Murray+Report+Proposal

To: Proximity Video Team From: Gregg Murray Subject: Netflix Report Proposal Date: January 12, 2010

The video market is about to make an unexpected change, which will see those who rely on DVD and Blu-ray Disc rentals losing market share. Netflix is an entrant into the video market that exploded into the market with its direct DVD rental strategy. I propose to write a report using Netflix as a case study on the current state of streaming video and future market opportunities.

The movie rental industry has been falling apart for a number of years. DVD sales were down by about 7% from 2007 to 2008 and continued to fall by an estimated 9% in 2009 (Graham 2009). Companies like Redbox, Apple and Comcast Cable are starting to chip away at the market share conventional sellers have enjoyed.
 * Need**

Companies are beginning to move video to online streaming formats.

· __Websites__ like Hulu are growing in number and they house large amounts of popular content that Netflix is struggling to get. · __Gaming systems__ are starting to operate in a more multipurpose format. Xbox, Playstation 3 and Wii are able to surf the internet for entertainment other than video games which includes movies. · __Online retailers__ like Amazon and Apple are trying to find ways to enter this competitive market. The concept of streaming videos is giving retailers an opportunity.

It is time for a major change. The option for companies is to move videos to a streaming format. Through partnerships and use of the internet this will allow companies to reach its consumers in a faster, more efficient manner. DVDs still have some potential to grow for the next couple of years but now is the time for Netflix to enter the market of streaming media. This market is faced with a period of uncertainty, and we are unsure which direction the video market will go.

Clients who wish to target Generation Y using streaming video sites need to understand the current state of the technology and its future possibilities. Companies that want to reach Generation Y need to have a direct way of gaining access to these users.

The proposed report, “Netflix and Streaming Video” will cover the following topics:
 * Report Topics**

· The transition from DVD video to streaming video · The three ways to deliver streaming video · Netflix’s streaming strategy · The future of the home movie experience

This report will also include at least one attachment comparing streaming video options for iTunes, Amazon, and Comcast Cable.

PR Newswire. (2010). //Netflix Announces Multiple Partners to Instantly Stream Movies and TV Episodes from Netflix to your TV.// Retrieved on January 12, 2010 from [].
 * Sources**

The press release from PR Newswire brings attention to the partnerships that Netflix is forming to enter the streaming media world. This article explains that Netflix has partnered with companies like Philips, Magnavox, Sharp, Sanyo and Toshiba. These companies will build Blu-ray players and digital televisions that will be capable of streaming thousands of videos over the internet from the Netflix library. These companies have joined others like Microsoft, Sony and LG which are already working with Netflix to provide direct streaming. This article is important because it shows the continual effort by Netflix to expand opportunities for their consumers.

Clark, D. (2010, January 8). New TV Apps Borrow a Page from iPhone. //Wall Street Journal.// Retrieved on January 9, 2010 from [].

Clark reports on the transition to getting applications for the television similar to that of the iPhone. This technology has been available for years; however the hardware devices were not ready to handle it. In recent years devices like TiVo, gaming systems, and some televisions have shown the ability to handle internet content. Yahoo! Inc. is the leader in providing applications for televisions. This technology will allow users to pull up video content to their televisions from the internet.

Arango, T. (2008, January 8). Comcast Plans to Offer a Huge Menu of Films. //New York Times.// Retrieved on January 9, 2010 from [].

Arango, a reported for the New York Times, interviews Brian Roberts (CEO of Comcast). In this article he details the plan that as been undertaken by the cable company. They want to provide access for their subscribers to the largest content of video in the market place. The article discusses the rapid growth of Comcast’s On-Demand features that will provide access to TV shows and movies. They are attempting to grow the Comcast library from 300 titles to over 6,000 titles. Roberts explains that this in an attempt to help regain market share from the companies that have been targeting Comcast directly.

Zeilder, S. (2010, January 6). Netflix Strikes New Deal for Warner Bros. Titles. Retrieved on January 9, 2010 from [].

Zeidler reports that Netflix and Warner Bros. have reached a new agreement for video content. Warner Bros. will hold onto its new releases for the first 28 day in retail stores. This is important to them because Hollywood studios see the largest portion of their sales in these 28 days. In exchange, Netflix will receive more online media that they can use for their sreaming formats. This will help Netflix grow its weak online library and keep Warner Bros. profits from suffering for the first 8 days of release.

Graham, J. (2009, July 1). Netflix is Still Renting Strong; CEO sees DVDs as a Growth Product, but Net Delivery is Next. //USA Today.// Retrieved on January 11, 2010 from [].

Graham discusses the process that occurs for Netflix to reach its near 11 million subscribers every day. Graham interviews Reed Hastings (Netflix CEO) in an attempt to find out what is next for the suffering video market. Hastings discusses the slim growth that DVDs may see over the next 5 years based on consumer’s knowledge of how they operate. He also knows that the next step for this industry is to penetrate the streaming movie market that is in its infancy stages. Hastings talks about Netflix continuing to expand its streaming media format through partnerships with companies like LG and Samsung. These companies will build TVs and Blu-ray players that will allow consumers to stream Netflix directly into their televisions.

Wildstrom, S. (2008, December 8). Turning Your Xbox into a Box Office. //Business Week.// Retrieved on January 11, 2010 from [].

Wildstrom writes about his experience using the Xbox 360 as a mode to view videos from Netflix. He compares the price of the Xbox and Netflix subscriptions to the fees that are associated with the Apple TV store. Wildstrom discusses how the media formats are very comparable to DVD quality, and have the capability of high-definition when viewing a video of this format. He explains that the speeds for download depend on your internet connection, and that there were no problems with the system. Wildstrom also discusses a few downfalls to the system, most of which arise because its primary use is for gaming and not watching video.