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Digital Supply Chain Success


Netflix

Netflix is an American entertainment company. They are a streaming media provider, started as a DVD-by-mail service and video-on-demand online. By 2013, they expanded into film and television production and online distribution.

Founded by Reed Hastings and Marc Randolph on August 29, 1997.

Netflix’s IPO (initial public offering) was in 2002.

Reed Hastings idea for Netflix occurred when we has charged a $40 fee from blockbuster for late copy of Apollo 13.

When Blockbuster closed its operations in 2013, Netflix won 9 Emmy Awards for Netflix Originals in 2016.

Netflix now has over 100 million subscribers worldwide and 4,500 full-time employees.

Netflix’s revenue reached 8.83 Billion.

Supply Chain Management is the core pillar of Netflix success.

  • Inventory Management – Since movies and TV shows lose their value, believe it or not, its true, Netflix has done a good job updating their content. Their demand planning and processes based on data has allowed Netflix to effectively curate good content. Hence, it is the go-to platform for shows and movies.

  • Sourcing – Just like other companies, their must be metrics and standards in place to maintain high quality levels for videos. Netflix was able build a quality control structure and certification processes to ensure content owners meet those high standards – 4:3 aspect ratio.

  • Resource Allocation/ Consumption – Netflix users consume a huge amount of bandwidth over a long duration due to binge-watching behaviors. In fact, Netflix uses 40% of total Internet bandwidth in North America. This means ISP’s must be able to meet Netflix service. Their algorithm of personalized suggestions based on user taste differs which is why ISP’s must be able to transmit millions of signals to help organize and suggest content to millions of users.

  • Lean System – Netflix uses a lean system and process to eliminate non-value products and understand customer value before entering the market. For example, Netflix uses their systems to accurately distribute subtitles and artwork based on demographics.

Netflix - “An Amazing Digital Success Story”, was able to turn and take advantage of mobile technology and improving Internet speed.

Netflix’s Global expansion strategy allowed them to make an impact on markets in Mexico, Canada and Brazil, which had a tremendous impact on their earnings.

Netflix plans to spend $6 billion solely on Netflix Originals and $1 Billion on Marketing in 2017.

Netflix’s first original series was House of Cards

On average – 1 billion hours are spent watching Netflix per week

47% of users are from outside the US

Netflix is willing to pay you to watch their content at home with a simple task of tagging it with words from a collection of 1,000 keywords.

Netflix has over 76,000 movie categories

“What’s got me excited about the education space is the growth of the Internet over the next 10, 20, 30 years” – Reed Hastings

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