In less than 2 weeks, I will be celebrating my 15th anniversary of holding shares of $NFLX.
The experience has been both educational and financially rewarding as an investor.
Here are 15 highlights and lessons from my 15-year journey.
#asseeninbt #nflx #netflix
The experience has been both educational and financially rewarding as an investor.
Here are 15 highlights and lessons from my 15-year journey.
#asseeninbt #nflx #netflix
1/15 Start small, dream big
$NFLX started with DVD by mail in 1997.
But Hastings had his eye on the bigger prize: delivering video over the Internet. He stressed that the company was named Netflix from the start and not DVD-by-mail.
$NFLX started with DVD by mail in 1997.
But Hastings had his eye on the bigger prize: delivering video over the Internet. He stressed that the company was named Netflix from the start and not DVD-by-mail.
2/15 Finding value where no one is looking
According to the HBR, only 30% of the $NFLX's DVD rentals were new releases compared to 75% at Blockbuster outlets.
By targeting under-valued titles, Netflix is able to carve out a profitable DVD rental business.
According to the HBR, only 30% of the $NFLX's DVD rentals were new releases compared to 75% at Blockbuster outlets.
By targeting under-valued titles, Netflix is able to carve out a profitable DVD rental business.
3/15 Competition and luck
$NFLX's success in DVD-by-mail attracted competition from Blockbuster.
Co-founder Marc Randolph admitted that Blockbuster would have won the battle if not for its heavy debt and interference from Carl Icahn, an activist investor.
$NFLX's success in DVD-by-mail attracted competition from Blockbuster.
Co-founder Marc Randolph admitted that Blockbuster would have won the battle if not for its heavy debt and interference from Carl Icahn, an activist investor.
4/15 A culture of freedom and responsibility
In 2009, $NFLX released a 129-slide company culture deck.
Among the key highlights: its high-performance culture.
To bring home its point, Netflix would offer a generous severance package for adequate performance.
In 2009, $NFLX released a 129-slide company culture deck.
Among the key highlights: its high-performance culture.
To bring home its point, Netflix would offer a generous severance package for adequate performance.
5/15 Growth and complexity
$NFLX believes that growth leads to complexity, and breeds bureaucracy.
Netflix prizes self-disciplined employees that can manage complexity while remaining nimble. The team needed to be flexible for its pivot into online streaming.
$NFLX believes that growth leads to complexity, and breeds bureaucracy.
Netflix prizes self-disciplined employees that can manage complexity while remaining nimble. The team needed to be flexible for its pivot into online streaming.
6/15 Slowly, then all at once
In January 2007, $NFLX launched its first online streaming service. Four years later, it expanded into Canada.
Five years later, in early 2016, the online streaming giant opened its service to 190 countries.
In January 2007, $NFLX launched its first online streaming service. Four years later, it expanded into Canada.
Five years later, in early 2016, the online streaming giant opened its service to 190 countries.
7/15 A scale the world has never seen
The plan to go from two to 190 countries in 5 years seemed reckless.
But $NFLX was building a business for a world with 5 billion netizens. Under that scenario, it would be the biggest distributor of content.
The plan to go from two to 190 countries in 5 years seemed reckless.
But $NFLX was building a business for a world with 5 billion netizens. Under that scenario, it would be the biggest distributor of content.
8/15 A chorus of naysayers
The online streaming business was not immediately profitable, attracting naysayers.
The most memorable moment came in December 2010 when ex-Time Warner CEO Jeff Bewkes derisively compared $NFLX's rise to the Albanian army taking over the world.
The online streaming business was not immediately profitable, attracting naysayers.
The most memorable moment came in December 2010 when ex-Time Warner CEO Jeff Bewkes derisively compared $NFLX's rise to the Albanian army taking over the world.
9/15 Mistakes were made
In July 2011, $NFLX announced that it was splitting up a popular subscription plan which resulted in a 60% price increase.
A comedy of errors ensued, including an ill-advised comment that it will hit US$1 billion in revenue for the first time.
In July 2011, $NFLX announced that it was splitting up a popular subscription plan which resulted in a 60% price increase.
A comedy of errors ensued, including an ill-advised comment that it will hit US$1 billion in revenue for the first time.
10/15 Willing to be embarrassed
The decision to split the services led to $NFLX losing 800,000 subscribers in a single quarter while shares tanked by nearly 80 per cent in 4 months.
Hastings walked back on his plans to split the services.
The decision to split the services led to $NFLX losing 800,000 subscribers in a single quarter while shares tanked by nearly 80 per cent in 4 months.
Hastings walked back on his plans to split the services.
11/15 Be stubborn in the direction
With the benefit of hindsight, we know that Hasting's push to focus on online streaming in 2011 turned out to be timely - and ultimately, correct.
Today, $NFLX has 214 million subscribers worldwide.
With the benefit of hindsight, we know that Hasting's push to focus on online streaming in 2011 turned out to be timely - and ultimately, correct.
Today, $NFLX has 214 million subscribers worldwide.
12/15 Data drives personalisation
A 2014 Atlantic article found that $NFLX categorised every movie and show into nearly 77,000 micro-genres, giving the online streaming provider unparalleled insight into its viewers' preferences.
A 2014 Atlantic article found that $NFLX categorised every movie and show into nearly 77,000 micro-genres, giving the online streaming provider unparalleled insight into its viewers' preferences.
13/15 Original content
$NFLX's model is attractive for storytellers who are free to create series or movies without the burden of fixed run times or pilot episodes.
Customers get to enjoy unique, original content + Netflix gets more subscribers.
$NFLX's model is attractive for storytellers who are free to create series or movies without the burden of fixed run times or pilot episodes.
Customers get to enjoy unique, original content + Netflix gets more subscribers.
14/15 Tapping the long tail of talent
Korean hit series Squid Game on $NFLX was viewed 1.65 billion hours by 142 million households within its first 4 weeks.
However, the show only cost US$21.4 million to produce, according to Bloomberg.
Korean hit series Squid Game on $NFLX was viewed 1.65 billion hours by 142 million households within its first 4 weeks.
However, the show only cost US$21.4 million to produce, according to Bloomberg.
15/15 Competition
$NFLX believes that its real competition is for a share of the member's time.
From this perspective, competition comes from all forms of entertainment, including linear TV networks, pay-per-view content, DVDs, video gaming, web-browsing, magazines and more.
$NFLX believes that its real competition is for a share of the member's time.
From this perspective, competition comes from all forms of entertainment, including linear TV networks, pay-per-view content, DVDs, video gaming, web-browsing, magazines and more.
For more on $NFLX, you can check out my article on @BusinessTimes
businesstimes.com.sg/wealth-investi…
Or follow me @chin_investor. Have a good weekend, everyone!
businesstimes.com.sg/wealth-investi…
Or follow me @chin_investor. Have a good weekend, everyone!
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