Apple & Netflix Acquisition Presentation

Report
Alex Blatt, Vanessa Boys Smith, Drew
Fann, Brie Hunt-Augustine, Chris Mullican
Why Netflix?
 Integrated Customer
Experience
 Good Cultural Fit
 Increased Market
Share
 Streaming & Content
Synergies
Apple TV – Not your typical TV
“I’d like to create an integrated television set that is
completely easy to use. It would be seamlessly synced
with all of your devices and with iCloud. It will have the
simplest user interface you could imagine. I finally
cracked it.” – Steve Jobs
Apple TV is Our New iOS Platform
Leveraging our Next Portfolio Product
•
integrated with iTunes and App
Store = new monetization opportunities
through capture of streaming market share
• New User Experience
• Fully integrated living room experience
• Deeper content relationship
• Leveraged synergies with a combined user
base
Acquisition
Need
Vertical
Integration
Outcome
Competitive Edge
Design Efficiency
Acquisition
2011
Solid State
Flash
Storage
In House:
MacOSx
iPhone,
iPad, iPods
Production Cost
Savings
Distribution
Efficiency
*Apple
TV*
Streaming
Contracts
Design Efficiency
(Apple TV
Integration)
TV as Platform
Integrated
User
Experience
Production Cost
Savings
(Contracts)
Distribution
Efficiency
(Streaming &
Market Share)
Movie Streaming on Apple TV:
Capturing Market Share
The DVD Streaming
Market
Other
30%
Netflix
70%
• 23.8 million subscribers
• 22 million streaming
Pricing Model
Basic Membership - $7.99 per month
Premium Membership - $14.99 per month
Conservative
Total
Year
1
2
3
4
5
Millions
$
782 $
Millions
$
808 $ 1,091 $ 1,363 $ 1,636 $ 1,881
978 $ 1,131 $ 1,250 $ 1,355
Expected
Total
Comparative Value with sensitivity
analysis
DCF
$17B
$16B
$15B
$14B
$13B
$12B
$11B
$10B
$9B
$8B
$7B
$6B
$5B
Earnings Multiple
Added Value
$17B
$16B
$15B
$14B
$13B
$12B
$11B
$10B
$9B
$8B
$7B
$6B
$5B
Netflix Value Mem. Rev. iTunes
Etc.
Outside Mem.
Total Rev.
Netflix current value
Our OFFER
$ 12.5 Billion
Divested owners
100% cash
Joining 50%cash/ 50%
in Apple Stock
Current Value Chain
Content &
Services
• MobileMe
• iCloud
Content
Aggregation
• iTunes
• iBooks
• App Store
Hardware &
Software
Platforms
• MacOSx
• iWorks
Appliances
• Mac
• iPhone
• iPad
• iPod
• Apple TV
Retail &
Distribution
• Apple Store
• Telecom
• Competitor
Hardware
Value Add: Vertical Integration
Content &
Services
• MobileMe
• iCloud
Content
Aggregation
• Netflix Streaming
Technology
• iTunes
• iBooks
• App Store
Hardware &
Software
Platforms
• MacOSx
• iWorks
Appliances
• Mac
• iPhone
• iPad
• iPod
• Apple TV
Retail &
Distribution
• Apple Store
• Telecom
Apple’s Innovative Culture
Values,
not Rules
Control the
Message
Do What
is
Important
Freedom
&
Flexibility
Empower Employees
to Make a Difference
Love &
Cherish
the
Creatives
Think
Different
Get
Marketing
Do Everything
Important Internally
Make a Dent in the
Universe
Values,
not Rules
Control the
Message
Do What
is
Important
Freedom &
Flexibility
Empower Employees
to Make a Difference
Love &
Cherish
the
Creatives
Get
Marketing
Do Everything
Important Internally
Think
Different
Make a Dent in the
Universe
Apple-Netflix Integration Team
Apple CEO
CEO, NFLX
R&D Apple TV
COO, NFLX
Head of iTunes
HR NFLX
HR, Apple
Responsible for vision,
direction and prioritization
of all integration efforts
Integration Change Management
COMMUNICATION
ORGANIZATION
CULTURE
Integration Initiative
Communication
Goals
Actions
Organization
Culture
Facilitate integration
effectiveness
Align Apple and
Minimize integration
Netflix to increase
risks due to cultural
efficiencies and realize differences
synergies
 Organize all
stakeholders
 Establish 2-way
feedback
 Launch internal
communication
campaign
 External PR
Campaign
 Maximize
stakeholder buy-in
and involvement
 Set crossorganizational
hierarchy
 Monitor retention
rates
 Develop cultural
transition strategy
 Deploy cultural
progress surveys
 Put extra emphasis
on gathering
informal feedback
Acquisition Timeline
Begin
integration
due diligence
Feb 1
Integration
Team
formed
Feb 8
February
Netflix is
acquired
Feb 1
Communication
Initiative
launched
Feb 8
Set cross
organizationa
l hierarchy
Feb 8
Deploy
Cultural
Progress
Surveys
March 1
| March
Maximize
stakeholder buyin and
involvement
March 1
Monitor
retention
rates
March 1
|October
Gather informal
feedback
March - October
| September
Integration
Completed
September 1
Netflix Will Benefit from the
Acquisition
Strategic
Leveraging:
Competitive
Positioning:
Cultural Fit
Fiscal
Incentives
Streaming
Advantage &
User Base
AppleTV as a
Platform
Summary
• Digital streaming experience unlike any other
•
•
Netflix Digital Library & Subscribers
Seamlessly Synced Apple Platforms & iCloud
Service
• Now:
•
#1 Digital Video Streaming Market Share
• Future:
Streaming Content with Untapped Market Entry

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