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Alex Blatt, Vanessa Boys Smith, DrewFann, Brie Hunt-Augustine, Chris Mullican
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Why Netflix?
Integrated Customer
Experience
Good Cultural Fit
Increased Market
Share
Streaming & Content
Synergies
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Apple TVNot your typical TV
Id like to create an integrated television set that is
completely easy to use. It would be seamlessly syncedwith all of your devices and with iCloud. It will have thesimplest user interface you could imagine. I finallycracked it. Steve Jobs
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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
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In House:MacOSx
iPhone,iPad, iPods
Solid StateFlash
Storage
Acquisition2011
TV as Platform
IntegratedUser
Experience
*AppleTV*
StreamingContracts
Acquisition NeedVertical
IntegrationOutcome
Design Efficiency
Production Cost
Savings
DistributionEfficiency
Design Efficiency
(Apple TV
Integration)
Production Cost
Savings
(Contracts)
Distribution
Efficiency
(Streaming &
Market Share)
Competitive
Edge
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Movie Streaming on Apple TV:
Capturing Market Share
23.8 million subscribers
22 m il l ion s tream ing
70%
30%
The DVD Streaming
Market
Other
Netflix
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Pricing Model
Basic Membership - $7.99 per month
Premium Membership - $14.99 per month
Conservative Year 1 2 3 4 5
Total 782$ 978$ 1,131$ 1,250$ 1,355$
Total 808$ 1,091$ 1,363$ 1,636$ 1,881$
Expected
Millions
Millions
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Comparative Value with sensitivityanalysis
DCF Earnings Multiple
$17B
$16B
$15B
$14B
$13B
$12B
$11B
$10B$9B
$8B
$7B
$6B
$5B
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Added Value
$17B
$16B
$15B$14B
$13B
$12B
$11B
$10B
$9B
$8B
$7B
$6B
$5B
Netflix Value Mem. Rev. iTunes Etc. Outside Me Total Rev.
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Netflix current valueOur OFFER
$ 12.5 Billion
Divested owners Joining 50%cash/ 50%100% cash in Apple Stock
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Current Value ChainContent &
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
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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
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Apples Innovative Culture
o EverythingImportant Internally
Make a Dent in the
Universe
Control the
Message
Get
Marketing
Love &
Cherish
the
Creatives
Values,
not Rules
Do Whatis
Important
Freedom
&
Flexibility
ThinkDifferent
Empower Employees
to Make a Difference
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o EverythingImportant Internally
Make a Dent in the
Universe
Control the
Message
Get
Marketing
Love &
Cherish
the
Creatives
Values,
not Rules
Do What
is
Important
Freedom &
Flexibility
ThinkDifferent
Empower Employees
to Make a Difference
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Apple-Netflix Integration Team
Integration Change Management
COMMUNICATION ORGANIZATION CULTURE
Head of iTunes
HR, Apple
COO, NFLX
HR NFLX
Responsible for vision,
direction and prioritization
of all integration efforts
CEO, NFLX R&D Apple TV
Apple CEO
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Integration Initiative
Communication Organization Culture
Facilitate integration
effectiveness
Align Apple and
Netflix to increase
efficiencies and realize
synergies
Minimize integration
risks due to cultural
differences
Organize all
stakeholders
Establish 2-way
feedback
Launch internalcommunication
campaign
External PR
Campaign
Maximize
stakeholder buy-in
and involvement
Set cross-
organizationalhierarchy
Monitor retention
rates
Develop cultural
transition strategy
Deploy cultural
progress surveys
Put extra emphasison gathering
informal feedback
Goals
Actions
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February | March |October | September
Begin
integration
due diligence
Feb 1
Integration
Team
formed
Feb 8
Netflix is
acquired
Feb 1
Integration
Completed
September 1
Acquisition Timeline
Communication
Initiative
launched
Feb 8
Set cross
organizationa
l hierarchy
Feb 8
Monitor
retention
rates
March 1
Maximize
stakeholder buy-in and
involvement
March 1
Deploy
Cultural
Progress
Surveys
March 1
Gather informal
feedback
March - October
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Netflix Will Benefit from theAcquisition
FiscalIncentives
Cultural Fit
CompetitivePositioning:
StreamingAdvantage &User Base
StrategicLeveraging:
AppleTV as aPlatform
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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