Focus your Netflix case assignment on these three questions: Question 1. In the case, Netflix has...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Focus your Netflix case assignment on these three questions: Question 1. In the case, Netflix has a DVD-only plan with 2 million subscribers (all other subscribers use streaming-only plans). At $14.99 avg per month per subscriber, the DVD-only plan generates about $30M/month, $360 million per year in revenue, which is bigger than most small companies in the United States. Most DVDs in the Netflix library are already paid for, and it's relatively cheap to run the DVD-only business (licensed-only DVDs, no original content costs). Those consumers who use the DVD-only plan are adverse to streaming and love the DVD-only plan, as it's about the only service remaining to rent DVDs. Should Netflix raise the price of the monthly DVD-only subscription by $1 per month, $2 per month, $5 per month or close down the DVD-only business and sell off the DVD inventory? Explain your answer. Question 2. Apple TV+ streaming launched Q4 2019 with a low subscription rate of $4.99/month. Apple has gained over 33 million subscribers in just 12 months since launch. Apple+ is considering two choices to compete with Netflix: 1) continue to hold it's very low $4.99 Apple TV+ price for at least one more year, but hold spending on new original content at current levels, OR 2) Raise the monthly subscription by $2 per month to $6.99/month, still much lower than Netflix. The $2/month will generate at least $66 million per month more profit (33M subscribers x $2 month) to invest in more Apple TV+ original content which could attract more users. Between these two choices, what do you think Apple+ should do? Explain your answer. Question 3. Netflix announced an October 2020 price increase: Basic plan $8.99 (1 screen SD), no price change; Standard plan (2 Screens HD) at $13.99, up from $12.99; Premium plan (4 Screens HD) at $17.99, up from $15.99. Although Netflix just raised prices in Oct 2020, they are considering a a $1 per month price increase across all three subscription plans in July 2021 (9 months from now). This increased revenue will allow them more revenue to build additional original content to distance themselves from Apple TV+, Disney+, Hulu and others. Netflix leaders believe their pricing is relatively inelastic, because when they've taken 10% + price increases in the past, the cancellation rate was only 3 to 4%. MONDAY ACTION: Reed Hastings, Netflix CEO, wants to get the team together on Monday to review the July pricing. Do you support or not support the action to raise subscription plans by $1 each in July 2021? Explain your answer. Focus your Netflix case assignment on these three questions: Question 1. In the case, Netflix has a DVD-only plan with 2 million subscribers (all other subscribers use streaming-only plans). At $14.99 avg per month per subscriber, the DVD-only plan generates about $30M/month, $360 million per year in revenue, which is bigger than most small companies in the United States. Most DVDs in the Netflix library are already paid for, and it's relatively cheap to run the DVD-only business (licensed-only DVDs, no original content costs). Those consumers who use the DVD-only plan are adverse to streaming and love the DVD-only plan, as it's about the only service remaining to rent DVDs. Should Netflix raise the price of the monthly DVD-only subscription by $1 per month, $2 per month, $5 per month or close down the DVD-only business and sell off the DVD inventory? Explain your answer. Question 2. Apple TV+ streaming launched Q4 2019 with a low subscription rate of $4.99/month. Apple has gained over 33 million subscribers in just 12 months since launch. Apple+ is considering two choices to compete with Netflix: 1) continue to hold it's very low $4.99 Apple TV+ price for at least one more year, but hold spending on new original content at current levels, OR 2) Raise the monthly subscription by $2 per month to $6.99/month, still much lower than Netflix. The $2/month will generate at least $66 million per month more profit (33M subscribers x $2 month) to invest in more Apple TV+ original content which could attract more users. Between these two choices, what do you think Apple+ should do? Explain your answer. Question 3. Netflix announced an October 2020 price increase: Basic plan $8.99 (1 screen SD), no price change; Standard plan (2 Screens HD) at $13.99, up from $12.99; Premium plan (4 Screens HD) at $17.99, up from $15.99. Although Netflix just raised prices in Oct 2020, they are considering a a $1 per month price increase across all three subscription plans in July 2021 (9 months from now). This increased revenue will allow them more revenue to build additional original content to distance themselves from Apple TV+, Disney+, Hulu and others. Netflix leaders believe their pricing is relatively inelastic, because when they've taken 10% + price increases in the past, the cancellation rate was only 3 to 4%. MONDAY ACTION: Reed Hastings, Netflix CEO, wants to get the team together on Monday to review the July pricing. Do you support or not support the action to raise subscription plans by $1 each in July 2021? Explain your answer.
Expert Answer:
Related Book For
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
Posted Date:
Students also viewed these marketing questions
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
The following information is computed from Fast Food Chains annual report for 2006. 2006 2005 Current assets $ 2,731,020 $ 2,364,916 Property and equipment, net 10,960,286 8,516,833 Intangible...
-
Izmir A.S. issued convertible bonds at their face value of 100,000 lira on December 31, 2017. The bonds have a 10-year life with interest of 10 percent payable annually. At the date of issue, the...
-
For each of the following experiments, describe the sample space. (a) Toss a coin four times. (b) Count the number of insect-damaged leaves on a plant. (c) Measure the lifetime (in hours) of a...
-
What are the financial and non-financial determinants of value creation?
-
1. Calculate the Altman Z-score for Ford and Toyota. What inferences do you draw from these values? What inferences do you draw from comparing the values across the two companies? (You may assume...
-
Identify Di Bella by using Cause and effect analysis (Fishbone) against its competitors like Starbucks and Nestle during the COVID-19 pandemic time and current period Link:...
-
Mr. M has been employed as an engineer by A Ltd., a company incorporated in Hong Kong. During the year ended 31 March 2019, Mr. M had the following income and expenditure. A monthly salary of...
-
A share now sells for $110. The price will either increase 10% (by a factor of u = 1.10) or decrease 5% (by a factor of d = 0.95) over a six-month period. A European call option on this share has an...
-
Currently Ahmad has deposited RM4.000 every month in accounts at 12 percent interest rate compounding monthly. He wants his amount in his account to be as RM50,000 after n years. How long he has to...
-
P2. The value of can be determined by the series (-1)() 4 -1.2.3 (2k-1) Write a MATLAB function [n, piVal, err]=findPiValue (targetError) that determines the minimum number of terms of the series n...
-
show full working out and solutions Question 3 Use the personal income tax rates in this unit to calculate (a) dependant rebates and (b) net tax payable for the following tax payers in respect of the...
-
Solve the following problem involving measures of central tendency. Show your complete solution. 1. Paulene has the following test results in Mathematics: 79, 80, 85, 84, 85, 86, 82, and 83. Solve...
-
(1) Find the derivative function for each of the following: (a) f(x)=x2x-1 (b) f(x)=sin(3-x) (2) Evaluate each integral. 1 (a) dx (b) [sece tane de (c) f(x-1)x dx 3x5 x+5x+4 2 x+4x+3x-4 (e) lim (3)...
-
QUESTION 1: PAKEL Tool Company is located in one of the Multi-Facility Economic Zone (MFEZ) in Zambia. The Company has been in existence for over five years and has a policy of building an excellent...
-
The Taylor's series expansion for cosx about x = 0 is given by: where x is in radians. Write a user-defined function that determines cosx using Taylor's series expansion. For function name and...
-
Don James purchased a new automobile for $20,000. Don made a cash down payment of $5,000 and agreed to pay the remaining balance in 30 monthly installments, beginning one month from the date of...
-
On December 31, 2010, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common...
-
Stock option plans provide employees the option to purchase: (a) A specified number of shares of the firm's stock, (b) At a specified price, (c) During a specified period of time. One of the most...
-
FIFO and average cost flow methods periodic and perpetual inventory systems Non-GST version Clean Air Ltd sells air purifiers. The table below summarises the inventory movements for the most popular...
-
Personal Tech Ltd records its inventory of fitness watches using the FIFO cost allocation for perpetual inventory. The following information summarises the inventory movements for their most popular...
-
Audio Attitude Ltd uses the perpetual inventory system to maintain its inventory records of Play it car stereos. The computerised accounting system identified the closing inventory value was \($245\)...
Study smarter with the SolutionInn App