This paper reviews the required elements of the audit analysis of Netflix prepared by Nicole Thom. Thom has clearly provided an introduction describing Netflix’s products and markets, including its competitors. The history of the company and its industry are also clear and complete. I think we can also mention that Netflix, Inc. is the world’s leading Internet television network with over 75 million streaming members in over 190 countries enjoying more than 125 million hours of TV shows and movies per day, including original series, documentaries and feature films. Netflix’s core strategy is to grow streaming membership business globally within the parameters of its consolidated net income and operating segment contribution profit (loss) …show more content…
Thus Netflix adheres to the SEC regulations on members’ independent as Thom supported the statement with the SEC Rule 4350.
8-K Report The date and purpose of the latest 8-k filing for Netflix, Inc. are given. Netflix, Inc.’s July 18, 2016 8-K report was to announce its financial results for the quarter ended June 30, 2016. Netflix, Inc. Ratios Thom discussed three relevant ratios for Netflix which are the debt to equity ratio, current ratio and payables period ratio. The ratios are substantively commented upon and compared to Netflix’s major competitor, Amazon, Inc. I just wanted to add some highlights form NASDAQ. Netflix's revenue growth trails the industry average of 47.1%. Since the second quarter last year, revenues rose by 28.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
The gross profit margin is currently very high, coming in at 87.48%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 1.93% trails the industry
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In addition, when comparing to the industry average, the firm's growth rate is much lower (www.thestreet.com).
Other Ratios
There are no other ratios computed or commented upon or additional items besides the three ratios afore mentioned. Additional items that I could add are the risk factors faced by Netflix.
Business Risks In the annual 10-K report, Netflix mentions many business risks, but I chose to only state the following three:
- If Netflix’s efforts to attract and retain members are not successful, the business will be adversely affected;
- Changes in how we market our service could adversely affect our marketing expenses and membership levels may be adversely affected;
- Any significant disruption in or unauthorized access to its computer systems or those of third parties that Netflix utilize in its operations, including those relating to cybersecurity or arising from cyber-attacks, could result in a loss or degradation of service, unauthorized disclosure of data, including member and corporate information, or theft of intellectual property, including digital content assets, which could adversely impact the
The third issue affecting Netflix is the age of movies that they offer to their customers. Netflix cannot deliver the newest movie titles online because they are not offered through VOD for at least a month after they come out on DVD. This is a huge disadvantage to their customers that exclusively use Netflix’s online service. This is the only advantage that Blockbuster still has over Netflix, because if someone wants to see a movie the day that it comes out on video then
Threat of New Competition: Netflix has almost zero threat of new competition. Any new competition would have to overcome large capital expenses to get started; these expenses include obtaining TV show and movie rights from the studios. Even if the starting
The main problem facing Netflix is the pending conflict with its content providers. Netflix has low bargaining power both over suppliers and buyers, and this represents an existential threat to the business. Netflix has proven to be a popular service, but despite the successes of its first ten years, there is now evidence that it has not fostered much brand loyalty, and that its customers are quite price sensitive. Combine this with the fact that its content suppliers are becoming direct competitors in the online streaming business and Netflix is in significant danger of having its growth trajectory derailed.
Netflix, founded in 1997 by Reed Hastings, has achieved its goal of becoming the largest online movie rental service in the world. By the end of 2007, Netflix recorded revenues of $1.2 billion. With a library of 100,000 movie titles and a subscriber base of over
“Netflix, Inc. is the world's largest online movie rental service, with more than 10 million subscribers (Netflix Media Center, 2009).”
Many of their competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources than Netflix does. Some of their competitors have adopted, and may continue to adopt, aggressive pricing policies and devote substantially more resources to marketing and Web site and systems development than Netflix does. The rapid growth of their online entertainment subscription business since their beginning may attract direct competition from larger companies with significantly greater financial resources and national brand recognition. For instance in 2003 the extremely wealthy Wal-Mart used their online site to launch an online DVD subscription service, Wal-Mart DVD Rentals. With increased competition reduced operating margins may result as well as a loss of market share and reduced revenues. In addition, our competitors may form or extend strategic alliances with studios and distributors that could adversely affect our ability to obtain titles on favorable terms.
Netflix was founded in 1997 with the intent to revolutionize the way in which consumers watch movies and television shows. Their accomplishments both in innovation and in customer base for their service indicate that the firm has been, and continues to be, successful in doing so. Currently, the
Entering and transforming the video rental industry was a large undertaking for the start-up company. The first marketing objective the company undertook was the process of building a brand. Netflix’s identity was crucial to future growth and success. Without a strong brand, competitors with deep pockets could have easily duplicated the company’s business model. Secondly, leveraging technology was critical to establishing the business and infrastructure growth. The consumer base was the final objective Netflix sought to achieve. Retaining and growing subscribers were fundamental to revenue and marketing goals.
In Netflix’s own description of its vision for sustainable long-term future, the company describes a few critical elements necessary for growth [Netflix.com]. Its vision encompass the evolution of internet TV, replacement of “linear TV” by the internet TV, development of interactive applications, and enhancement of streaming capability to virtual limitless access capability.
Netflix was founded by Reed Hastings and Marc Randolph in 1997 and was originally based out of Scotts Valley California. The business model that they were working towards was to create a company that would offer online movie rental service made available by streaming media as well as DVD’s that could be ordered online and delivered to the customers’ homes. (Wheelen, Case 12). Netflix had a strategic plan to undercut the competition in an effort to stress the market and force weaker competition out of the field. This was a very successful plan and over a period of years it was able to force the closings of most of its competing market to include the mega giant Blockbuster video. Using a business
In many ways, Netflix is an amazing company to analyze. By being disruptive, the company has changed drastically the disc rental business and the streaming industry. In addition, the ecommerce business model Netflix has developed was one of a kind, focusing mainly on the consumer’s needs and experience. Now, it might seem obvious that ecommerce marketers should focus on these aspects but at the time it was a first.
Starting off as a mail-only service in August of 1997, the service rapidly bloomed into an online, paid source for thousands of movies, series, and other TV shows. Although their streaming option is the most favored, Netflix still offers users the opportunity to order DVDs and other forms of tangible movies. All in all, Netflix holds a multitude of positive and negative effects on society, both which include instant accessibility, immediate forms of entertainment, binge-watching, and unproductivity. Lastly, Netflix may soon become an overwhelmingly large company that takes the television and video distribution industries by storm due to its growing popularity and its ability to be cheaper than regular cable
Netflix began in 1997 as a revolutionary idea by CEO Reed Hastings and software executive March Randolph. Before long, in 1999 Netflix launched its major line of business, the online subscription service, which radically changed the way consumers viewed movies and television. For a young company in an innovative and growing industry, Netflix has set itself up for a tremendous journey. The company has had much success due to its adaption of a modern business model and strength in operations management. Its continued reliance on and improvements of operation management principles is necessary to continue growing and bringing in profits.
It is imperative from the prospect of Netflix that they should assess external environment of the business or related industry for the reason that it would help them
For netflix's business portfolio they outline that their main area of focus are online DVD rentals via online streaming (Netflix ,2010). It is clear from this that netflix have outlined that they aim to provide a service that they hope many people across a broad market will be able to use. With this in mind they would be able to generate a large revenue. Netflix is operated on the basis that you pay a monthly subscription and in