CORPORATE GOVERNANCE AND STRATEGY

BUSI3629

Romain Hignard 101178627

Marc Orieme 101178615
Mazharul Towhid 101182808
Antoine Vandenhove 101179654
Table of Content

1. Executive Summary

2. Macro Environment: PESTEL & O/T Analysis

3. Industry Analysis

4. Business Unit Analysis

5. Strategic Issues

6. Strategy Alternatives, Choices and Rationale

7. Bibliography

8. Appended Documentation i.e. graphs, tables, charts

1. Executive Summary : NETFLIX

Netflix ​is an ​American multinational ​company​ ​ founded in ​ ​1997​ ​ by ​ ​Reed Hastings​ and
Marc​ Randolph, operating in the creative industries by distributing and operating film and
television works through a ​dedicated ​platform.​ ​ ​Globalization has made it easier to implement
Netflix around the world. It has developed a powerful presence in the global market,
providing streaming services in over 190 countries.

On the one hand, the external analysis shows us that Netflix is a major player in a competitive
industry. We can see that the industry is moderately unattractive. The threat of new entrants
is high as new streaming services are launched by entertainment giants like Disney as well as
tech moguls like Apple and it enhances the intensity of the competition. On the other hand,
with the internal analysis we can see that Netflix has control on its distribution while having
original and differentiative contents. This allows Netflix to have a large number of users all
around the world. However, even though the company seems to be financially solid, Netflix
needs to be vigilant about the limited liquidity available and its lack of liquid assets to meet
short-term obligations.

Netflix needs to make strategic decisions that will allow the company to maintain its
dominance in the streaming service industry especially considering new competitors entering
the market. The company has liquidity issues which may hamper its short term debt
obligation considering the dynamic and ever changing scenario with Covid 19. Netflix has
not been able to expand in China. Illegal piracy of the content is hampering Netflix’s growth
and profit potential. Investors usually judge Netflix's success or failure by its subscriber
growth which is in direct correlation to its revenue and profit potential. Netflix should offer a
new reduced monthly subscription fee for accounts which will have advertising in their
contents in markets where piracy of digital content is high. It will help improve the liquidity
scenario of Netflix which will, in turn, help meet the short term obligations. ​Original
exclusive local language contents and shows need to be developed for targeted markets of
latin america, middle east, and indian sub-continent. ​Netflix can establish strategic
partnerships with popular chinese streaming sites like Youku which is owned by Alibaba for
expansion into the chinese streaming industry.
2. Macro Environment: PESTEL & O/T Analysis

2.1 PESTEL : Opportunities and threats

Opportunities:

The number of Internet users has increased worldwide. This means that Netflix has the
opportunity to expand its online presence. Moreover, the world is shifting most of its content
to the internet. There also has been an increasing number of social media users. The three
most known social media platforms ( Facebook, Instagram and Twitter) never had so many
active users. It is a great opportunity for Netflix to promote its products, interact with its
customers and collect their feedback.
The increase and enrichment of the middle class allows Netflix to target a greater amount of
consumers.
Technological development is accelerating, allowing Netflix to improve its services and
continue to innovate. This is also the case for the collection of data and what they can do with
it.
The coronavirus health crisis has forced half of the world's population to remain confined to
their homes. It has also increased the use of Netflix.
Globalization has made it easier to implement Netflix around the world. It has developed a
powerful presence in the global market, providing streaming services in over 190 countries.
Netflix may be tempted to turn to advertising to quickly multiply its revenues. Until now they
have never wanted to incorporate advertisements in their content, but the opportunity is there.
It could have tremendous economic benefits for the company.

Threats:

Rise of competitors as well as new entrants. As a result, Netflix's huge market share is under
threat. The increasing competition within the industry is putting downward pressure on
prices. It has also caused a loss of original content to its competitors. In addition, the
technological development of the competition threatens Netflix. Switching costs are low
which is harmful for the company.
Consumer tastes are evolving, putting pressure on organizations to continuously adapt their
products to meet the needs of their customers.
Piracy threat. There are still many users downloading or watching illegal streaming content
which prevents Netflix from maximizing its number of consumers and hence revenues.
Netflix must continually innovate, further develop its technology and increase its marketing
spend to combat the growing competition.
Freedom of expression and the degree of censorship in some countries. This has an influence
on the content distributed by Netflix. It's also why they still don't have access to the world's
largest market, China.

3. Industry Analysis ​(see details in appendix)

Overall Industry Attractiveness – (34/50)

The industry is moderately unattractive. The threat of new entrants is high as new streaming
services are launched by entertainment giants like Disney as well as tech moguls like Apple.
Bargaining power of suppliers is high for the companies owning the original content.
Bargaining power of buyers is medium as switching cost is also low but content exclusivity
may force the consumer to subscribe to a certain streaming network. Threat of product
substitutes is medium. The intensity of rivalry is high among the competitors as companies
are targeting the same target market with disposable income.
4. Business Unit Analysis

4.1 Internal analysis

RESSOURCES

Tangible resources :

• ​financial​ :

Solid financial result and turnover with a strong wish to have a

healthy financial statement to meet shareholders expectations. Strong
capitalization at 167B$.

Increasing number of users and increase of the average subscription

price.

Competitive pricing
FORCES
•​physical​ : Large customer base (130M users in 190 countries),

•​technological : Strong ability to analyse and use users datas, to

improve customer experience and meet their needs. Intuitive
streaming plateforme with easy access for everybody. Multi Device
streaming.

•​distribution/production : Own distributor. The company holds a

number of licenses that it operates.

Netflix also has the confidence of producers, which facilitates its

access to the resources needed to co-produce content.

Intangible resources :

•​human :​ Employee with strong abilities and technical skills

•​innovation : Innovation is in the adn of the brand (DVD to

streaming, use of Amazon Web Service server’s…). Original content
creation.

•​brand : High brand awareness and brand recognition (with 130M of

users in 190 countries), status of pioneer and leader in subscription
streaming service, Strong internationalization with the ability to
 create new content adapted to each target territory. While other
competitors create more global contents.

Contents produced by Netflix are well received by the public and the
critics. With award winning content (72 awards won for 432
nominations)

CAPABILITIES:

Netflix's ability to innovate is its strength and has enabled it to

become a pioneer in streaming services and also in content creation.
The company now has the experience and resources of a major player
in the production of content in quantity and quality. Indeed the brand
has created many different original contents for each territory it
targeted but also created content that has been rewarded with awards.
This asset allows it to differentiate itself from its competitors. In
addition, the company controls the distribution of its content and can
distribute it to a large customer base, which increases the virality and
success of its creations. In addition, its content creation and
distribution is fueled by its ability to analyze its users' data in order to
offer them an experience that is as close as possible to their needs.
These skills meet the characteristics of the VRIN model, they are
Valuable, Rare, Inimitable and Non-sustainability.

COMPETITIVE ADVANTAGE: Netflix can provide unique content

to its customers and broadcast it to a large number of people.

Strong dependence on the content producers that become serious

competitors (Disney, Warner-HBO…). Netflix uses the servers of
WEAKNESSES Amazon Web Service, one of its most strong competitors, which have
a strong advantage on Netflix.

High cost and high level of risk with the creation of its own content.
Competitor with large amount of capital and strong technological
skills (Apple, Amazon)

Users are not loyal to a streaming service but only to its content, there
is an important risk of users leaving the service (facilitated by
non-committal subscriptions) for competitive content. Netflix free
cash flow is decreasing considerably, strong lack of liquidity with a
free cash flow at -3.3B$ in 2019 (-3B$ in 2018).
 4.2. SWOT

STRENGTHS WEAKNESSES

Original and differentiative contents Partners became serious competitors

(Amazon, Disney, Warner…).
Control of distribution
Competitor with solid financial capital and
Large number of user all around the world technological skills (Apple, Amazon)
Strong capitalization and investors Lack of cash and heavy leverage
confidence

OPPORTUNITIES THREATS

See 2.2 Opportunities and threats See 2.2 Opportunities and threats

4.3 Financial Statement Analysis ​(see details in appendix and attached excel)

The company's growth is driven by an increasing number of paying users, which is expected
to rise to +26% in 2018 and +20% in 2019, i.e. 131 million users. Growth is also driven by an
average subscription price that is increasing by 8% in 2018 and 3% in 2019 to $10.09. These
two criteria explain the growth of the company's revenues to +28% in 2019.

We also note that the company is increasingly profitable, with a margin at +27% in 2019,
from a margin of 13%. This increase can be explained by an increase in sales at +28% vs.
2018 and in the same way a control of costs which increase less quickly at +24% vs. 2018.
Finally, given that the company is financed mainly through debt, the return on equity is high
at 25% in 2019, i.e. +6% vs. 2018. Earnings per share are also up sharply at $4.13, i.e. +54%
vs. 2018.

Netflix's performance ratios are solid and increasing. Indeed, the company's efficiency in
creating gains with its assets improved between 2017 and 2019 with an increase of +59% in
2018 and +18% in 2019 with a ROA in 2019 at 5.5%. However, it is important to note that
the strong increase in 2018 is due to a non-returned provision for income taxes (therefore a
revenue) at the end of 2017 that was deferred to 2018 reducing the impact of Netflix income
taxes by $73M, thus explaining the strong +59% growth in ROA.

The company does not appear to have the capacity to generate sufficient liquidity to meet its
short-term obligations. This is due to the company's business model and its bias to view its
content creation as a long-term asset. Indeed, the company has changed its accounting
methods to go against the rules established in the content creation industry, which originally
considered content as a current asset. This change in method had a strong impact on the
company's available cash. Working capital became negative in 2019, the current ratio fell by
40% at 0.90 between 2018 and 2019, thus reducing the company's ability to meet its
short-term obligations, as cash is now its only asset to meet them. However, in 2019 the
company generated more cash (+32% vs. 2018) and limited the increase in current liabilities
(+6% vs. 2018), thus increasing its ability to meet short-term obligations in cash.

It is clear from the balance sheet above that current content assets fell to zero in 2019
compared to 5 million in 2018 and that non-current content assets rose to 24 million in 2019
compared to 15 million in 2018. This sharply reduced current assets and therefore assets
easily convertible into cash, which worsened Netflix's liquidity ratios.

Netflix favours financing its business through debt rather than equity with a debt-to-equity
ratio of 3.48 in 2019 Netflix uses leverage to create value.
However, the company tends to reduce its debt financing in favour of equity. This can be
seen with a slowdown in debt (+34% in 2018 versus +27% in 2019) and an acceleration in
the use of equity (+46% in 2018 and +45% in 2019). This strategy has an impact on the
debt-to-equity ratio, which declines by 12% between 2019 and 2018.
It is also important to note that the company has a healthy debt to equity ratio. Its net income
enables it to meet 3.8 times its financial interest expenses, i.e. +18% vs. 2018. This is due in
particular to a 68% increase in pre-tax income compared to a 43% increase in interest
charges.

This analysis could be summarized by emphasizing Netflix's willingness to improve its

financial health in order to maximize its shareholders' income with limited leverage. Point of
vigilance on the limited liquidity available and its lack of liquid assets to meet short-term
obligations. Apart from this point the company seems to be financially solid and has the
advantage of having a long-term vision and financial assets which is reassuring for investors.

4.4 Mission statement & corporate objectives

The company's mission is to "entertain the world with content people love" Netflix wants to
become a "passion brand" and of course remain the market leader.
To do so, it wants to consolidate the North American market with a target of 60-90 million
for future periods and also the will to develop its international business to entertain the world.
In order to do so, it wishes to develop the original non-English language even more.

4.5 Netflix attractiveness

The company is very attractive, even though the market is tense and the competition is
increasingly strong, Netflix remains attractive.
The company is a leader in the sector, it has understood the needs of users and has been able
to set up content productions that meet the needs of its users. Even though it faces a lack of
liquidity and strong use of leverage, the brand has strong capitalization, revenue-generating
capacity and strong growth perspectives.

5. Strategic Issues

Netflix needs to make strategic decisions that will allow the company to maintain its
dominance in the streaming service industry especially considering new competitors entering
the market such as Disney+, Amazon Prime, Apple TV, and HBO Max.

The company has liquidity issues which may hamper its short term debt obligation
considering the dynamic and ever changing scenario with Covid 19. This also provides
opportunity as more people are staying at home and require entertainment contents for
leisurely enjoyment. Netflix has not been able to enter China yet which is one of the biggest
consumer markets. The illegal piracy of the content is hampering Netflix’s growth and profit
potential. Investors usually judge Netflix's success or failure by its subscriber growth which is
in direct correlation to its revenue and profit potential.

6. Strategy Alternatives, Choices and Rationale

Alternatives
A. Netflix can take no strategic decision to change its business process and maintain the
status quo.
Advantage:
● It will require no investment or change in the current business culture. Cost of
this alternative is nil.
Disadvantage:
● Netflix will potentially fail to manage the threats observed in the industry.
● The company will not be able to identify where to expand its product lines and
business operations.
● The management will fail to develop a competitive strategy to dominate the
streaming service industry.
B. Merger with a competitor/supplier such as Disney.

Advantage:

● Netflix will have access to the vast catalogue of Disney content of

entertainment including the coveted contents of Marvel, 21st Century Fox,
Lucasfilm etc.
● The enterprise value of Disney is USD 228.6 billion while that of Netflix is
USD 171.1 billion. The merger will create positive value for the shareholders.
● The threat of new competition will minimize as Disney+ can be inducted into
Netflix.

Disadvantage:

● Significant cultural changes may be required for Netflix to integrate

successfully into the new corporate structure.
● Netflix may lose its edge in terms of innovation and creativity in generating
content for its streaming sites.
● There may be regulatory issues such as antitrust laws impacting this merger.
● The debt burden of Netflix will increase significantly with USD 59.93 billion
debt of Disney added to the balance sheet.
C. Offer a new reduced monthly subscription fee for accounts which will have
advertising in their contents in markets where piracy of digital content is high.

Advantage:

● It will increase the revenue and profit potential and significantly improve the
cash flow.
● It will help improve the liquidity scenario of Netflix which will in turn help
meet the short term obligations.
● It will reduce piracy threat as more people will be willing to subscribe at a
lower rate.
 Disadvantage:

● May dilute the brand image of Netflix.

● Subscribers of premium accounts may move to this reduced monthly option
for decreasing revenue potential.
D. More original exclusive local language contents and shows need to be developed for
targeted markets of latin america, middle east, and indian sub-continent.

Advantage:

● It will help Netflix maintain overall subscription growth as domestic US

market growth has slowed in 2019 with just ​2.6 million new customers.
● Netflix can easily penetrate the international markets where many subscribers
prefer local language content than dubbed ones.
● Positive impact to overall revenue growth potential.

Disadvantage:

● High investment required to develop varied content in different local

languages.
● May have to censor content per domestic censorship requirements.
● Production of different local contents with local crew and actors may have
various regulatory and legal implications.
E. To expand its reach in Chinese market, Netflix can establish strategic partnerships
with popular chinese streaming sites like Youku which is owned by Alibaba.

Advantage:

● Capturing one of the biggest consumer markets and increasing revenue

potential.
● Leveraging the already developed mandarin original series for chinese
diaspora to penetrate chinese market.
● Allowing Youku to handle operational and logistical issues which will help
Netflix avoid dealing with Chinese regulators directly.

Disadvantage:

● China may highly censor Netflix contents diminishing the quality and appeal
of the shows.
 ● Netflix may face greater scrutiny from US regulators regarding this strategic
partnership.

Recommendation and Implementation Timeline

The first alternative should not be pursued. Granted this has zero cost to Netflix, the
significant downside to this cannot be overstated. Profit potential and impact to brand is zero.
Ability to implement this alternative is non-existent for evaluation. Moreover, Netflix will
lose significant growth potential as a result.

The second alternative of merger with a competitor/supplier such as Disney should not be
pursued. The merger with Disney may have unintended costs to Netflix such as increasing the
debt burden of the company significantly. The profit potential of this option is medium.
Netflix has improved its profitability in 2019 with a margin of 27%. The merger will provide
Netflix with greater variety in entertainment contents including a vast plethora of movies,
series, animated shows. However, the subscribers already having Disney+ streaming service
may get free access to Netflix. This will result in lost revenue for Netflix. Impact to brand is
very positive. Disney is one of the most renowned brands in the world especially in the
entertainment industry. The enterprise value derived from such a merger will put the
combined brand value in much higher territory. However, the ability to implement this option
is not easily available for Netflix. Antitrust laws may compel regulators to step in and stop
such a merger. Due to the acquisition of 20st Century Fox, Disney has taken a significant
debt burden with total debt of USD 51.9 billion currently. Netflix’s financial position will be
negatively impacted with such a merger.

Netflix should pursue the third alternative of offering a new reduced monthly subscription fee
for accounts which will have advertising in their contents in markets where piracy of digital
content is high. To discourage the subscribers of premium accounts to move to this reduced
monthly option, Netflix can limit the number of device access to the accounts at the same
time. Netflix already uses this restriction to promote the Premium accounts. Cost of
implementing this option is extremely low. The profit potential is high. The advertising
revenue and increased number of subscribers should provide a strong revenue stream.
However, impact on the brand is slightly negative. Netflix has full technical expertise to
implement this without changing its subscription mechanism too much. Netflix should start
this in a market where the subscription penetration is low and piracy of Netflix content is
high. The implementation should be started within six months. Extensive market research
needs to be conducted as well as cost benefit analysis on different countries and markets
before implementing this.

The fourth alternative should be pursued by Netflix. Original exclusive local language
contents and shows need to be developed for targeted markets of latin america, middle east,
and indian sub-continent. This option will require significant investment from Netflix
resulting in high cost. However, the profit potential is high with increased number of
subscribers in the international market. International markets accounted for about 90 per cent
of Netflix’s growth in 2019. This signifies the growing potential of diversification of
investment in content development. Netflix has enjoyed improved popularity due to ​spanish
and portuguese original series in latin american region in 2019. The company needs to be
strategic in developing quality contents specific for the middle east and indian sub-continent.
Impact to brand is extremely positive with right promotion and marketing campaigns. Netflix
will be able to enhance its image as a global brand with diversified content. Netflix has the
ability to implement this strategy. The investment capital can be raised through debt or equity
financing. Netflix has preferred debt financing to fund its massive projects previously. Due to
covid 19 evolving scenario, raising capital from the share market may not be the most ideal
option. Netflix already possess sufficient technical expertise and experience to successfully
implement this. The implementation timeline should be an ongoing basis. The popularity and
demand of shows in each specific market will dictate when the next batch of shows should be
produced.

Netflix can implement the fifth strategic alternative which is regarding expansion in the
Chinese market, Netflix can establish strategic partnerships with popular chinese streaming
sites like Youku which is owned by Alibaba. Cost of this option is medium. Netflix may have
to incur additional costs in terms of editing content due to chinese censorship. The profit
potential of this strategic partnership is huge. If Netflix can successfully increase viewership
in China, this may have immense growth in coming years. Video Streaming revenue is
US$1.8 billion in 2019 in China and expected to grow to US$2.2 billion by 2024. Netflix
brand image will have an overall positive impact due to this expansion providing a more
global appeal. The implementation of this strategy is not easy. Netflix previously didn’t enjoy
much success with iQiyi which is a streaming service owned by Baidu. It was mainly due to
the strict censorship applied by the chinese regulators. As Netflix is already producing
manderin language content, this censorship issue can be handled in the production stage.
Rather than incurring additional cost for editing later. Allowing Youku to handle operational
and logistical issues which will help Netflix avoid dealing with Chinese regulators directly.
Netflix should try to implement this strategy within one year.

7. Bibliography

https://hbr.org/2018/10/how-netflix-expanded-to-190-countries-in-7-years

https://hbr.org/2018/07/to-see-the-future-of-competition-look-at-netflix

https://www.presse-citron.net/netflix-est-mauvais-pour-votre-sante-et-lenvironnement

https://finance.yahoo.com/news/factors-could-affect-netflix-international

https://www.netflixinvestor.com/financials/financial-statements/default.aspx

https://ca.finance.yahoo.com/

https://www.bnnbloomberg.ca

https://www.statista.com/
8. Appended Documentation i.e. graphs, tables, charts and attached excel

8.1 PESTEL

Political / Legal:
A high level of taxation would deter large companies like Netflix from operating in certain
countries => would be harmful to maximize their profits.
The nature of the political regimes of the countries in which Netflix operates. The more
liberal the regime, the more Netflix will be able to distribute a diversified catalogue. Some
countries with authoritarian regimes practice censorship and do not have the same freedom of
expression, this has repercussions on the catalogue proposed by Netflix.
Regulations have changed significantly due to the development of E-commerce.
Netflix is still not present in China, the most populous country in the world. This is due to the
lack of permits issued by the Chinese government. If Netflix wanted to operate in China, they
would have to massively censor their content. Maybe even restrict entire episodes or movies,
depending on what the Chinese government requires.
The legal measures implemented to combat video piracy.
Numerous trials regarding copyrights infringements.

Economic:
Fluctuating exchange rates can negatively impact Netflix revenues. Since they operate in
more than 100 countries, they are predisposed to fluctuating exchange rates. Weaker
currencies will impact Netflix’s bottom line.
Interest rates in different countries will also influence Netflix’s growth.
The emergence of other streaming platforms like Disney or Amazon Prime. They are taking
over content that was previously exclusive to Netflix, forcing Netflix to create more original
films and TV shows to remain relevant.
Price competition from the monthly subscription fees of other streaming platforms.
Video piracy is a source of major revenue losses for streaming platforms and the film
industry. Torrenting is illegal however millions of users still do it.
Competition with other streaming platforms. In the beginning Netflix had a nearly
monopolistic position. However, with the emergence of competitors such as Disney + or
Amazon the company is now in a more oligopolistic situation, with all the economic
consequences that it implies.
It also increased Netflix's expenses, especially in original content creation and marketing.

Sociocultural:
Social trends show that people tend to move away from television in favour of new streaming
platforms. They also show that many customers are now watching video content on their
smartphones rather than on traditional big screens.
A country's age pyramid and the distribution of wealth influences the way Netflix will
conduct its marketing campaigns.

Technological:
Netflix is a technology juggernaut whose analyses, algorithms and digital streaming
innovations have changed the way customers watch movies and TV shows.
The company has a large amount of data on the viewing habits of its 150 million subscribers
and uses it to advise them on their future viewing. Indeed, this powerful data system creates a
social system that influences the series and movies that members see, based in part on what
they have liked in the past and what other subscribers watch and appreciate. Moreover, one
has the ability to rate what s/he has watched so that Netflix can make predictions of what the
customers would like (thumbs up/ thumbs down rating system).
Quality of the films on offer in order to compete with other streaming platforms, television,
cinema or even video piracy. They use a special system to compress video without sacrificing
quality.
Development of the 4g (and soon the 5g) in order to offer movies in streaming anytime and
anywhere.
Democratization of internet access which allows a greater number of people to benefit from
Netflix.
Mobile and digital technologies are driving consumers.
Environmental:
For streaming platforms such as Netflix, access to data servers puts enormous pressure on the
environment.
Netflix's impact on global bandwidth averages 15%. This also weighs on our carbon
footprint. It would account for about 4% of global emissions.
A study by The Shift Project provides a more important but also scarier assessment of the
data. 10 minutes of Netflix would correspond to a 2000W electric furnace running during 5
minutes and two hours of streaming would correspond to 6 kg of CO2.
The use of renewable energies would enable them to reduce their technological footprint.
Netflix accounts for more than one-third of internet traffic in North America.

8.2. Industry environment

INDUSTRY ENVIRONMENT PORTER’S FIVE FORCES

Netflix's success puts the Video on Demand (VOD) market in a real

source of profitability and revenue. While it may prove to be a
potential generalist player to shake the brand with red typography, a
shot is to play for everything related to niche culture.
Threat of new
entrants Competition is coming for the youth offer: Disney has launched its
own Disney platform which is Disney +, TFOU + in France also
High (8)
offering cartoons on a dedicated platform. Above all, web
behemoths like Amazon, Apple or YouTube intend not to leave the
market to Netflix for very long. However, massive investment is
required to enter this industry. And creating a brand such as Netflix
will take time and promotional efforts.
 Backward integration is possible as observed in case of Disney+
streaming service. The original content owners such as big studios
have greater options now with more and more streaming sites
entering the market.
Power of
suppliers The advantage of Netflix is that it is its own provider when the
company produces its original content. This does not mean that the
High (8)
platform is free, because producing requires large investments that
Netflix assumes at the moment only thanks to very large loans.
Debt to the financial "provider" is significant.

In addition, with respect to non-original content, negotiations can

be tricky with production and broadcast studios, which can sell the
broadcast rights expensively or even require exclusivity..

There is very little threat of backward integration in this industry.

However, the ability to affect the price of the service for the buyers
is high. The switching cost is also low. However, content
Power of buyers
exclusivity will force the consumer to subscribe to a certain
Medium (5) steaming network.
Given the number of substitutes, it can be said that the bargaining
power of customers is certain, not in the sense that it can affect the
already very small price of the Netflix subscription (no more than
13 euros per month for the most expensive formula), but in that
where it can turn to other means of consuming audiovisual
products.

Threat of product VOD is a novelty that disrupts consumption habits, which in itself
substitutes/ means that it is itself a substitute for other possibilities. Illegal
Complementors streaming is one of them, as are physical media (DVD, Blu-Ray...),
television and movie theaters. Online video games such as Fortnite
Medium (5) have quickly become a strong substitute for Netflix.

Intensity of All the above creates intense competition among the competitors.
rivalry among Even if Netflix enjoys a pioneering stance: they launched the VOD
competitors market in a significant way, far beyond more confidential attempts.
The platform is therefore a leader and almost in a monopoly
High (8) situation, without a particularly formidable competitive pressure at
the moment. However, competition from other streaming services
such as Disney+ and Amazon is shifting the market dynamics.
 Even Youtube is producing its original content for premium
accounts. With low switching cost and increasing number of
streaming sites, the fight for the disposable income of the customers
is only getting intense.

8.3. INCOME STATEMENT ​(see excel attached)

8.4. BALANCE SHEET​ ​(see excel attached)