100%(1)1 out of 1 people found this document helpful
This preview shows page 1 - 3 out of 10 pages.
CASE TWO:Investors Abandon Netflix Amid Subscriber Losses (I do expect that you do some research on these questions besides the article below; please properly cite your source) (Wikipedia is not an academic source) QUESTIONS: 1. Which foreign markets has Netflix expanded into? What is the basis for choosing these countries first, would you surmise? 2. What are Netflix's two major business areas? Which one is being emphasized abroad? Why? What are the pros and cons of this? 3. Thinking more broadly, why does internationalization fit or not fit the streaming business? Do the economics of streaming favor internationalization more or less than they favor the internationalization of DVD rentals? What are the strategic ramifications of this? 4. Overall, can Netflix afford to delay its internationalization strategy to attend to its domestic ailments? Or can it actually not afford to delay its move abroad, even if this means distraction and resources? 5. Read over the letter that Reed Hastings published (I have added the PDF of the letter to blackboard) Pay attention to the part where he explains the company’s strategy. Do you think it will work? Why or why not? If you were in charge of Netflix what strategy would you try to implement in the next year? Investors Abandon Netflix Amid Subscriber Losses By STU WOO, SAM SCHECHNERand MATT JARZEMSKYShares of NetflixInc. plunged 35% Tuesday amid worries about how the Internet video pioneer would pay for its aggressive expansion plans and stem a wave of subscriber losses. Netflix's stumbles likely lessens the competitive threat the streaming service posed to cable TV but could also jeopardize the money entertainment companies have been making from licensing their old content. Sam Schechner explains on The News Hub. Until recently known for posting staggering subscriber growth and healthy profits, Netflix on Monday reported a U.S. subscriber decline and projected that a move into the United Kingdom and Ireland—on the heels of a 43-country expansion in Latin America and the Caribbean in September—will trigger a few quarters of losses next year.
Tuesday's stock fall followed a steady decline in recent weeks, after unpopular moves this summer that included a price increase for customers who both rent DVDs and watch videos online. Netflix's $4.2 billion market capitalization is now about a quarter of where it stood just four months ago. Analysts question whether Netflix needs to expand so quickly overseas. Some argue Netflix would be better off focusing on the U.S. market instead of international regions where online-video viewing—the key to the company's current strategy—hasn't caught on yet. The debate is one that has popped up repeatedly during the evolution of the Web, as companies weigh the costs of seeking out more customers against the risk that rivals might grab them first.