Netflix: subscription marketing machine

A nice article by Motley
Fool talks about how Netflix lowered prices in the past year to stave
off competition from Walmart and Blockbuster. They will reach 4 million
subs by the end of this year and project more than 5.5 million by the
end of next year. Next year they will generate almost $1 billion in
revenue. Impressive.

Netflix has one of the best online marketing machines out there. They
are everywhere. Entrepreneurs and students of internet marketing would
do well to study all the ways Netflix markets their services.

The one month free trial offered on their home page is great.

They promote that offer everywhere.

  • Natural Search. They have almost 600,000 pages indexed by Google. Blockbuster has only 55,000.
  • Search Rankings. They rank #1 on Google for \”dvd rental\” and which gets more than 1,000,000 searches per month in the U.S. They are also #1 on Yahoo for \”dvd rental\”. They are #2 on Google for \”movie rentals\” just behind Blockbuster.
  • Affiliate Marketing. Last year they switched from BeFree to LinkShare, a high end affiliate marketing network. They pay quite well and have many affiliates.
  • Pay Per Click. They are outbidding Blockbuster (as of right now)
    on \”movie rentals\” and many other terms on both Google and Yahoo. Googspy shows them bidding on many keywords (although the Googspy list only shows a tiny fraction of what people are really bidding on.)
  • Social Networking. Last year they introduced Netflix Friends. Haven\’t heard how well it is working.
  • Online advertising (banners and rich media). Netflix had the 4th largest budget for online advertising in both August and July.
  • Email list size. I haven\’t found this yet, but I\’m guessing that
    millions have signed up for their free trial offer and that their list
    is probably much, much larger than their subscriber base.

Here is the management discussion of their business from a recent 10-Q.
And here is an interesting block called Hacking Netflix that contains tons of news and info about the company.

3 thoughts on “Netflix: subscription marketing machine

  1. On their conference call yesterday, one analyst suggested that their “email list” was around 8 million, but they would not give a breakdown of how many people have left and come back, so I suspect that the number is really closer to 5 – 6 million, but have no data to back this up.

  2. I just finished a 40-page internal and external analysis on Netflix for one of my classes; it really is a pretty amazing company. I signed up for the free month but it was really only two weeks (maybe because I did the cheap plan). I would recommend it to anybody that enjoys movies and isn’t a poor college student. It has an amazing selection, a cool recommendation engine, and you can set it to only show PG13 movies. The best is that you don’t waste a half an hour at Blockbuster each time you want to rent, and since you have unlimited movies you can try films that you’re not sure about at no risk. If a movie stinks, just send it back and you’ll get a new one from your queue in a few days. It really is a unique business model. I’ll post a link to my group paper wiki if anybody is interested in reading it. I’m setting it up on a new server though, so it may be a few days. By the way, for any students (or employees) out there who do a lot of group work, wiki really are awesome. Group work without them is unthinkable to me now. The days of having to work around 6 peoples’ busy schedules to turn in one choppy paper in six different voices are over. 🙂 Sorry for the long post. Got kind of excited.

  3. Mark Cuban is on his way to kill NetFlix and probably reinvent how TV/Movie content is delivered. As soon as the movie industry gets their act together and deliver on demand content, DVD/VHS rentals are dead. Read: Will Mark Cuban (Finally) Revolutionize Hollywood? His plan to break the video window. By Edward Jay Epstein at http://slate.msn.com/id/2128631/?nav=fo

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