Netflix: Threat or Opportunity?

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Netflix’s success in the US and in Western Europe has demonstrated that consumers are willing to change how they watch and pay for TV and movies. As a result Netflix’s OTT proposition is challenging traditional pay TV models and changing how new broadband services are looking at content. For some players Netflix is a threat and for others an opportunity. So, how should content owners, channels, pay platforms and broadband providers respond?

Description

Format: PDF filePages: 34 pagesCharts: 27Author: STL research teamPublication Date: January 2015

Table of Contents

  • Executive Summary
  • Introduction
  • Overview of Netflix
  • History
  • Consumer Proposition and USPs
  • Netflix International Expansion
  • Netflix Financials
  • Attitude of the Financial Markets
  • Impact of Netflix on the Market
  • Impact on Rights Owners and Producers
  • Impact on Channels
  • Impact on Pay Platforms
  • Impact on Broadband Operators
  • Summary impacts on players along the value chain
  • Responses to Netflix
  • Case Study: HBO
  • Case Study: BSkyB
  • Case Study: Broadband Operators

Table of Figures

  • Figure 1: Selected Media Companies Market Capitalisation, 1st Sept. 2014 (left) & 1st Jan. 2015 (right), USD billion
  • Figure 2: Netflix’s subscriber targets for 2020 (announced launches only) in USD million
  • Figure 3: Summary of Netflix’s Impacts along the Value Chain
  • Figure 4: Netflix subscribers 1999 – 2014 in 000s
  • Figure 5: Reasons Netflix streamers subscribe to the Service
  • Figure 6: Netflix’s Evolving Content Proposition
  • Figure 7: Netflix’s user interface
  • Figure 8: Netflix geography and timeline
  • Figure 9: Netflix’s Market Penetration over time to Dec 2013 (% households)
  • Figure 10: Netflix revenue per service area, 1999 – 2014, USD million
  • Figure 11: Netflix’s revenues & costs per business line, 2011–2014, USD million
  • Figure 12: Netflix’s net income and free cash flow, 2009 – 2014, USD million
  • Figure 13: Netflix’s streaming content obligations, 2010 – 2013, USD million
  • Figure 14: Selected Media Companies Market Capitalisation, 1st Sept. 2014 (left) & 1st Jan. 2015 (right), USD billion
  • Table 1: Comparison of Key Value Ratios
  • Figure 15: Netflix’s share price (USD), Jan 2010 – Jan 2015
  • Figure 16: Players along the Value Chain
  • Figure 17: Subscribers to premium channels in the US (%of TV households)
  • Figure 18: Changes in US Pay TV Penetration
  • Figure 19: Percentage of Households that are “cord-cutters”
  • Figure 20: Real Time Entertainment Share of Downstream Traffic
  • Figure 21: Share of Traffic of Downstream Peak Time Applications
  • Figure 22: Summary of Impacts along the Value Chain
  • Figure 23: Overview of Sky Expanded Offering
  • Figure 24: Sky’s offering across All Windows
  • Figure 25: Vodafone / Spotify and Sky Sport deals – Impact on mobile broadband usage
  • Figure 26: Netflix Broadband Partners
  • Figure 27: Netflix Competitor Set

Technologies and industry terms referenced include: BSkyB, cable, content, Disruption, entertainment, HBO, Netflix, OTT, pay-TV, Strategy, Telco, Telecoms, Time Warner, video, VOD