• Netflix (E): Capture value (Cartoon case)

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”?

  • Identify and categorize the different strategic challenges Netflix is facing
  • Infer the changing customer behavior for movie entertainment
  • Evaluate Netflix’s key resources and capabilities against a variety of aggressive competitors
  • Assess the importance of economies of scale due to the high and increasing cost of content, both licensed and produced.

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  • Netflix (A): Business model innovation (Cartoon case)
  • Netflix (B): The 2011 fiasco (Cartoon case)
  • Netflix (C): The race to videostreaming (Cartoon case)

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Willy C. Shih

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Branding has been described as the defining industrial practice of television's recent past. This article examines publicly available industry documents, trade press coverage, and executive interviews to understand the place of traditional television network branding in streaming video on-demand (SVOD) portals as represented by Amazon and Netflix. Focusing on materials relating to licensed rather than original content and the role of such content within the U.S. domestic SVOD market, two distinct approaches emerge. For Amazon, the brand identities of some television networks act as valuable lures that draw customers into its Prime membership program. For Netflix, linear television networks are competitors and their brand identities are seen as impediments that reduce Netflix's own brand equity. Nonetheless, for advertiser-supported cable networks, the benefits of network branded content on SVODs remains unclear. Ultimately, Amazon's efforts to build a streaming service alongside network brand identities and Netflix's efforts to build its own brand at the expense of such identities demonstrates the need to think about contemporary television branding as an ongoing negotiation between established and emerging practices.

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