Netflix

Team1
MichaelChen(c hen.michae@husky.neu.edu)
AlisonCroteau(c roteau.al@husky.neu.edu)
JalenKupatt(kupatt.j@husky.neu.edu)
AlyssaWixsom(w ixsom.a@husky.neu.edu)

Country:China
April6,2016
INTB22022:504:30
ValentinaMarano

 TeamOne1

ExecutiveSummary

Netflixisalargemultinationalcorporationthatcurrentlyhastwelvesubsidiariesin
Brazil,theNetherlands,Japan,Luxembourg,France,Germany,theUnitedKingdom,andUnited
States,withtheNetherlandsandU.S.havingmultiplesubsidiaries.Theonlyfourcountriesinthe
worldNetflixdoesnotcurrentlyoperateinareCrimea,Syria,NorthKorea,andChina.Thebest
countryforNetflixtoexpandintowouldbeChina,forwhichthereasonswillbediscussedin
detaillater.Thecompanysrevenueshaveincreasedsignificantlyfrom2011to2015,withthe
biggestsalesincreasecomingfromitsinternationalrevenuestreamwhichhasincreased2258%
(Appendix3).Asforcorporatesocialresponsibility,thecompanyschangefromitsoriginal
DVDbymailmethodtothemorepopularstreamingserviceshasfedthecompanysefforts
relatingtosustainabilityandhasallowedittoreduceitsenvironmentalimpactbylargely
reducingcarbonemissions.Thecompanysvaluesofcandor,transparency,andcouragearean
integralpartofitscorporatesocialresponsibility,butthecountriesthatNetflixhasyettoexpand
tohaveverylimitedfreedomofspeechandaccesstoinformation,makingexpansiondifficult.
OurmethodsofenteringtheSyria,NorthKorea,andChinamarketswhilemaintainingthese
valueswillbefurtherexpandedonlater.
OurfindingsshowthatChinaisthebestcandidateforexpansionasSyriaandNorth
Koreasmarketsarepracticallyimpenetrable.NorthKoreastenserelationshipwiththeU.S.as
wellasitscitizenslackofaccesstotheinternetmakeitveryunlikelythatNetflixwouldbeable
tointegrateitsservices.AsforSyria,itsunderdevelopedtelecommunicationsindustryaswellas
thestateofitseconomyandhighlyunstablegovernmentmakeitanunlikelyoptionaswell.
AlthoughSyriansmayhavemoreaccesstomediathanNorthKorea,therearemanyfactors,
discussedlater,thatwouldproveentrytobedifficult.Chinashowsthemostpromiseasit'sthe
fastestgrowingeconomyintheworld,closetoourAsiansubsidiaryinJapan,andcontainother
streamingcompaniesthatNetflixcouldpartnerwith.Althoughtherearestrictregulations
imposedbythegovernmentandobtainingastreaminglicensewouldprovetobedifficultand
timely,NetflixhasagoodchanceatpenetratingthismarketbycloselyadheringtoChinese
streaminglaws.
NetflixisawiredtelecommunicationscarrierheadquarteredinLosGatos,CAwhose
companyactivitiesconsistofprovidinganinternettelevisionnetworkandsubscriptionstreaming
services.Thecompanyoffersmorethan2billionhoursofTVshowsandmoviesthroughthree
operatingsegments:domesticstreaming,internationalstreaming,anddomesticDVD.Itsrevenue
fordomestic&internationalstreamingcomesfrommonthlysubscriptions&membershipfeesof
streamingcontentwhileitsrevenuefordomesticDVDcomesfrommembershipfeesof
DVDbymail(Osiris).NetflixsthreemaincompetitorsareAmazon.comInc.,Comcast
Incorporated,andWalmartStores,Inc(MarketLine).

 TeamOne2

HostCountryAnalysis

EconomicAnalysis
Asdiscussed,thecountrythatwehaveultimatelychosentoexpandintoisChina.We
consideredseveralkeyfactorswhenmakingthisdecisionpertainingtoeconomic,political,legal,
cultural,andethicalaspectspresentwithinthecountry.DuringananalysisofChinaseconomic
standing,weencounteredseveralimportantconceptsthatwouldgreatlyaffecttheprocessof
bringingNetflixintoChina.Beingoneoftheworldsfastestgrowingeconomies,Chinawould
presentvastopportunitiesforthegrowthofNetflix.Recentexponentialeconomicgrowthcanbe
attributedtotheimmensemodernizationandglobalizationthathavebeenoccurringwithinChina
throughoutthepastcentury.Thesestridesofmodernizationhaveleadtoanoverallimproved
standardoflivingnationwideaswellasagreatdealofindustrialization.Chinaisalsobeginning
toimplementseveraleconomicliberalizationpoliciestobegintoopenuptheireconomytothe
restoftheworldinordertocultivatemoretradeopportunitiesandexpandforeignrelations.The
2014EconomicGrowthIndexratedChinaat14outofthe177countriesanalyzed,which
indicatesthatChinahasexperiencedsomeofthemosteconomicgrowthinrelationtotheother
countriesrankedoverthepastfewyears.Thiseconomicgrowthpresentsexcellentopportunities
forNetflixastheylooktoexpandintoChina.Pertainingtomarketpotential,inastudydoneby
theWorldBanktoassessthenumberofinternetusersbycountry,itwasfoundthatin2014
roughly49.3%ofthechinesepopulationusedtheinternet.Thoughthisseemstopalein
comparisontothe87.4%oftheUSpopulationthatusestheinternet,thisfiguremustbeassessed
inrelativeterms.ThepopulationofChinais1.38B,whichisimmenselyhigherthanthe324M
individualsintheUS(Worldometers).So,thepopulationofinternetusersinChinaisstillabout
twiceasmuchasthetotalUSpopulation,whichpresentanincrediblyvastuntappedmarketfor
Netflixsexpansionendeavors.However,thereareseveraleconomicaspectsthatwouldpose
issuesforNetflixsexpansionprocess.First,intheEaseofDoingBusinessIndex,Chinawas
ranked84outofthe189countriesanalyzed.Thisindicatesthatitcouldberelativelydifficultfor
NetflixtobeginabusinessrelationshipwithChina,howevernotimpossible.Finally,inthe2016
IndexofEconomicFreedom,Chinawasgivenascoreof52,whichplacesthecountryat144out
ofthe178countriesanalyzed.ThisposesanissuebecauseitindicatesthatChinamaynotbe
incrediblyopentoNetflixsexpansion,whichissomethingthatthecompanywillneedtogreatly
considerbeforebeginningthemarketpenetrationprocess.

PoliticalAnalysis
AsChinaremainsundercommunistrule,severalbarriersarepresentedtoNetflix,an
Americanbasedcompany,thatmustbefacedbeforeenteringthemarket.TheCommunistParty
ofChinacameintopowerin1949,causingmanynewconstrictingpoliciestotakeshapewithin
thecountry.Thecurrentpoliticalregimehasgivenwaytoastronggovernmentalholdonthe
marketand,inturn,themedia.Beingacompanybasedonmediaandfilmpresentsamajorissue
 TeamOne3

forNetflix.ThiswouldgreatlydecreasethesizeoftheNetflixlibrarythatcouldbestreamedto
subscribersinChinaaswellastheeaseofenteringintothemarketinthefirstplace.TheWorld
Banks2014PoliticalStabilityIndexgaveChinaascoreof.46whichplacedthemat132outof
the191countriesranked.ThisindexplacesChinaatthebottomofthechainintermsofoverall
politicalstability,whichissomethingthatbothNetflixandtheUSgovernmentshouldtakeinto
accountbeforebeginningthisexpansionprocessasanypoliticalissuesthatmayarisewould
affecttheUSasawhole,notjustNetflix.However,severalbeneficialpoliticalaspectsinclude
thestepsthatChinaismakingtowardpoliticalreform.Duetotheonsetofmodernizationinthe
recentcentury,ChinahasadoptedsomeWesternpoliticaltechniquesandideologythatare
allowingforgradualpoliticalreformation.Inthelongrun,thiswouldlikelyincreaseChinas
rankingonthePoliticalStabilityIndexand,inturn,createamoreprosperousandinviting
environmentforacompanysuchasNetflix.ThisconceptisbackedbyChinasrankinginthe
2015LongTermPoliticalRiskIndexwheretheyweregivenascoreof2/7,whichtranslatestoa
rankingof42ndoutofthe190countriesanalyzed.ThissupportsthefactthatChinascurrent
politicalreformpoliciesareplacingthecountryontracktogreatlyimprovetheirpolitical
standinginthelongrun.

LegalAnalysis
ThereareseveralissuesoflegalitythatwouldmakeitdifficultforNetflixtoinitially
enterthechinesemarket.Forinstance,thereisamediastreaminglicensethatthecompany
wouldneedtoobtainbeforebeginningoperations.However,onlysevencompaniescurrently
holdthislicenseandtheyareallChinesebased.Beinganamericanbasedcompany,Netflixmay
experienceadifficulttimeobtainingthelicense.However,sinceadesirefortheNetflixservice
hasbeensowidelyexpressedinChina,thechancesofobtainingthelicenseanddoingso
relativelyquicklyarelikelyincreased.Besidestheinitialdifficultyofenteringthemarket,China
hasexperiencedmajorissueswithcensorship,piracy,andcybersecuritybreachesinthepast,
whichwouldposeseriousissuesforNetflix.Thesepastproblemscouldpresentissuesof
intellectualpropertytheftandfilmtheft,whichcouldbringNetflixmajorlegaldisputes.Finally,
inthepast,ithasbeenseenthatasvariouscountriesincreasedtheamountofbusinesstheywere
doingwithChina,thenumberofcommercialdisputesalsoincreased.TheUSisalreadyamajor
businesspartnerofChina,sotheseconcernsmaynotbequiteasrelativeforNetflix,howeverfor
alargeglobalcompanysuchasNetflix,issuessuchasthismustberecognizedregardless.

CulturalAnalysis
TherehasnotonlybeenanexpresseddesiremadebytheChinesepeopletobringNetflix
totheirmarket,butseveralculturalfactorswithinthecountrypresentNetflixwiththeprobability
ofgreatsuccess.TheyoungerurbangenerationpresentinChina,whichencompassesroughly
35%ofthepopulation,ishighlyinfluencedbyglobaltrends,specificallythosepertainingtothe
media.ThiswaveofwesternizationandmodernizationthathaspassedthroughChinainthepast
 TeamOne4

centuryhasbroughtmanydifferentculturalchangestothecountry,buttheincreasedprevalence
ofvariousmediaplatformshasbeenpivotal.Thismodernizationalsobroughtaninfusionof
westerninstitutionsandconceptsintothechinesefilmindustrycreatingamorediversified
industry.Inaddition,basedona2015study,Chinaholdsthesecondlargestfilmindustryinthe
worldbasedonboxofficerevenues.ThisentailstheChinesemarketwouldgreatlybenefitfrom
theservicesprovidedbyNetflixandthecompanywouldlikelyreapimmenseprofits.However,
risinginequalityandagrowingincomegapwithintheChinesepopulationcouldposeissuesfor
Netflix.Growthofthelowerclassensuesthatasmallerpercentageofthepopulationwouldbe
abletoaffordtheluxuryofavideostreamingservice.However,withthelongtermeconomic
growththatisexpectedfromChina,thisconceptofgrowinginequalitywithinthecountrywill
likelynotposeanissueinthefuture.

EthicalAnalysis
ThemainissueofethicalitywhenlookingtoexpandNetflixintotheChinesemarket
pertainstocorruption.WiththeForeignCorruptPracticesActcurrentlyinplaceintheUS,
dealingwithcountriesknowntoharborhighamountsofcorruptionandbriberycanbeincredibly
riskyforaUSbasedcompanysuchasNetflix.Briberyisacommonthreadinchinesebusiness
practices,soinordertoavoidtheextremelycostlyramificationsofbreakingtheFCPA
legislation,Netflixmustbeextremelycautious.InTransparencyInternationalsCorruption
perceptionsIndexChinawasgivenascoreof37,whichtranslatestothe83rdleastcorrupt
countryoutofthe168countriesanalyzedinthisstudy.ThislumpsChinaunderthecategoryof
moderatelycorrupt.Thisisafairlyaveragescorerelativetotheothercountriesanalyzed,
howeveritisstillacauseforconcernconsideringthemeasuresthattheUStakesasawholeto
disengagefrominteractionswithhighlycorruptcountries.Anothertopicofethicalconcernhas
todowithenvironmentalconsciousness.Becausetheservicewillonlybeimplementedasan
onlinestreamingserviceinChina,environmentalissuesarenotofgreatconcernforNetflix
specifically.However,measuringpollutionlevelscanbeanimportantindicatorofethical
practicesasawholewithinacountry.The2016PollutionIndexgaugestheoveralllevelof
variousformsofpollutionbycountry.Chinawasgivenascoreof85.54,whichtranslatestothe
10thmostpollutivecountryoutofthe99countriesranked.Thoughthisindexisnotnecessarily
directlyrelatedtotheformofbusinessthatNetflixwillbedoinginChina,itisstillanindication
ofgenerallypoorethicalpracticewithinthecountry.

 TeamOne5

FinancialAnalysis

ProjectedRevenues
WhenlookingatNetflixsalesstructuresinrecentyears,itbecomesapparentthatthe
momentumswingsinfavorofinternationalexpansion.Whiledomesticsalesincreases
significantlyfrom2011to2015byabout55%,internationalsalesgrewbyabout2258%.(See
Appendix3)Thisnumberneedstobeputintocontextassalesgrewbyaboutthesamenet
amountbothdomesticallyandinternationally.However,thepercentagechangeshowshowmuch
Netflixhasprofitedfrominternationalexpansion.Withourproposal,wehopetotakeadvantage
ofthisdevelopment.
BeforeexpandingtoChina,weneedtotakeacloselookatpossibleearningsfromthe
potentialmarket.Inordertocomeupwithdependablenumbersandforthepurposeofexpected
revenuecalculation,thereareafewfundamentalassumptionsthatneedtobemade(Appendix
4).TherateswesuggestarebasedoffofthecurrentAmericanofferings(Appendix7).
IntheU.S.thereareroughly133.960.000householdsasof2014.Itisreportedthat
Netflixreaches36%ofthesehomes,reachingaround50.000.000subscriptions.In2014,Netflix
reportedthattheaveragesubscriberpays$8,14permonth,generatingrevenueof$407.000.000
permonth.TheU.S.marketisconsideredhighlypenetratedandNetflixisthebiggeststreaming
providernexttoAmazonWatchandHBO.
Forthepurposeofthisexercise,weassumethatwecanreacharoundonefourthofthatin
China,meaningnot36%but10%ofhouseholds.Withanumberof455.940.000householdsin
2014,a10%penetrationwouldresultinroughly46.000.000subscriptions,anumberalmost
equaltothatintheU.S..Internationally,Netflixreportsthattheaveragesubscriptionpays$8,34
permonth,resultinginpotentialrevenueof$383.640.000permonth.Thisnumberispurely
hypotheticalandbasedonnumerousbroadassumptionsbuttheresultsshowthatifNetflixonly
reachesonefourthofthecustomersithasintheU.S.,theresultcouldberevenuesequaltothose
madeintheU.S.
Onekeystonethatplaysintothe10%assumptionisAlibabasrecentteamupwith
DisneytoofferstreamingservicesinChina.HostedbytheplatformofWasuMedia,oneofthe
firstChinesebusinessestogetaninternetstreaminglicensefromthegovernment,theserviceis
offeredforaninitialsetupcostoftheequivalent$125,whichincludesaoneyearsubscription.
AlibabaisoneofChinasbiggestinternethostsandplatforms.Wewentonatangentand
concludedthat10%wouldbeanambitiousyetnotattainablegoal,giventhegrowthofthe
marketandtheinterestbyvariousgroups.Weareawarethat10%willnotbeoursharefromthe
beginning.However,weareconfidenttoreachitovertime.
Intermsofcost,Netflixreportedacostofrevenueforinternationalstreamingofaround
88%in2014.Usingthatnumber,wecanconcludethattheexpensesforChinaonamonthly
basiswouldbearound$337.603.200,leavinguswithaprofitmarginof$46.036.800permonth.
Whilethisnumberispromising,thisdoesnotincludefactorssuchasmarketingcosts,orthe
 TeamOne6

setupcosttogetlicensedbytheChinesegovernment.Consequently,weexpectedanegative
profitmargininthefirstyear,possiblytwo,ofoperation.

ProjectedExpenses
ThebiggestexpensesforNetflixconstituteoftheproductionofnewshowsandthe
licensestohostshowsfromothernetworks.FortheproductionoftheshowM arcoPolo,Netflix
spentover$90.000.000.Licensesforthestreamingofshowsfromothernetworkscanrange
from$1.350.000to$2.000.000.ThesearecoststhatNetflixwouldmostlikelyincurinChinaas
thetargetingofanewaudiencewouldrequirenewshowsandpossiblytranslationsofoldshows.
Theextentofthesecostsisunforeseeableandwouldputpressureonourprofitmargin.However,
toexpressitinthetermsofForbesMagazine,itsanecessaryevilforNetflixtoremainviable.
Overall,theentrytoChinaisfinanciallyviableduetothehugepotentialofthemarket
thatcanbeseenevenwithourbasicestimates.Thecostsaredifficulttodetermineatthispoint
andweruntheriskofcostbloating.However,weseetheriskasbearableandundercontrol.
Netflixhasrecentlyexpandedintoover130newcountries.Thisexperiencehasgiventhe
companythenecessaryinsightintoadaptingtonewlanguage,culture,currency,politicalsystems
etc.,makingourproposalriskybutfinanciallyviable.

 TeamOne7

ConsiderationstoEntry

Competition
EnteringChina,however,doescomewithvariousthreatsthatmaybeanobstacleto
success.TherecurrentlyalreadyexistsstreamingservicesinChinathathavealreadyestablished
themselveswithmedialicensesfromtheChinesegovernment.Therefore,ourmaincompetitors
includeYoukuTudou,aChineseYoutubelikesubsidiaryofAlibabawiththemostwebtraffic,
iQiyi,anonlinevideoplatformsubsidiaryofBaiduInc.thatreleasesChineseexclusiveTV
showsandprograms,andDisneylife,ajointventureDisneystreamingservicebetweenDisney
andAlibaba.Netflixearned$1.82billioninrevenuesthispastQ4of2015(McAlone).Thispast
Q3of2015,YoukuTudouearnedrevenuesequivalenttoabout$291.8million(PRNewsWire).
iQiyiearnedabout$213.3millioninrevenuesinthepastQ4of2015(Baidu).TheDisneylife
jointventurehasyettoannounceearningsastheyhavejustreleasedtheirproduct.Asseenby
therevenues,Chinesevideosubscriptionserviceshaveyettobecomeaspopularassubscription
servicesinAmerica.However,therapidlygrowingpopularityofbothYoukuTudouandiQiyi
reflectChineseusersinterestsinexclusivestreamingcontent,whichisagoodsignforNetflix.
Netflixwillhavetofindanichemarketwithinthevideostreamingmarketinorderto
differentiatethemselvesfrombothYoukuTudouandiQiyi.Thiswouldnotrequireamajor
changetotheirexistinglibrary,asexistingvideostreamingservicesinChinadonothaveagreat
selectionofwesternTVshowsandprograms.Therefore,Netflixwillbeabletobringafresh
selectionofprogramstoChineseusersthathavelargelybeenunseenabroad.

ModeofEntry
TheapproachforenteringChinawillbeslightlydifferentthanNetflixsapproachto
enteringothercountries.TheChinesegovernmenthasbeennotoriouslystrictandrigidwhenit
comestoallowingforeigncompaniestoobtainmedialicensesintheircountry.However,ithas
beenshown,throughthejointventureofAlibabaandDisneywiththeirDisneylifestreaming
service,thatlicensesaremucheasiertoobtainthroughpartnershipswithalreadyestablished
companieswithinChina.Therefore,thefirstplanwouldbetotakeadvantageofNetflixsalready
establishedsubsidiarytopenetratetheChinesemarket.Secondly,wewouldlookatChinese
companieslookingtopartnerwithavideosubscriptionservice,which,giventhecurrentstateof
thevideostreamingservicemarket,willnotbeadifficultmatter.Throughthismodeofentry,
NetflixwillnotonlyhaveaneasiertimeenteringtheChinesemarketandacquiringalicense,but
alsobeabletogainknowledgeofconsumerinterestsandtastesthroughthepartnershipwithan
alreadyestablishedChinesecompany.

 TeamOne8

CorporateSocialResponsibility

Environment
WeoutlinedthetimelineforNetflixcorporatesocialresponsibilityeffortsinthe
MidtermProposaldraft.WecametotheconclusionthatNetflixbiggestcontributiontoits
surroundingsandsocietyisthepositiveeffectthestreamingservicehasontheproductionand
shipmentofDVDs.Forone,thestreamingserversrequiremuchlessenergythantheplants
manufacturingdisks.Thismeansthatlessenergyneedstobeproduced,leadingtoalesser
demandfornuclearorgasenergysourcing.Additionally,DVDsarenotresultingintrashany
longer,reducingtheamountofnondegradablewastethatcancontaminateandhurtthe
environmentinthelongrun.Finally,theshipmentofDVDsledtolargecarbonemissionsasthe
shipmentsdontrequiretransportation.ItusedtobethecasethatthetrucksshippingDVDs
createdlarge,harmfulemissions.Now,videoscanbestreamedandemissionsgodown.Itisboth
forreasonsofcorporatesocialresponsibilityandcustomerservicethatweplantoenterChina
offeringonlythestreamingandnottheDVDsegmentofNetflix.

Media
Netflixdoesntcurrentlyplaceexplicitemphasisontheissueoffreemedia.Nonetheless,
webelievethat,givenNetflixbusinessmodelandglobalreach,Netflixshouldbeanadvocateof
freedomofspeechandfreedomofmedia.Chinaisundercommunistrulewiththegovernment
banningmaterialontheinternetatwill.ItisnotourplantoprovokeareactionbytheChinese
governmentbutwewanttocomeoutinfavoroffreemedia.Agivenwouldbetheconditionthat
thegovernmentdoesntcensoranyofourcontentwithoutourpermission,aclauseweinsist
upon.However,morecanbedone.

Education
Wewouldliketofocusonaccesstoinformationforeducational,notpoliticalpurposes.
WereexploringoptionstomakethechildrensegmentofNetflixaresourceforeducation.We
arewillingtocooperatewiththelocalexpectationsforthis.PartneringwithChineseeducational
institutionswouldenableustoprovideourplatformtothem,extendingthepossibilitiesand
learninginfrastructureforchildren.Childrencouldstreameducationalvideos,movies,etc.on
Netflix.Intermsofcost,wewouldbewillingtoofferthisservicetochildrenenrolledin
institutionsforfree,giventhattheChinesegovernmentdoesntputlimitsontheothersegments
thatweofferanddoesntbananymaterial.Thiswouldbenefitbothsidesaswehaveleverage
andassurancethatourserviceisupandrunningwhilechildrengetaccesstoaneducational
videoplatform.ThisprojectishypotheticalandNetflixdoesntcurrentlyparticipatein
partnershipssuchasthisbutwebelievetheoptionworthexploring,givingbacktotheChinese
childrenandcommunities.

 TeamOne9

NextSteps

OurfinalrecommendationtotheBoardofDirectorsistoexpandNetflixsservicesinto
ChinausingitsJapanesesubsidiaryasabase.Fromthere,Netflixmustobtainastreaming
licensefromtheChinesegovernmentandonlystreammediathatadherestothecountrys
streaminglaws.Weexpecttheprojecttimelinetobebetweenfiveandtenyears,asobtainingthe
licensemaytakeoversixyears.Oncethelicenseisobtained,weexpectitwilltakeayearat
mosttobeimplemented,asonceNetflixisissuedthelicenseitwillbeavailabletostream
relativelysoon.Avitalcomponentofthesuccessoftheexpansionismaintainingclosetieswith
theChinesegovernment,aswewanttoavoidabanorclosureofouroperationatallcost.That
includesstayinguptodateonpolicy,transparencywithofficials,andadherencetolocalrules
andregulation.Wewillconsidertheprojectasuccessifweareabletocapture10%ofthe
Chinesemarket.

 TeamOne10

Appendices

1.Subsidiaries

2.SubsidiariesbyRegion

3.NetSalesforNetflixinthousands

 TeamOne11

4.AssumptionsforCalculations
1 Onehouseholdusesonesubscription

2 Customerspayontimeandwhentheinvoiceisdue

3 ChinesecustomersbehavethesameasU.S.subscribers

4 NetflixbecomesavailableinallpartsofChina

5 ThesamelevelofserviceandqualityisofferedinChinaastherestoftheworld

6 Thereisnogovernmentcontroloverthecontentoffered

Onesubscriptioncanservicemultiplecustomersbuttheaverageofratesfor
7 variousnumbersofscreenspersubscriptionsisusedhere($8,14domestic,$8,34
international)

8 Wereach10%ofhouseholdsinChina

9 AllcalculationsaremadeinUSD.ChineseYuan(CNY)isconvertedtoUSD
equivalents.1USD=6,48CNY

5.MarketShares

6.ProjectedFinancialResults
Potential Netflix AvgMonthly Revenues Costof
Country Market Reach PaymentsPer PerMonth Revenue
Subscription /Expenses

U.S. 134M 50M $8,14 $407M 88%

China 456M 46M $8,34 $384M ?

 TeamOne12

7.Rates
Country 1ScreenBasic 2Screens 4Screens AveragePaid
Standard Premium PerSubscription

U.S. $7,99 $9,99 $11,99 $8,14

China 52CNY 65CNY 78CNY $8,34

8.OfferedPlans&Features

 TeamOne13

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