Case Study

Netflix (C): The race to videostreaming (Cartoon case)

4 pages
March 2014
Reference: IMD-3-2277

This case is part of a series on Netflix. Case (A) discusses the company’s growth until July 2011. Case (B) tells the story of Netflix’s sharp share price decline after it announced it was splitting the business in two and increasing prices. This (C) part covers the years 2012/13, when Netflix found its way back to success. Seeing that the industry bottleneck was shifting from the channel (who can reach the viewers?) to the content (who owns the movie rights?), Netflix started to produce its own TV shows (e.g. House of Cards, Hemlock Grove). All its shows were highly successful and even won prestigious Emmy Awards in 2013. Unlike cable networks, Netflix made whole seasons available at once, allowing customers to binge-watch all the episodes. In September 2013, two years after its meltdown, the Netflix share price hit an all-time high. Learning objectives: This case illustrates a complete strategic turnaround, as the name of the game changed in 2011. The story is a starting point for discussing the concept of value constellations, business ecosystems, Porter’s five forces and strategic moves. It can also be used to teach co-opetition, whereby Netflix and Amazon or Netflix and Apple are both competitors and partners at the same time.

Learning Objective

Learning objectives: This case illustrates a complete strategic turnaround, as the name of the game changed in 2011. The story is a starting point for discussing the concept of value constellations, business ecosystems, Porter’s five forces and strategic

Keywords
Internet, Film Entertainment, Competitive Strategy
Settings
Northern America, United States of America
Netflix, Travel and Leisure, Entertainment, Media
2012-2013
Type
Published Sources
Copyright
© 2014
Available Languages
English
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Netflix (E): Capture value (Cartoon case)
By Stefan Michel and Sarah Von Blumenthal
Case reference: IMD-7-2499 ©2023
Summary
This case is part of a series on Netflix. Case (A) discusses the company's growth until July 2011. Case (B) tells the story of Netflix’s sharp share price decline after it announced it was splitting the business in two and increasing prices. Case (C) covers the years 2012/13, when Netflix found its way back to success. Seeing that the industry bottleneck was shifting from the channel (who can reach the viewers?) to the content (who owns the movie rights?), Netflix started to produce its own TV shows (e.g., House of Cards, Hemlock Grove). Case (D), set in 2020, focuses on a diverse set of strategic challenges Netflix is facing. First, as indicated already in the (C) case, the cost of content through licensing and production continued to increase. Netflix users had to get used to more frequent cancellations of their favorite show. Second, the “streaming war” between Netflix, Disney+, Hulu, HBO Max, Apple TV, Amazon Prime Video and YoutTube was intensifying on two fronts: competition for subscribers and for content. Third, Netflix was increasing its global presence to accelerate economies of scale by introducing new pricing strategies in foreign countries. Fourth, most movies are watched on mobile phones, where a vertical format is more natural than the traditional horizontal format. It was an open question whether movie producers should adopt this trend set by Instagram and TikTok. Thanks to the growing subscriber base, Netflix’s revenue and profitability were increasing. But is the company well equipped for the intensifying “streaming war”?
Reference IMD-7-2499
Copyright ©2023
Copyright owner IMD Copyright
Organization Netflix
Industry Media
Available Languages English
Contact

Research Information & Knowledge Hub for additional information on IMD publications