Professor Marco Protano's Strategic Brand Management course at Hult International Business School, Shanghai (August 2014). Final presentation.

1. Claudio Cammarano, London EMBA 2014
A new power player in the Italian media landscape
Marketing strategy and tactical plan
Shanghai, August 5th 2014

2. Agenda
• Executive summary
• Analytical summary
Category: demand attractiveness
Category: market attractiveness
Company & competitive position
GE/McKinsey’s matrix
Competitive perceptual positioning
Competitors’ brand attributes
Competitors triage of value
Brand meaning map
Positioning map
MDI vs. SDI dimensions
Brand Asset Evaluator
Centers of influence & PESTLE
• Strategic opportunity & marketing strategy
• Decision tree & strategic alternatives evaluation
• Strategic recommendation
• Tactical marketing plan: S_IVAR
MDI vs. SDI projections
Desired brand objectives
Market share performance tree
The core concept
Budget, cost, benefits
Examples of creativity
• Brand management
Brand attributes
Brand personality
The 4 pillars of brand equity
Desired outcome on positioning map
Desired outcome on Brand asset evaluator
Value proposition evaluation matrix
• Exhibits

3. Executive Summary
• The strategic opportunity is to enter the Italian market with
possible $ 846m revenue by 2017
• We can grab this opportunity by considering competition
within the entire E&M category and differentiating our
product in order to better reach unmet consumer needs
• The strategic alternatives are: (1) entering the Italian
market with our efforts alone, (2) entering the Italian
market in partnership with a relevant Italian player, or (3)
entering the Italian market as a part of a wider European
strategy for the company
• We recommend to enter the Italian market in synergy with
Netflix European strategy because we can generate total
revenue $ 397m in 2 years and $ 846 by 2017

4. In Italy, in 2017, spending for Internet access
will have grown from € 7,3b to € 12b with
+10% year-on-year growth. Digital products
will be 31% of E&M total spending.
Category: Demand Attractiveness
Implication: Internet access will drive consumers
demand and the entire category growth within 2017.
E&M Consumer Spending* In 2013 In 2017
Category
Entertainment &
Media
€ 48b
(+2,3% y-o-y)
€ 56b
(+3,5% y-o-y)
Segment Home video
€ 1.069b
(-1.6% y-o-y)
€ 1.145b
(+1,4% y-o-y)
Sub-segment
Digital home-
video
5% of the total home
video sub-seg
35-40% of the total home
video sub-seg
*Source: PwC 2013, “Entertainment & Media Outlook in Italy”.

5. Italian E&M industry is risky on overall, with a medium-
low degree of market attractiveness.
Market Risk Attractiveness: Italian media
Forces Reasons Mitigating Factors
Italian Entertainment & Media industry
Rivalry
(MEDIUM)
Risk of triggering a price war among
competitors.
Focusing on add-on services
and premium prices.
Supplier Power
(HIGH)
Huge negotiation power for stars,
authors & agents; now they can skip
traditional intermediation and ask for
different revenue stream model.
Differentiating through
tailored services to suppliers
(e.g. multichannel
publishing).
New entrants
(MEDIUM)
Risk of product comoditization and/or
price war can let new player enter the
game.
Only big players with huge
technologic assets and
Government endorsement
can realistically enter the
market.
Substitute power
(HIGH)
Technological convergence brings all
entertainment consumes into a unique
device. All entertainment segments
compete for customers’ disposable
time. Piracy is a potential substitute.
In Italy technological
convergence is not
accomplished yet: first
mover will have huge
advantages.
Buyer Power
(MEDIUM)
Greater freedom of choice among
media.
Freedom always requires
sophisticated consumers.

6. We have high strengths and opportunities in Italy
Company & Competitive Position:
STRENGTH
Superior brand, offering &
positioning
Superior operations and
customer preferences insight
Superior organization agility &
HR management
OPPORTUNITY
An entire customer segment
up to now ignored
A legal full-service and tailor-
made product can compete
both with mass market home
video and piracy
WEAKNESSES
Not influential in Italian system
of regulations and
governmental authorizations
THREATS
Requirement of products
cultural adaptation in the
target market
Some major traditional
competitors are trying to
fill the gap
Implication: There are unmet customer needs; traditional
players didn’t fill the gap in order to protect their current
leadership position.

7. Considering Netflix not only as part of home video
segment but of E&M on overall, we might consider
investments for growth.
GE Matrix: Italian E&M Industry
New Market Entry
Improve Position
Invest to Grow
Improve Position
Protect Position
Invest to Grow
Protect Position
Improve Position
Optimize Position
Harvest
Improve Position
Optimize Position
Invest to Grow
Protect Position
Optimize Position
Harvest or
Divest
Monetize
Harvest or
Divest
Monetize
Harvest or
Divest
MarketAttractiveness
Competitive Position

8. Consumer: Competitive Perceptual Position
In consumers’ mind, competition is not only within home video
players, but also involves broad- and narrowcast tv channels.
Home video
distributors
Warner Bros Universal Medusa Niche competitors
Segmentation
Adults 18-50, with a male skew. Younger people more skewed to lower
prices and purchases on mass markets.
Teenagers to adults (14-
45), with niche consume
patterns: science fiction,
Japanese anime etc.
Frame of reference
Distributors are not visible by themselves: its
product brand that drives the offer.
Same, but with slightly
more focus on Italian
production.
Collection. Doesn't
matter if they have
already a digital version.
Differentiation
A vast portfolio of titles leaded by brands (actors,
directors, series), with different price level.
Same, but with Italian
blockbuster successes
used as a vessil of
overall quality.
In-group and out-group
dynamics: followers are a
community.
Broadcast tv RAI Mediaset La7 Minor competitors
Segmentation
Potentially the widest audience possible: adults 19-
75, with a female skew. Both targeting exactly the
same audience. Losing teenagers on the way.
Adults 20-50, with a
slight male skew. For
newspaper and book
regular readers.
People 15-60, who use
these channel as a
second screen.
Frame of reference
The public free
broadcasting service.
The main private
broadcaster. In the last
30 years completetly
substituted RAI's role.
Quality entertainment &
news. Here's what public
opinion says.
My own local world on tv.
Differentiation
Supposed to provide
quality and
experimentation. Totally
disrupted.
On degree of visibility:
it's what is left of mass
communication in Italy
today.
On quality. On geographical basis.

9. Consumer: Competitive Perceptual Position
Pay tv Sky Mediaset Premium Fastweb TV Vodafone Infinity & similar
Segmentation
Adults 30-60, with a male
skew. Affluent, successful,
willing to pay for high quality
content.
Families with extended
consumes of broadcast tv
(especially Mediaset).
Families or adults with
extended consumes of
Internet bandwidth.
Mobile connectivity providers'
clients.
Frame of reference
Distinction. Broadcast tv is
cheap; narrowcasting is
something worth to pay for.
Undefined. Leveraging
Mediaset brand alone as a
differentiation factor is not
enough to trigger a frame of
reference.
All the content with my
Fastweb connection, the
fastest in the market.
Content I love right here
on my mobile device with
a little mark-up.
Differentiation
Premium price. Quality of
news (the only one with a
global focus).
Quality products from
Mediaset portfolio at a
premium price. Poor efficacy.
An add-on service for
Fastweb clients. A small
niche, but technologically
enabled.
An add-on service for mobile
device users, but 3G is not
quick enough yet and wifi not
so spreaded.
Digital terrestrial tv
(DDTV)
Cielo
Rai 4, Rai 5, RaiNews24 &
similar
Real Time & similar Boing & similar
Segmentation
Adults 18-50, with a female
skew.
Audience highly segmented
on the basis of content: Rai 4
for quality entertainment, Rai
5 for documentaries,
RaiNews24 for news etc.
Teenagers and adults, 15-45
years old with a female skew.
Children, teenagers and their
parents.
Frame of reference
A selection of unexclusive free
content form Sky payed
channel.
Audience deluded by Rai
broadcast tv can find refuge
here.
Reality-based entertainment:
low-cost reality shows, talents
etc.
Children entertainment.
Differentiation
Quality nonetheless, but on a
delayed time compared to
Sky.
It is where Rai experiments
and seeks for quality.
On the basis of content. On the basis of content.

10. Implications:
• For consumers market, what leads differentiation is not
driven by distribution channels, but product brands
(e.g. authors, actors, directors, movies, series etc.).
• Distributors credibility and differentiation is derived by
their brand portfolio.
Consumer: Competitive Perceptual Position
• Home video segment players are not differentiated per
se: it is their product brand portfolio that counts
• On broadcast side, the historical role of Rai as quality
content provider has been heavily disrupted in the last
25-30 years
• The unique leader of pay tv segment is Sky, while
Mediaset Premium failed to gain a real differentiation
• Fastweb and Vodafone are trying to leverage their tech
savvy niche consumers, but their content offer is
poor, not exclusive and narrow

11. Consumers: Competitors Brand Attributes
Main attribute
Secondary
attribute
Brand persona
RAI Classic Friendly
A 60 year old mother and grand-mother, attended secondary
schools, not many interests except family.
Mediaset Fun Accessible
A 55 year old male, father, not very cultured, loves cars, sports
and easy entertainment.
Sky
Sophisticated/
Upscale
Modern
A 45 year old professional, with high education and net income
above average, speaks a good English, enjoys smart
entertainment, has only one child.
La7 Competent Modern
A 50 year old man, cultured, employed in services, intellectual,
sophisticated, a bit snobbish, probably close to Italian labor
party.
Fastweb Modern Ruggedness
A 35 year old man, not married, still living as a teenager,
probably imployead as a web developer in one of the main cities
of the country.
Vodafone Personable Spontaneous
A 35 year old lady, easy-going and beautiful, very connected
with peers, colleagues and friend.
Among all players, only six have a defined set of brand attributes.
Newcomers (Sky, Fastweb, Vodafone, La7 target specific segments of customers,
even though with different business models (e.g. subscription vs. advertising).

12. Consumer: Competitors Triage of Value
Mainstream media brands:
• In the last 25 years, RAI has lost its
differentiation, pointing to function,
emotion and experience at the same time
• Mediaset is not functional any longer,
after its prestiged anchorman Enrico
Mentana left the company to start a new
newscast up for La7
• Sky’s approach is the most focused on
functional benefits («the best newscast +
the greatest shows») and on watching
experience.
Rai
Sky
MediasetFUNCTION
EMOTION EXPERIENCE
FUNCTION
EMOTION EXPERIENCE
FUNCTION
EMOTION EXPERIENCE
The triage of value model shows how mainstream and target market media
promote their benefit to the customers.

13. Consumer: Competitors Triage of Value
Target market media brands:
• La7 is a mainstream media, but it is
targeted on a narrow segment of Italian
population, more interested in the quality
of services.
• Fastweb’ communication is entirely
focused on fast traffic data stream (its
testimonial is the motorbike world
champion Valentino Rossi).
• Vodafone communication is centered on
consumers feelings and entertainment.
La7
Vodafone
FastwebFUNCTION
EMOTION EXPERIENCE
FUNCTION
EMOTION EXPERIENCE
FUNCTION
EMOTION EXPERIENCE

14. Consumer: Brand meaning map
A culture crisis implies media crisis: The traditional role of Rai and Mediaset as
mainstream cultural mediators has failed. This void has been only in part filled by
niche players such are now La7 and Sky.
Within the competitive scenario, only Rai, Mediaset, La7 and Sky have
successfully positioned as content providers, while the others (Fastweb,
Vodafone) are considered as technology add-on services.
Main meanings Insights
Rai
Tradition - Family - Education - Entertainment - Who holds
the remote control? - Authority - (Official) truth -
Semplification - News - Media events (undisputed) -
"Nazional-popolare"
In the last 10 years, Rai failed to
define and identify events of
national interest. End of Italian
spirit of "nazional-popolare".
Mediaset
Entertainment - Leisure - Easy - Sport - Extreme -
Excitement - News - Semplification - Prime time - Media
events (pop)
More and more difficult to find new
popular events to vehicle throur
mainstream tv.
La7
Quality news - Critic - Independent - Intellectual - Quality
entertainment - Media event (disputed) - Substitutive of
public service
La7 comes when here Rai and
Mediaset fail in their mission.
Sky
Global - Quality news - Quality entertainment - Exclusivity -
Convenient (SkyGo) - Expensive - Updated - Technologic
Main traits are “mass distinction”
and exclusivity.

15. Consumer: Positioning map
Upscale
Modern
Accessible
Cielo
Distributor differentiation is key: brand with focus only on content (e.g. anime,
science fiction, reality) are confined to niches in the middle of the 4 quadrants.
Mediaset
Sky
3
2
4
1
Mediaset
Premium
La7
Rai
Rai DDTV Channels
Fastweb
Vodafone
Niche players
In the last 10 years, as a result of their business and communication
activities, content providers have positioned their brands as
upscale/accessible or modern/classic.
Classic

16. Consumer: MDI vs. SDI dimensions
Share Growth
Opportunity
Limited Growth
Very High Growth
Potential
Growth With Market
Development
MarketDevelopmentIndex(MDI)
Share Development Index (SDI)
Low High
LowHigh
With the end (or the update) of “mainstream media” concept, former
mainstream media are declining, leaving space for newcomers.
In this scenario, Sky and La7 can gain market share left behind by Rai
and Mediaset, while Fastweb and Vodafone are growing in proportion with
market growth (where their market of reference is digital media).
Mediaset
Sky
Rai
Fastweb
La7

17. Consumer: Brand Asset Evaluator
Brand Status
BrandStrength
Currently, power brands are competing in E&M market. Market
is mature, but there seems to be some space for new brands.
Niche players
Mediaset
Rai
Sky
Fastweb
Vodafone
Mediaset
PremiumCielo
La7
Leader product brands (Rai + Mediaset) are being eroded, while Sky
has just started to shift from high-end niche to mainstream. All other
brands are sharing a fragmented space.
From mainstream media to a scenario of mass fragmentation.

18. Italy is a highly regulated country, with a high degree of cultural
complexity and bureaucracy. However, there are conditions for a
warm reception of Netflix novelty.
• Opinion leaders: Media have already covered Netflix, with much
interest. Most intellectuals and opinion leaders are looking forward
to its arrival, since in Italy it is common sense that broadcast tv is
“cheap”.
• Policy makers: Mainstream media are heavily connected with
political power. It is unlikely for a newcomer to enter and disrupt the
market without assuring that the Italian media landscape won’t
change in its substance.
• Trade unions: Netflix HR standard policies are unlikely to be applied
in Italy, since labor market is heavily regulated.
• Digital divide: wifi, 3G and 4G are not as spread as in other Western
countries. So far, governments haven’t invested in it because they
conceived Internet as a disruptor for mainstream media landscape.
Centers of Influence & PESTLE
Italy is a high-context type of country: technology, current
policies and, most of all, culture are the main factors that make
investments in media sector so risky.

19. The strategic opportunity is to enter Italian E&M market in
order to gain by 2017 6m new subscribers and $ 846m
revenue in three years, with a contribution margin of
-39% in 2017 (a standard for a tree-year launch).
Strategic Opportunity
Vision To become the next global leader in E&M and TV industry
for the next decades.
Goals Leading the way in replacing globally the traditional
“linear TV” with multi-screen Internet TV.
Objectives Entering Italian market as a part of a strategy for
Western Continental Europe. More specifically for Italy:
In 2015,
achieve 1m subscriber with a total amount of $ 72m
revenue, reducing marketing expenses through
economies of scope.
In 2017,
achieve 6m subscribers and $ 846m revenue ($ 450 in
2017 only) with a -39% contribution margin.

20. Marketing Strategy
Competitive
advantage
Our competitive advantage lays
in our superior HR, our ability to
extract customer insight from raw
traffic data and our superior
brand.
Resource
strategy
In order to enter the Italian
market, which has a huge
potential but is also risky, we will
need to use our resources
(capital and labor), expecting
positive return in a 5-year time.
Degree of
intensity
The effort will have to be intense,
but since we have already
launched Netflix in other
countries in Western Europe and
we’re planning to do that in
others, we have chance to use
economies of scope.
Focus Our target is the Italian cultured
middle class at first, aiming to
extend to a larger audience
within 2017.
• Best product
performance
leadership
• Best customer
relationship

21. Decision Tree: Strategic alternatives
Enter Italy
Not enter Italy:
• Customer base: +0 units
• Revenue: $ 0m
• Δ margin: $ 0m Enter Italy as a part of a
Western European Strategy.
By 2007:
• Customer base: +6m units
• Revenue: $ 846m
• Δ margin: $ -0.4b
Enter Italy in partnership with
a major Italian player.
By 2017:
• Customer base: +6m units
• Revenue: $ 846m
• Δ margin: $ -0.3b
Enter Italy alone,
By 2017:
• Customer base: +6m units
• Revenue: $ 846m
• Δ margin: $ -1.1b

22. Strategic Alternatives Evaluation:
Alternatives
Not enter Italy
Enter Italy alone
Enter Italy with
as an Italian
tech partner
(e.g. Fastweb)
Enter Italy as a
part of an
European
strategy
Pros
No risks
Total autonomy
of decision. No
need to share
customer info.
Fastweb can
foster technology
habilitation of
Italian
consumers.
Action better
concerted with
other European
HQs.
Cons
After 2017 it will
be difficult (and
costly) to enter
with a relevant
market share.
Acting in isolation
raises the degree
of risk.
Need to share
analytics
expertise with
Fastweb.
Difficult to drive
change with
several people
involved in
decision-making.
Cost
Not gaining new
customer base,
relevant
information,
revenues.
Δ margin:
$ -1,1b
Δ margin:
$ -0.3b
Δ margin:
$ -0.4b.
Benefit
Not suffering for
that profit loss in
the next 5 years.
Revenue:
$ 846m
Revenue:
$ 846m
Revenue:
$ 846m

23. Our recommendation:
Enter Italy
Not enter Italy:
• Customer base: +0 units
• Revenue: $ 0m
• Δ margin: $ 0m
Enter Italy as a part of a
Western European Strategy:
• Customer base: +6m units
• Revenue: $ 500m
• Δ margin: $ -0.6b
Enter Italy in partnership with
a major Italian player:
• Customer base: +6m units
• Revenue: $ 500m
• Δ margin: $ -0.8b
Enter Italy alone:
• Customer base: +6m units
• Revenue: $ 500m
• Δ margin: $ -1.5b
We recommend to enter Italian market as a part of European
strategy, in order to gain effectiveness and efficiency through
economies of scope.

24. Tactical Marketing Plan: S_IVAR
China
Solutions Shifting linear TV for Neflix means total customization:
• Quality, “exactly how you mean it”.
• Convenience, that is your favorite show on your favorite display at your
favorite time.
• Discover, offering is not only “pull”: we know you best and we will make
you new product offerings you will adore.
Information &
Incentives
Traditional activities:
• Media advertising, online adverstising, DEM and newsletters.
• Limited partnership with 3G and wifi providers in order to have access to
technologically enabled customers.
TV series production:
• Production of a brand new TV series set in most European cities, delivered
to new customers, whose costs can be shared among all European HQs.
• Alternative reality game teasing campaign to launch the series.
• The teasing campaign will be focus on the main concept: “This story tells
about your story”.
Value For streaming, € 9,99 per month in 2015 and 2016; € 12,99 in 2017.
Access &
Relationship
Some special content about the series will be shared with customers online.
Also a prequel web series will be realized as a teaser.
Careful selection of product brand portfolio.

25. Consumer: MDI vs. SDI projections
Share Growth
Opportunity
Limited Growth
Very High Growth
Potential
Growth With Market
Development
MarketDevelopmentIndex(MDI)
Share Development Index (SDI)
Low High
LowHigh
With the end (or the update) of “mainstream media” concept, former
mainstream media are declining, leaving space for newcomers.
Especially Netflix can shift from “cozy clubs” to achieving a dominant
place in mainstream media landscape, considering the new, emerging &
unmet consumer needs inside the Italian E&M segment.
Mediaset
Sky
Rai
Netflix
Fastweb

26. Netflix Italy: Desired brand objectives
The hitchhikers:
ROS 14-20%
The high-power brands:
ROS >20%
Dead-end brands:
ROS <5%
The low-road brands:
ROS 5-10%
«Premium»degreeofcategory
Relative market share
Low High
LowHigh
With the end (or the update) of “mainstream media” concept, former
mainstream media are declining, leaving space for newcomers.
With different positioning (not to harm each other), Netflix and Sky can
shift from “cozy clubs” to achieving a dominant place in mainstream
media landscape, taking up a role of cultural mediation.
MediasetSky
Rai
Netflix

27. Market share performance tree:
Aware
Press coverage:
$ 0 (labor cost)
Attracted Price
Intend
to buy
Purchase
Expected
SOM in
2017:
14% in TV
segment
no no no no no
Buzz on TV series
with
Entertainment42 :
$ 10m agency cost
Online and ATL
advertising:
$ 15 media planning
cost
TV series “Path
of glory”:
$ 300m
production cost
Monthly fee at $
9.99 for 2015 and
2016:
$ 0 cost (but less
revenues)
DEM &
Remarketi
ng:
$ 1m adv
cost
Costs will be shared
among European HQs.

28. The TV series: “Paths of glory”
As it happened before with “House of Cards”, Netflix
will produce an original TV series refined on the basis
of their unique customer insight.
• Based on Stanley Kubrick’s masterpiece on 1st World War
• Directed by Luc Besson
• Starring Ralph Fiennes
• Also starring Franka Potente
• 12 episodes
• Set in Western Europe
• Can follow 1st World War
anniversary celebrations

29. The teaser campaign: “Paths of glory”
Set an alternate reality game to promote “Paths of glory”
before the launch. The best agency in that specific field is
probably Entertainment42, founded by Jordan Weisman.
• Whysoserious.com, alternative reality
campaign for Christopher Nolan’s “Dark knight”
• Nine Inch Nails “Year zero” launch
• Participated for the launch of James
Cameron’s “Avatar”

30. Netflix Italy: Value Proposition Flow Chart
1
VALUE PROPOSITION
The best global
entertainment directly on
your device; we know
your next passion before
you do.
1. MARKET
Competition on entire E&M
consumers (TV, books, home
video, music, concerts etc.).
5. ALTERNATIVES & DIFFERENTIATION
SkyGo is a potential alternative: no
customization at a higher price. Customer
information as a differentiating factor.
3. OFFERINGS
Flat subscription for 1
month or more. Customized
push content offerings (no
cost)
6. PROOF
Press coverage on Netflix
worldwide, 15% market
share in USA , Blockbuster
disrupted.
2. VALUE EXPERIENCE
Convenient, no restrictions
on device choice, no sense
of space, customizable.
4. BENEFITS
“Experience (1) quality (2)
global (3) entertainment (3)
in the way you wish (4) at a
fair price”.
OTHER DATA:
• Season 1 of «House
of Cards» nominated
for 9 Emmy Awards
and resulting winner
for 3
• NFLX stock price
today is 477.64
(+980.15% in five
years)

31. Netflix Italy: Perceptual position & personality
Desidered Perceptual Positioning
Segmentation
Adults 25-50, with a male skew. Emerging middle class. Cultured, willing to
pay for high quality content. Knowledge and services workers strong
skewness.
Frame of reference
Customized offer, with greater convenience than watching content on PCs.
Even possible to share the same room with your family and still watching
different programmes.
Differentiation
Premium price for a digital distribution services. Very convenient (more
convenient than piracy). Technologic but easy. Personal media.
Main attribute
Secondary
attribute
Brand persona
Modern Spontaneous
A 35 year old young man, working as a creative worker in an advertising
agency. Cultured, tech savvy but not interested in technology per se, with
a rich and various social life.

32. Netflix Italy: Brand meaning
Main meanings Insights
Entertainment - Convenience - Customization - Media events
(global/ entertainment) - Family - Technology - Updated - Global -
Quality service - Quality content
Death of the concept of "second screen".
Netflix formula is the best to meet Italian family unmet needs in
mainstream media landscape: quality, security (in terms of privacy and
content), convenience.

33. Consumer: Competitors Triage of Value
Compared to other «modern»
brands, Netflix is the only one
so tightly focused on
experience. This is certainly a
differentiating factor.
Sky
Netflix
Italy
FastwebFUNCTION
EMOTION EXPERIENCE
FUNCTION
EMOTION EXPERIENCE
FUNCTION
EMOTION EXPERIENCE

34. Netflix Italy: Positioning map
Upscale
Modern
Accessible
Cielo
Mediaset
Sky
3
2
4
1
Mediaset
Premium
La7
Rai
Rai DDTV
Channels
Fastweb
Vodafone
Niche players
In terms of positioning, Netflix will be positioned as definitely “modern”,
but also as “accessible”, because of its flexibility and convenience.
Classic
Netflix
LEGENDA:
• Pink is the unfriendly area
• Yellow is the niche area
• Green is the culture area
• Orange is the fail area
• Grey is the new frontier area

35. Consumer: Brand Asset Evaluator
Brand Status
BrandStrength
Niche players
Mediaset
Rai
Sky
Fastweb
Vodafone
Mediaset
PremiumCielo
La7
In a scenario of mass fragmentation, Netflix will start its
brand history as a niche brand, but its purpose it to
become the next mainstream media.

36. Our aim is to transform Netflix in Italy from a niche
brand into the new premium mainstream media.
Value Proposition Evaluation Matrix
Exclusivity
Desire
IN 2017
NEXT

37. Claudio Cammarano, London EMBA 2014
Thank you

38. Exhibit 1: Netflix result on operations in 2013
Revenues derived from our DVD-by-mail membership
services. The price varies from according to the plan
chosen by the member.
• DVD-by-mail membership fee = from $ 4.99 to $ 43.99
• Contribution margin = 48%

39. Exhibit 2: Netflix result on operations in 2013
Revenues derived from monthly membership fees for
services consisting solely of streaming content offered
through a membership plan.
• Monthly membership fee = $ 7.99 (1 device); $ 11.99 (4 devices)
• Contribution margin = 23%

40. Exhibit 3: Netflix result on operations in 2013
Revenues derived from monthly membership fees for
services consisting solely of streaming content offered
through a membership plan.
• Monthly membership fee = from $ 7.00 to $ 14.00
• Contribution margin = (39%)
• 25% of total streaming memberships

41. Exhibit 4: Projected result on operations 2015-17
As of /Year Ended December 31 Change
2016
projected:
Italy
2016
projected:
Italy
2015
projected:
Italy
2015 projected:
Current markets
2014 projected:
Current markets
2013 2012 2013 vs. 2012
(in thousands, except percentages)
Members (units):
Net additions 2,760 2,300 1,000 6,249 5,530 4,809 4,263 13%
Members at end of period 6,060 3,300 1,000 22,710 16,460 10,930 6,121 79%
Paid members at end of period 5,757 2,970 0,890 22,255 16,296 9,722 4,892 99%
Contribution loss ($):
Revenues $449,046 $326,700 $71,200 $2,473,418 $1,766,727 $712,390 $287,542 148%
Cost of revenues $100,000 $150,000 $250,000 $1,767,986 $1,262,847 $774,753 $475,570 63%
Marketing $500,000 $500,000 $500,000 $500,000 $215,000 $211,969 $201,115 5%
Contribution loss -$150,954 -$323,300 -$678,800 $205,432 $288,880 -$274,332 -$389,143 -30%
Contribution margin -34% -99% -2,358% 8% 16% -39% -135%
Revenues derived from monthly membership fees in Italy
for services consisting solely of streaming content offered
through a membership plan.
• Monthly membership fee = by 2017, 6m subscribers for $ 500m revenues
• Contribution margin = (34%)