainder relating to the expenses associated with the acquisition, licensing, and production of such content. Cost of rev-
enues in the domestic DVD segment consist primarily of delivery expenses such as packaging and postage costs, content expenses, and
other expenses associated with the company’s DVD processing and customer service centers.
Note 2: The company defined contribution margin as revenues less cost of revenues and marketing expenses incurred by segment.
Note 3: Netflix discontinued reporting this statistic due to a change in the definitions of its geographic business segments, effective with
the fourth quarter of 2019.
Source: Company 2017 10-K Report, pp. 19–22 and pp. 59–61; Company 2018 10K Report, pp. 20–22 and pp. 60–62; and p. 15 of Reed
Hastings’ “Letter to Shareholders,” included as part of the company’s Report of Fourth Quarter 2019 Earnings, January 21, 2020.
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EXHIBIT 6 
Netflix’s Performance by Geographic Region, 2019 (in millions, except
for average monthly revenues per paid subscriber)
Three months ended

March 31, June 30, Sept. 30, Dec. 31, Full Year
2019 2019 2019 2019 2019

UCAN Streaming
Revenue $2,257 $2,501 $2,621 $2,672 $10,051.2
Paid Memberships 66.63 66.50 67.11 67.66 67.66
Paid Net Additions 1.88  −0.13 0.61 0.55 2.91
Average Monthly Revenue per Paid Subscriber $11.45 $12.52 $13.08 $13.22 $12.57
EMEA Streaming
Revenue $1,233 $1,319 $1,428 $1,563 $5,543.1
Paid Memberships 42.54 44.23 47.36 51.78 51.78
Paid Net Additions 4.72 1.69 3.13 4.42 13.96
Average Monthly Revenue per Paid Subscriber $10.23 $10.13 $10.40 $10.51 $10.33
LATAM Streaming
Revenue $630 $677 $741 $746 $2,795.4
Paid Memberships 27.55 27.89 29.38 31.42 31.42
Paid Net Additions 1.47 0.34 1.49 2.04 5.34
Average Monthly Revenue per Paid Subscriber $7.84 $8.14 $8.63 $8.18 $8.21
APAC Streaming
Revenue $320 $349 $382 $418 $1,469.5
Paid Memberships 12.14 12.94 14.49 16.23 16.23
Paid Net Additions 1.53 0.80 1.54 1.75 5.63
Average Monthly Revenue per Paid Subscriber $9.37 $9.29 $9.29 $9.07 $9.24
Total Streaming
Revenue $4,440.0 $4,846.0 $5,173.0 $5,399.0 $19.859.2
Paid Memberships 148,860 151,510 158,334 167,090 167,090
Paid Net Additions 9.60 3.43 6.77 8.76 27.83
Average Monthly Revenue per Paid Not Not
Subscriber reported reported $11.13 $11.06 $10.82

Source: Company website, Excel spreadsheet regional information for 2019, posted in the Investor Relations section as part of the
company’s report of Fourth Quarter 2019 Financial Results, www.netflix.com, accessed February 15, 2020.

internet service providers asked Netflix to temporarily infections that membership growth and viewing
reduce the network traffic of its members. According hours would decline
to CEO Reed Hastings,27
Using our Open Connect technology, our engineer- The Financial Strain of Netflix’s
ing team was able to respond immediately, reducing Growing Expenditures for
network use by 25 percent virtually overnight in those
countries, while also substantially maintaining the qual-
Original Content and Other
ity of our service, including in higher definition. We’re Content Acquisitions
now working with ISPs to help increase capacity so that
The company’s heightened strategic emphasis on
we can lift these limitations as conditions improve.
original content produced in-house had resulted
Netflix executives expected as progress was in multi-billion-dollar annual increases in Netflix’s
made in containing the virus and reducing new financial obligations to pay for streaming content
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Netflix’s 2020 Strategy for Battling Rivals in the Global Market for Streamed Video Subscribers 21

CASE 11 Netflix’s 2020 Strategy for Battling Rivals in the Global Market for Streamed Video Subscribers C-159

and sharply higher negative cash flows from opera- would continue to experience negative, but progres-
tions (see Exhibit 7). Netflix was covering these obli- sively smaller, cash flow deficits, for several more
gations with new issues of common stock and new years due to growing expenditures for original con-
issues of senior notes; details of Netflix’s outstanding tent. However, executive management was confident
senior notes are shown in Exhibit 8. that the company’s expected growth in subscribers,
Netflix management forecasted that the com- subscription revenues, and operating profit margins
pany would have a negative free cash flow deficit would in the near future result in positive and growing
of about $2.5 billion in 2020 and that the company cash flows from operations, enabling the company

EXHIBIT 7 The Growing Financial Strain of Netflix’s Strategic Emphasis on Producing

Original Content In-House, 2015–2019 (in millions of dollars)
2019 2018 2017 2016 2015

Streaming content obligations at year-end $19,490.1 $19,285.9 $17,694.6 $14,479.5 $10,902.2

Additions to streaming content assets 13,916.7 13,043.4 9,805.8 8,653.3 5,771.6
Additions to DVD content assets Note 1 38.6 53.7 77.2 78.0
Amortization of streaming content assets 9,216.2 7,532.1 6,197.8 4,788.5 3,405.4
Amortization of DVD content assets 2.7 41.2 60.7 79.0 79.4
Net cash used in operating activities (2,887.3) (2,680.5) (1,785.9) (1,474.0) (749.4)
Proceeds from issuance of debt 4,469.3 3,921.8 3,020.5 1,000.0 1,500.0
Proceeds from issuance of common stock 72.5 124.5 88.4 37.0 78.0
Outstanding senior notes 14,893.0 10,360.0 6,499.4 3,364.3 2,371.4

Note 1: This item was reclassified and merged into a different accounting category on the company’s Cash Flow Statement.
Source: Company 10-K Reports 2019, 2018, 2017, 2016, and 2015.

EXHIBIT 8 Netflix’s Outstanding Long-Term Debt as of December 31, 2019

Principal Amount
Debt Issues Issue Date Maturity Date Interest Due Dates
at Par

4.875% Senior Notes $1.00 billion October 2019 June 2030 June 15 and December 15
3.625% Senior Notes $1.23 billion October 2019 June 2030 June 15 and December 15
5.375% Senior Notes $1.34 billion April 2019 November 2029 June 15 and December 15
3.875% Senior Notes $900 million April 2019 November 2029 June 15 and December 15
6.375% Senior Notes $800 million October 2018 May 2029 May 15 and November 15
4.625% Senior Notes $1,260 million October 2018 May 2029 May 15 and November 15
5.875% Senior Notes $1.9 billion April 2018 November 2028 April 15 and November 15
4.875% Senior Notes $1.6 billion October 2017 April 2028 April 15 and October 15
3.625% Senior Notes $1.561 billion May 2017 May 2027 May 15 and November 15
4.375% Senior Notes $1.0 billion October 2016 November 2026 May 15 and November 15
5.500% Senior Notes $700 million February 2015 February 2022 April 15 and October 15
5.875% Senior Notes $800 million February 2015 February 2025 April 15 and October 15
5.750% Senior Notes $400 million February 2014 March 2024 March 1 and September 1
5.50% Senior Notes $700 million February 2015 February 2022 April 1 and October 1
5.375% Senior Notes $500 million February 2013 February 2021 February 1 and August 1

Source: Company 2019 10-K Report, p. 55.

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to reduce borrowing and begin to pay down its long- But there is also a very large market opportunity; today
term debt. In April 2018, CEO Reed Hastings said:28 we believe we’re less than 10% of TV screen time in
the U.S. (our most mature market) and much less than
We will continue to raise debt as needed to fund our that in mobile screen time. Many [industry observers]
increase in original content. Our debt levels are quite are focused on the “streaming wars,” but we’ve been
modest as a percentage of our enterprise value, and we competing with streamers (Amazon, YouTube, Hulu)
believe [issuing] debt is [a] lower cost of capital com- as well as linear TV for over a decade. The upcoming
pared to equity. arrival of services like Disney+, Apple TV+, HBO
Max, and Peacock is increased competition, but we
Reed Hasting’s View of are all small compared to linear TV. While the new
competitors have some great titles (especially catalog
the Forthcoming Globally titles), none have the variety, diversity, and quality
Competitive Battle for Streamed of new original programming that we are producing
around the world. The launch of these new services
Entertainment Subscribers will be noisy. There may be some modest headwind to
In Reed Hastings’ “Letter to Shareholders” in our near-term growth. . . In the long-term, though, we
October 16, 2019, he talked about the upcoming expect we’ll continue to grow nicely given the strength
of our service and the large market opportunity. By way
streaming war with all the various new competitors:29
of example, our growth in Canada, where Hulu does
We compete broadly for entertainment time. There not exist, is nearly identical to our growth in the U.S.
are many competitive activities to Netflix (from watch- (where Hulu is very successful at about 30 million paid
ing linear TV to playing video games, for example). memberships).

ENDNOTES
1 11
As reported by Andrew Liptak, “The MPAA Monthly active users and hours watched are in Joe Supan, “Everything You Need to
says streaming video has surpassed cable based on information about iQiyi posted on Know About Netflix,” Allconnect, posted
viewing worldwide,” posted at www.theverge Wikipedia (accessed January 27, 2020). at www.allconnect.com, January 17, 2020
12
.com, March 21, 2019 (accessed February 3, Todd Spangler, “Netflix Projected to Spend (accessed February 11, 2020).
22
2020). Over $17 Billion on Content in 2020,” Variety, Reed Hastings, “Letter to Shareholders,” p. 3,
2
Amazon press release announcing 4th January 16, 2020, posted at www.Variety.com included as part of Netflix’s announcement
Quarter 2019 financial results, January 30, (accessed February 11, 2020). of fourth quarter 2019 earnings, January 21,
13
2020. Ibid. 2020, posted in the Investor Relations section
3 14
Savannah Marie, “Report: Amazon Prime Digital 2020 Global Overview Report, at www.netflix.com.
23
Movie Library almost 5x the Size of Netflix and posted at www.thenextweb.com on January From p. 11 of Netflix’s 4th Quarter 2019
Nearly 7.5x the Size of Hulu,” Xanjero Media, 30, 2020 (accessed February 10, 2020). Earnings Call Transcript, January 21, 2020,
15
January 29, 2019, posted at www.xanjero.com Transcript of remarks by David Wells, Netflix’s posted in the Investor Relations section at
(accessed February 3, 2020). Chief Financial Officer, at Morgan Stanley, www.netflix.com.
4
Amazon press release announcing 4th Technology, Media & Telecom Conference, 24
Wikipedia, https://en.wikipedia.org/
Quarter 2019 financial results, January 30, February 27, 2018, www.netflix.com (accessed wiki/List_of_accolades_received_by_Netflix
2020. April 5, 2018). (accessed February 14, 2020).
5 16 25
Transcript of Peacock’s Investor Day Digital 2020 Global Overview Report, Based on Reed Hastings’ comments during
Presentation, January 16, 2020, posted in the posted at www.thenextweb.com on January the company’s conference call announcing the
Investor Relations section at www.cmcsa.com 30, 2020 (accessed February 10, 2020). company’s financial results in the first quarter
17
(accessed February 7, 2020). According to the Speedtest Global Index, of 2018, April 16, 2018.
6 26
Peacock Investor Day Presentation Slides, posted at www.speedtest.net (accessed Netflix’s 4th Quarter 2019 Earnings Call
January 16, 2020, posted in the Investor February 10, 2020). Transcript, January 21, 2020, posted in the
18
Relations section at www.cmcsa.com From p. 7 of Netflix’s 4th Quarter 2019 Earnings Investor Relations section at www.netflix
(accessed February 7, 2020). Call Transcript, January 21, 2020, posted in the .com.
7 27
Transcript of Peacock’s Investor Day Investor Relations section at www.netflix.com. Reed Hastings, “Letter to Shareholders,” p. 2,
19
Presentation, January 16, 2020, posted in the Rebecca Moody, “Which countries pay the included as part of Netflix’s announcement of
Investor Relations section at www.cmcsa.com most and least for Netflix?” posted September 3, first quarter 2020 earnings, April 21, 2020,
(accessed February 7, 2020). 2019 at www.comparitech.com (accessed posted in the Investor Relations section at
8
ViaconCBS Factsheet, posted at www.viacbs. February 12, 2020). www.netflix.com.
20 28
com (accessed February 13, 2020). For more details, see p.14 of Netflix’s Company press release, April 16, 2018.
9
Ryan Vlastelica and Bloomberg, “Apple’s 4th Quarter 2019 Earnings Call Transcript, 29
Reed Hastings, “Letter to Shareholders,” p. 5,
push in TV is ‘failing to resonate’, says analyst,” January 21, 2020, posted in the Investor included as part of Netflix’s announcement
posted at www.fortune.com, February 3, 2020 Relations ­section at www.netflix.com. of third quarter 2019 earnings, October 16,
21
(accessed February 9, 2020). According to data from JustWatch.com, 2019, posted in the Investor Relations section
10
Ibid. posted on January 17, 2020 and cited at www.netflix.com.