In todays day and age if you dont know what Netflix is or have never

heard

of

Netflix

then

chances

are

that

youve

been

in

cryopreservation for about seventeen years and have no idea how important it has
become to every person who watches TV today. Netflix is the worlds leading Internet
television network with over 57 million subscribers in nearly 50 countries enjoying more
than two billion hours of TV shows and movies per month, including original series,
documentaries and feature films. Its members can watch as much as they want,
anytime, anywhere, on nearly any Internet-connected screen.
Netflix was founded in 1997 in California by Reed Hastings and Marc Randolph.
What inspired Reed Hastings to start Netflix was a late charge of $40 on a VHS copy of
Apollo 13. Originally when launched Netflix offered an innovative and simple method for
ordering movie DVDs. While entertainment giants such as Blockbuster and Redbox still

On Demand Video Streaming W

operated on the traditional business model of retail outlets and kiosks, Reed identified
the internet as a powerful source and developed a site via which users could order DVDs
with a single click with a traditional pay-per-order model. Netflix introduced the monthly
subscription concept in September 1999, and then dropped the single-rental model in
early 2000. Since that time, the company has built its reputation on the business model
of flat-fee unlimited rentals without due dates, late fees, shipping and handling fees, or
per title rental fees.

ADNAN DIYAN

MAR 649 DIGITAL

MARKETING

MAR 649 Digital Marketing

Adnan Diyan

In 2002, Netflix went public, raised $82 million and grew to gain 4 million
subscribers. There was a major paradigm shift in 2007 when Netflix changed or modified
their business model
(VOD) which resulted

61 % of Netflix

to include Video On Demand

in a dip in DVD rentals but at the

same time leveraged

users binge-watch

numbers from Video

shows at least

on Demand i.e. Netflix grew as

DVD sales fell from

every few weeks.

2006 to 2011. By 2010, Netflix's

their

books

with

boosting

streaming business had grown so quickly that within months the company had shifted
from the fastest-growing customer of the USPS first-class mail service to the biggest
source of evening Internet traffic in North America.

Now and Beyond - Long Term View: People love watching TV and watch over a
billion hours a day of linear TV. However for a long time now even if there have been a
number of channels offered i.e. variety of things to watch there has never been a choice
of content to watch. This has happened only due to the advancement of Internet
technology and the integration of Internet and Entertainment. The worlds leading linear
TV networks, such as HBO, ESPN, Canal+ and BBC, are moving into Internet TV. And
Netflix already is taking measures to make sure it maintains the lead among its
competitors. Among a number of initiatives for a long term dominance Netflix has a
number of cards up its sleeve like spending $3B for 2015 on just content. With a special
focus on original content (House of Cards being one of the most anticipated series).
In addition to promotion of original content, Netflix is available in only 50 countries
right now and intends to expand to every country in the world by end of 2016. And as far
as competition is concerned Netflix is only worried about HBO for the time being as it is
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Adnan Diyan

the only other service which has the capacity and the backing to make a dent in Netflixs
profits. HBO has won long-term exclusive domestic movie output deals with Universal
and Fox and Warner Bros.
In addition to HBO, other competitors include Amazon Prime Instant Video, Hulu,

Netflixs Orange is

Now TV, Viaplay, Clarovideo, and many other cable and

the New Black got

broadcast networks in various territories.

pirated more than

commissioning

60 million times

their

own

original

Many are

programming,

presumably because they see the same exciting big

picture for Internet TV as Netflix does. It is not uncommon for consumers to subscribe to
multiple services if each have unique compelling content.

In this report we are going to talk in brief about the major competitors today i.e.
Hulu and Amazon Instant Video.

MAR 649 Digital Marketing

Adnan Diyan

Most common subscription video on demand (SVoD) combinations among multiple subscribers in the United States in 2nd quarter 2014.
70.0%
63%
60.0%

50.0%

46%

40.0%
Share of respondents
30.0%
23%
20.0%

10.0%

0.0%
Netflix + Amazon Prime

HULU was started in 2007

and is a joint venture of NBC Universal Television Group, Fox Broadcasting Company and
DisneyABC Television Group. The name Hulu comes from two mandarin Chinese words
i.e. hl , "calabash; bottle gourd", and hl, "interactive recording". Hulu being an adsupported online video streaming service it has an offering Hulu Plus in which
subscribers can access episodes in HD from ABC, Fox, NBC, and the CW the day after
they air, using smart TVs, smartphones, game consoles, set-top boxes, and other
Internet-connected devices for $7.99 per month. As of April 2014 Hulu has six million
paying subscribers and this number is steadily increasing. However, through October
2014, access to Hulu.com and Hulu Plus is not available internationally outside of the
United States.

MAR 649 Digital Marketing

Adnan Diyan

Amazon Instant Video was started in September, 2006 by

Amazon as streaming video on demand service. It is
available for free to Amazon Prime members and now Amazon has put in a lot of money
in producing original content after the success of its first originally produced show
Transparent. In January 2015, Transparent became the first show produced by Amazon
Studios to win a major award and the first series from a streaming video service to win a
Golden Globe for best series.

The Comparisons
Streaming movies and TV shows from the internet has caught on fast. Theres no
shortage of content to stream these days, and there are tons of different services out
there vying for a couch potatos attention. But with so many services out there offering
up a continuous slew of programming, how is one supposed to decide which one of them
is the best? In order to aid our decision of the best on demand video streaming service
we can compare them in the areas of content selection, pricing, and availability, which
are some of the most basic criteria for this service. Each of these three video streaming
services are unique, and bring their own content to the table.

Content - Definitely the most value as far as money is concerned when looking
specifically at content alone, Netflix offers the largest content library of the three
services. Netflixs content library is roughly double to triple the size of Amazons library,
though the company has made a push to catch up. Netflixs vault is also larger than
Hulus library, but the type of content thats available on Hulu is significantly different
than whats available on Netflix. Regarding the retail giant, we cannot discount Amazon
based solely on the content volume. Strategically, Amazon is attempting to pick up
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Adnan Diyan

television shows and movies that have expired on Netflix in addition to snagging
exclusive access to popular shows like Downton Abbey and Falling Skies.
When talking about original content, a couple of years back Hulu plus was ruling the
roost but times have changed. As Netflix has made serious moves (and laid out serious
money), it has released a growing list of shows in the last two years that have gained
favor from critics and audiences alike, including House of Cards, Orange is the New
Black, American Horror Story, and others, have easily vaulting Netflix into first place. And
more importantly, Netflix programming has garnered respect that echoes outside of the
burgeoning world of online content, as House of Cards became the first show of its kind
to win an Emmy in 2013. In the near future the company is putting out even more cash
for content, including a reported $200 million for a host of shows from the Marvel
universe. As original online content gains more street cred, Amazon and Hulu Plus have
both doubled down, announcing a bundle of new shows for their lineup for 2014. While
Netflix is king right now, there is still plenty of room for competitors to expand as viewers
and advertisers increasingly look online for new and innovative original programming.

Pricing: Amazon recently moved its Prime package up from $79 to $99, it essentially
makes the difference in price between the $96 cost of either Hulu Plus or Netflix a wash.
However, if we count in the bonus of getting free shipping on all of Amazon Prime
shopping something that is a near-vital necessity in todays online shopping paradigm
Amazon comes out on top. As an added bonus, signing up for Amazons service can also
get you deals on the purchase of current seasons of shows you cant find on other sites
like The Walking Dead, which isnt a part of the Hulu Plus universe. Therefore in this
context Amazon is a clear winner.
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Adnan Diyan

Availability: While the availability of new episodes is often dependent on the network, the
majority of new episodes are available the following day after the show airs. The ability
to catch the newest shows right away comes anchored to a massive caveat:
commercials. Users who pay for Hulu Plus do so knowing they will have to watch a
stream of ads, which has only grown more frequent as the service has expanded. To
compound the issue, many of the ads are on re-feed over a single series, which means
binge watchers will see the same commercials over, and over, and over again.
Alternatively, Netflixs add-free service doesnt add previous seasons of shows until the
new season of a show begins. That time frame ranges from three months up to an entire
year based on the agreement between Netflix and the studio that created the show. Over
on Amazon, a user can purchase the latest episodes for a premium price. However, if
members watch tons of network programming, its smarter financially to go with the
Hulu Plus subscription over paying $1.99 on Amazon ($2.99 for HD) for the latest episode
of shows like ABCs Once Upon a Time or NBCs Law and Order: SVU.
-x-

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Adnan Diyan

Bibliography

(n.d.). Retrieved February 13, 2015, from http://news.google.com/newspapers?

id=Qqc_AAAAIBAJ&sjid=p1YMAAAAIBAJ&pg=2709,435491&dq=netflix 1 billionth
dvd&hl=en
Arango, T., & Carr, D. (2010, November 24). Netflixs Move Onto the Web Stirs Rivalries.
Retrieved February 13, 2015, from
http://www.nytimes.com/2010/11/25/business/25netflix.html?pagewanted=all
Netflix Long Term View. (n.d.). Retrieved February 13, 2015, from http://ir.netflix.com/longterm-view.cfm
n.a.Most common subscription video on demand (SVoD) combinations among multiple
subscribers in the United States in 2nd quarter 2014. In Statista - The Statistics Portal.
Retrieved February 13, 2015, from http://www.statista.com/statistics/321628/svod-combinations-usa/
Netflixs Orange is the New Black got pirated more than 60 million times. (2014, August
20). Retrieved February 13, 2015, from https://gigaom.com/2014/08/20/orange-is-the-newblack-torrent-statistics/