3. Laptop Concept For PowerPoint
Regulatory
restrictions
Local
adaptation
Competition
in global
markets
Market
expansion
Subject to both U.S.
and host country
regulations
Challenges facing
4. Laptop Concept For PowerPoint
Need to adapt
content offerings
to serve the local
customers’ needs
Challenges facing
Regulatory
restrictions
Local
adaptation
Competition
in global
markets
Market
expansion
5. Laptop Concept For PowerPoint
Competition from
local pay television
operators and VOD
service providers
Challenges facing
Regulatory
restrictions
Local
adaptation
Competition
in global
markets
Market
expansion
6. Laptop Concept For PowerPoint
Can Netflix grow
the number of
international
subscribers?
Challenges facing
Regulatory
restrictions
Local
adaptation
Competition
in global
markets
Market
expansion
7. Potential Solutions
1. Develop exclusive content in international locations
2. Partner with local telephone and cable carriers
8. 1. Develop Exclusive Content
- Increases financial
commitment and risk
- Content must align with
local preferences
- Language & translation
issues
9. 2. Partner with Local Carrier
Pros:
- Instantly gain access to
new users
- Don’t have to spend a lot of
money on advertising
Cons:
- Reluctant carriers
- Netflix viewed as direct
competitor
- Netflix not registered to
license content
- Netflix will benefit more
from the partnership
11. How Will The Partnership Work?
- Netflix available on flights that are 4+
hours
- Netflix exclusive content available on
all passenger’s individual monitors
- Wider variety of content offered on
personal devices to current subscribers
12. Benefits of a Netflix-Delta Partnership
Benefits to :
- Gain exposure to
non-existing customers
- Utilize viewer/streaming
data for future business
decisions
Benefits to :
- Increase customer
satisfaction on flights
- Competitive advantage in
the industry
13. Potential Timeline
January 2018 January 2019
Current # of Worldwide
Netflix Users:
110 million
Assumptions:
# of 4+ hour Delta Airlines
Flights in a year: 2.75 million
# of passengers on average
Delta Airlines flight: 130
1% x 357.5 million
= 3.58 million new
customers
Current # of Worldwide
Netflix Users:
122 million predicted +
3.58 million =
125.58 million
14. Laptop Concept For PowerPoint
Regulatory
restrictions
Local
adaptation
Competition
in global
markets
Market
expansion
Original content &
mutual distribution
rights
Delta Solves Challenges
15. Laptop Concept For PowerPoint
Mutually popular
shows
Delta Solves Challenges
Regulatory
restrictions
Local
adaptation
Competition
in global
markets
Market
expansion
16. Nonexistent in the air
Regulatory
restrictions
Local
adaptation
Competition
in global
markets
Market
expansion
Delta Solves Challenges
17. Laptop Concept For PowerPoint
Large potential
customer base
Regulatory
restrictions
Local
adaptation
Competition
in global
markets
Market
expansion
Delta Solves Challenges
18. Number of 4+ hour Delta flights per year 2.75 million
Average number of passengers per flight 130
Total Potential Exposures 357.5 million
Netflix Basic Subscription Cost $7.99
Percentage of Exposed
who Subscribe
3% 1% 0.50% 0.25%
New Subscribers 10,725,000 3,575,000 1,787,500 893,750
Realized Incremental
Revenues for
$117,867,750 $39,289,250 $19,644,625 $9,822,313
Financial Analysis
19. Potential
Income (000's)
2016 2018 (3%) 2018 (1%) 2018 (.5%) 2018 (.25%)
Revenues $8,830,669 $10,012,347 $9,226,562 $9,030,115 $8,931,892
Cost of revenues 6,029,901 6,029,901 6,029,901 6,029,901 6,029,901
Marketing 991,078 991,078 991,078 991,078 991,078
R&D 852,098 852,098 852,098 852,098 852,098
G&A 577,799 577,799 577,799 577,799 577,799
Operating income 379,793 $1,561,471 $775,686 $579,239 $481,016
Interest expense -150,114 -150,114 -150,114 -150,114 -150,114
Interest and other income
(expense)
30,828 30,828 30,828 30,828 30,828
Income before income taxes 260,507 $1,442,185 $656,400 $459,953 $361,730
Provision for income taxes 73,829 $408,722.37 $186,026.93 $130,353.07 $102,516.15
Net income $186,678 $1,033,462 $470,373 $329,600 $259,214
YoY% Increase 454% 152% 77% 39%
