Course Name - Change Management Group Project Topic Netflix Change Program And Result.pdf

By the of 2011, the company decided to separate their two services which are, DVD rental and streaming online, however, the customer seemed to unsatisfy about it so Netflix had to elimin

HOA SEN UNIVERSITY FACULTY OF INTERNATIONAL LANGUAGES AND CULTURES

DAI HOC HOA SEN

COURSE NAME : CHANGE MANAGEMENT

Group Project Topic NETFLIX CHANGE PROGRAM AND RESULT

Instructor: Nguyêên Phước Tuy Hà

In charge:

Trâân Lai Thanh - 22012493 Trâân Bao Khanh Linh — 2180866 Cao Nguyéén Khanh Vy — 22014525 Hoàng Thị Mai Duyên — 22014497 Trâân Lai Linh — 22011190

Lu Ting Yï — 22014468

Ho Chi Minh City - December, 10, 2022

Table of Content

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LIST OF IMAGES

Figure 3: Netflix subscribers over the @AFS - «cm ng nh gu ng gu 11

1 Introduction about Netflix:

Reed Hastings had collaborated with Marc Randolph in order to establish the business in 1997 and up until 1999 Netflix changed to DVDs rental online, it means that the customer just only needs to choose what they need and the goods will be sent through mail to their places In May 2002, Netflix went public with 15S per share And at the same time they offered night delivery service In 2003, Netflix finally became profitable acrost 1 million subscribers In 2004 Netflix stated that they wanted to change their old service into a streaming service in 2005 Unlucky cofi founder Mark Randolph was no longer with the company, the program didn't launch until 2007 The aim of the program is streaming content, delivering directly to TVs, computers, and tablets through its Watch Now service They then expanded beyond the United States by launching it streaming from to Canada in 2010 By the of 2011, the company decided to separate their two services which are, DVD rental and streaming online, however, the customer seemed to unsatisfy about it so Netflix had

to eliminate that plan A year later, they then had their own shows and content The first show they made was Lilyhammer Next, in 2013, House of Cards was released

Up until now, they have more than 1,900 original content and one of them has received many awards such as The Crown By 2016, the company stated that over

190 territories and countries are now having their streaming service And until 2021, they had become the most popular streaming online service

2 Change context:

2.1 PESTLE: ( External )

Technology:

® In 2006, people were able to adopt the availability of high speed internet and portable computers capable of streaming media

important role in the decision of change management of Netflix in that time Social: People globally pay more attention to use social media in many views as education, entertainment

® Netflix had noticed the upcoming market demand

2.2 Internal:

« The Ceo of Netflix Reed Hastings has long seen the potential of streaming In

2000, the CEO of Netflix, flew to Dallas to suggest a partnership to Blockbuster

CEO Netflix would run Blockbuster’s brand online and Antioco’s firm would promote Netflix in its stores

tt> But this idea was quickly rejected However, this story shows that this CEO has long seen the potential of streaming

® In 2006, the industrial revolution took place strongly We can see that through appearance of many website and special event:

© Google acquired YouTube in 2006

o The birth of new social networks like Twitter in March and Facebook in September

o In this year, most people still use their mobile phones as phones and the big deal is being able to replace their landline phones with this technology 73% of adults use mobile phones

tt> This is a special year with many changes in technology as well as the birth of many websites

© Netflix decided to change because it wanted to work on its business model and reduce obstacles to accessing entertainment content

® The reason for Netflix's shift to streaming is that very few people see the value

of pursuing streaming video tt> less competition

® People start to figure out how to download and upload movies to the internet Netflix was aware of what was going onfi they knew the change was imminent This is a suitable time to change as they want to be before

efficient, farfiresearching, scalable and less costly

tt> That is why in 2007, Reed Hastings decided to launch the company's online streaming service from an online DVD rental platform to online streaming service

3 Change program:

Reed Hastings has turned Netflix into one of the companies that dominate the Internet From humble beginnings in what was once the headquarters of a bank, the company has now grown to more than 5,000 employees globally On ffianuary 16,

2007, Netflix launched a new service fi streaming video directly to viewers' personal computers For the first time in the television industry's 100fiyear history, customers can choose what they want to watch and enjoy at any time Netflix officially usurped the rights of media and television corporations and handed them over to individuals

It started in 2008, when Netflix found a "backdoor" to add 2,500 titles, TV shows, and musicals from Sony and Disney themselves to its streaming list fi which competitors didn't know Netflix acquired the streaming rights to these shows from payfiTV

channel Starz, which was also building its own streaming service at the time, under the name Vongo, but failed Thanks to this contract, a series of blockbuster titles such

as SpiderfiMan 3, Ratatouille, Pirates of the Caribbean 3, No Country for Old Men are available on Netflix At that time, even though Netflix had 12,000 different choices of movies and TV shows for users, most of those titles came from foreign countries or independent studios, which were rarely known known by users

In 2008, Netflix rebuilt its application functions inside a cloudfinative development environment, then developed applications for business operations The big, bloated Netflix service of 2008 has been refactored into microservices and into unstructured scalable data Using a cloudfibased database, Netflix can pay as much as they want, which is a form of payment that helps them save maximum costs every time they create features based on Al to make personalized recommendations to users

In 2011, Netflix fell into a serious crisis when it separated its DVD rental and movie streaming businesses Before that, within 4 years, the internal turmoil between Hastings and many of its senior leaders caused Netflix to lose a series of dedicated and capable personnel, who were "public servants" who contributed to building the empire Netflix from day one Its stock price fell 77%, losing 800,000 users

In October 2011, after 3 weeks of launch, Hastings had to close Qwikster fi a DVD rental subsidiary of Netflix Hastings also posted a short blog post aimed at quelling the rising outrage of users shortly after the appearance of a clumsy promotional clip for Qwikster

Things were brighter when Netflix decided to expand its investment into the production of exclusive TV shows and movies

In 2013, the 13fiepisode Netflix series "House of Cards" was nominated for 9 Emmy Awards and won 3 What's more, this is the TV series with the highest viewership ratings in the US up to the present time In 2013, Netflix began to enter the Games field through licensing the adaptation of Stranger Things or The Dark Crystal series to Games development companies In addition, Netflix has also produced a series of interactive movies directly with viewers such as Black Mirror: Bandersnatch, Unbreakable Kimmy Schmidt: Kimmy Vs The Reverend, allowing viewers to choose the actions of the characters in the movie , bringing a whole new cinematic experience to Netflix fans

Since 2016, Netflix is present in 190 countries, including Vietnam Currently, Netflix owns 151 million subscribers worldwide and on October 16 officially launched the Vietnamese interface

In 2021, Netflix was honored with 42 Golden Globe Award nominations for 22 movies and 20 shows Netflix has an advantage in hand with more than 200 million registered subscribers to use the service globally, and it is impossible to miss the

opportunity to participate in the extremely exciting and potential gaming market In early 2021, Bloomberg and The Information reported a lot about the event that Netflix will soon return to the "race" of the Games segment with the goal of providing highfiend game service packages like Xbox Game Pass or Apple Arcade

4 Change model of Netflix:

@ Unfreezing:

Netflix began as a mailfiorder DVD service Throughout those years, Netflix has rolled out new subscription features to DVD rental customers, and this new service allows customers to rent unlimited DVDs Thanks to this success, the company launched its official website with subscribers being able to choose from movie and video titles Things didn’t go well with Netflix at some point It had to lay off twofithirds of its employees to stay afloat Finally, after all, the subscriptions were up again, and Netflix understood that it would be a great idea to distribute the video directly on the network Although the internet speed at the time was too slow to stream high quality content Again, they were thinking of renewing their product distribution, although at the time they were still renting out a lot of DVDs, which was their main source of income When sales of CDs and DVDs begin to rapidly decline, that usually marks the end of any company that depends on it, but Netflix is thinking ahead enough as usual and services Onfidemand video allows the company to continue to grow

U.S Consumer Home Entertainment Spending

Total: Almost all DVDs by the mid-2000s

Growing but Digital and VOL

Still a fraction of DVD

$s

so

1999 2000 2001 2002 2003 2004 2005S 2006 2007 2008 2009

Figure 1: DVDs consumption

In 2007, Netflix added more competitive pressure when it announced the launch of a streaming service called “Watch Now” At the time, the streaming service was intended to be used only by proficient users with an internet connection, which was uncommon at the time Netflix started its video streaming service with a slow

approach In September 2007, the company gradually scaled up its service offering instead of rolling it out to all users at once Netflix made the new service available to all customers in ffianuary 2007 Netflix upgraded its technical infrastructure by optimizing for the cloud along with a slow and steady approach that has helped Netflix keep it It’s a pioneering advantage Netflix, relying on a solid engineering and content team, has managed to maintain its competitive edge since the launch of its video streaming service

® Refreezing:

Netflix has expanded into internet video on demand What they offer is a revolutionary new way of watching TV Improvements in streaming technology and increased use of handheld devices have helped grow Netflix, as well as the platform’s vast library of movies and TV shows Netflix is also the first company to offer their content on all devices, including PCs, phones, tablets, TVs, etc But there is a problem that there is not any content in the original version Netflix rights That means the company not only pays the network for each episode, but there’s no guarantee that they'll be able to keep the copyrights forever The solution they came up with was to switch from streaming TV to producing it on their own Netflix started investing in series and movie production by acquiring infihouse or independent creators Netflix has introduced some new improvements to match the value proposition block using the video recommendation algorithm This algorithm is very good and tries to come

up with a recommendation of a new video show you will like based on many criteria

In addition, Netflix will broadcast all seasons of the original show at once without having to wait Netflix doesn’t rely on ads to make money compared to traditional TV channels so they don’t have to, and for Netflix subscribers, the advantage is that they can comfortably watch all the seasons they want without having to wait There are some business actors from the traditional model that worry that it is slowly changing

TV viewers from linear TV to video on demand Furthermore, by taking advantage of competition and organizational change, Netflix is able to launch offline playback

interruption

5 The result:

The company was among the very first to see the potential of video streaming technology and began transitioning toward a subscription videofionfidemand strategy

in 2007 Since this adjustment, Netflix's revenue has surged more than ten times more than 29.7 billion in 2021, up from 1.67 billion in 2007

Figure 2: Netflix global revenue

In the last few years, the company has been very successful They not only lead the streaming market in the U.S but also effectively expand its service outside North America In 2010, the company offered the streamingfionly service in Canada To expand the plan, in 2011, the plan was introduced to Latin America and the Caribbean In 2012, the United Kingdom, Ireland, and Scandinavia all received the streamingfionly plan from Netflix as they expanded outside of the United States More than 190 nations and territories would have access to its streaming service by

2021

Until 2013, Netflix had launched its first three original series named House of Cards, Hemlock Grove and Orange is the New Black Those contents are seen as a major focus of Netflix, to sum up to the end of 2021 the company offered more than 2,400 original titles Along with building a sizable subscribers base globally, the company has also succeeded in creating and distributing popular original series like House of Cards and Orange is the New Black, upsetting established TV networks like HBO and

Netflix Global Revenue by Year

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@ Total Revenue ($ Mn) -® YoY Growth (%)

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Only 20% of consumers when it first came out in 1999 chose against purchasing a Netflix subscription after using the free trial ffiust over 5 million people were Netflix subscribers as of 2005 But in 2021, with more than 200 million subscribers, their streaming services became the biggest revenue generator

Figure 3: Netflix subscribers over the years The world's most widely used subscriptionfibased video streaming service, Netflix, appears to be performing extraordinarily well in both areas, including the game In addition to concentrating on expanding their consumer base, the business also succeeds in keeping its subscribers satisfied They outperform their rivals in every important facet of their service business, according to a new Forrester poll of American users of video streaming services

By far, Netflix is still the company hard to beat In the United States, 85% of respondents who pay for digital video content said they pay for a Netflix membership, according to Statista's Global Consumer Survey Amazon Prime was the nextficlosest service, lagging Netflix by a significant 20%

fa,

250

200

150

100

2007 2010 2013 2016 2019 2021

Achieved: In 2021, 129 Netflix original shows were nominated for Emmy Awards, more than three times as many as were nominated in 2016

6 Why Netflix succeed:

Reed Hasting noticed that Apple with the launch of AppleTV had used a similar idea

to the one he had and he found it to be too limiting With the rise of YouTube and some other limited video sites in 2005 & 2006, he realized that internet streaming was truly the future