1. Read the case, keeping in mind the textbook topic(s) the case covers 2. Read the Case Analysis section of the textbook 3. Written Document a. Provide a BRIEF description of the situation b. Update the situation to today(2025) using library and/or online resources (the company web site is a great place to start) i. This means to take into consideration the geo-political and economic environment the firm is operating in NOW. ii. Compare and contrast now vs. when the case takes place c. Cite sources of data not included in the case, using APA format i. Use at least TWO peer-reviewed articles ii. Do NOT rely solely on what you know about the company iii. Other credible sources are: WSI NYT Wash Post The Guardian, the firm's web site and 10K filings (if pub Meet the new Teams video d. Answer the questions at the end of the case if any, in light of the topic of the chapter e. DO NOT spend more than 1/3 to 1/5 a page describing the situation. f. No more than 3 pages, excluding References and Cover Page. 4. Presentation a. No more than 15 minutes. b. 5-7 slides, including the introductory slide C. Address the important facts, decisions, recommendations d. If there is a recommendation needed, make one and justify it using analysis of facts. 5. Your written analysis and your oral presentation should be the same, with the written document providing more detail. 6. Who is your audience? Not Me. Your audience is middle and upper level management of the firm in question. 7. Who are you? An up-and-coming Management trainee who has been tasked with helping the firm to understand the situation in the case. 8:56 W CASE 6 Nell's 2023 Strategy for Edwing kisws in TEM SENDIT EXHIBIT 1 Netflix's Consolidated Statements of Operations, 2015-2022 (in millions, except per share data) N LTÉ + 87% 2015 Revenues $6,779.5 2018 $15,794.3 $24.996.1 $29,6478 2020 2021 2022 $31,615.6 Cost of revenues jalmost all of which relates to amortization of content assets) 4.591.5 Gross prof 2.188.0 9,967.5 15,276.3 5,826.8 17,332.7 19.168.3 9,719.8 12,355.1 12.447.3 Operating exper Technology and development 650.8 1,221.8 1.8296 22739 2,711.0 Marketing 824.1 2,360.5 2.228.4 2.545.1 2,530.5 General and administrative 407.3 630.3 1.0765 1351.6 1,572.9 Total operating expenses 4.221.6 5,1345 6.170.6 6,814.4 Operating income 305.8 1.605.2 4.5853 6.1945 5,632.8 Interest expense 420.5 (767.5 (765.6) (7062) Imerest and other income (expense 131.2) (378 1518.4) 4112 337.3 141.9 19.2 $1226 Income before income tax Provision for income taxes Net income Net income per share: Basic 5 0.29 $ 2.78 $ 0.28 6.26 6.08 $ 11.55 $ 11.24 10.10 9.95 1,2265 3.1993 438.0 5,840.1 5.253.9 $1,211.2 $ 2.761.4 7239 $5,116.2 7720 $ 4.491.9 Diluted Weighted average comman outstanding on on Basic Diluted More 1: Some may not add due to rounding Source: Company 10-K reports for 2015, 2020, and 2022 4259 436.5 435.4 451.2 440.9 454.2 443.2 455.4 4447 to unleash an increasingly intense competitive battle among streaming providers to become serious com tenders in the rapidly growing global market for subscriber-based streamed content. This rapidly grow ing and fast evolving market had quickly become "the wave of the future." It had already attracted some 2 billion individuals/households and was prov ing highly disruptive to the businesses of traditional cable and satellite providers, whose global subscriber counts had deceased from just under 500 million in 2017 to 527 million in 2021. College graduates and many millennials were avoiding subscribing to cable and sateline providers with increasing frequency because of the "high" monthly prices and the grow ing availability of cheaper substitutes for viewing the programs they really wanted to watch or were sat- isfied with watching. According to one source, the app-based video streaming industry had revenues of $72 billion in 2021 (most of which came from the United States) and was projected to reach $115 bil- lion by 2026. Including entertainment streaming by cable and satellite providers, the global video stream- ing market size was an estimated $372 billion in 2021 and was projected to grow from $473 billion in 2022 to $1.690 billion by 2029.4 Competition had been further enhanced by the introduction of the Tik Tok app to the Western World by China's Bytedance in 2018, Tiktok quickly became one of the most used video apps in the world, with availabil ity in 75 languages in 154 countries (as of March 2023). C40 PART 2 Cain Crafting and Execuring Strategy EXHIBIT 2 Selected Balance Sheet and Cash Flow Data for Netflix, 2015-2022 (in millions) 2015 2018 2020 2021 Selected Balance Sheet Data Cash and cash equivalents Current assets $ 1,809.3 5,431.8 $1,794.5 9,604.1 $ 8.205.0 9.761.6 $ 6,0278 $ 5,147.2 80698 9.256.5 Content assets, net 7,2188 20,107.5 25,384.0 30.9195 32,736.7 Total assets Current liable 10.202.9 25.974.4 38,280,4 44.584.7 48,594.8 3,529.6 6,487.3 7,805.8 Long term debt 2,371,4 10,350.1 150019 8,489.0 14.6931 7,931.0 14,353.1 Total Fables Stockholders' equity 7.979.4 2,223.4 20,735.6 28,215.1 5,238.8 11.605.2 28.7354 15,849.3 27,817,4 20,777 A Cash Flow Data Net cash (used in provided by $1749.4) $ (2,680.5) $ 2.427.1 392.6 $ 2,006.3 operating activities Net cash provided by used in 1179.2) 1339.1) (505.4 (1.3399) 0.0764) investing active Net cash provided by used in 1,640.3 4,0485 1.237.3 11.149) (664.3 financing activities % A of Nets long term det consisted of senior unsecured notes that were issued at various points in time and had various notury dates and various fixed rates of interest Sources: Company 10-K Reports 2015, 2018, 2020, and 2022 downloads of over 2.6 billion as of January, 2020, and an estimated 1 billion monthly active users in March 2023. In addition, video game streaming had boomed, with the entry of Amazon's Twitch (which hosted games with millions of followings like Ninja. Shroud, PewDiePie, Rubius, Pokimane, Tue, and Auronplay), YouTube Gaming (which hosted games with millions of followings like Mr. Beast, Myth, and Tim The Tatman), Facebook Gaming (which ended in August 2022). Prime Gaming. Huya and Douyu in China, and Tik Tok (which introduced its gaming app in November 2022) NCSOFT, headquartered in Pangyo, South Korea, was the world's premier devel oper and publisher of massively multiplayer online games; its best-known game titles included Lineage AION, Blade & Soul, and Guild Wars plus it had a num- ber of casual games. Netflix entered the market for video game streaming in November 2021 and by early 2023 had 55 games available that subscribers could play at no additional charge; the selection included 12 of the best Android games. Netflix planned to expand its game options in 2023 and beyond in an capture a bigger share of the roughly $130 that consumers were currently spending on software. The company was endeavoring to around 40 more games in the remainder of 2023 an attempt to make sure it had at least one game that each of its 230+ million subscribers could enjoy." Netflix was not put off by the stronger competitive forces at work. Reed Hastings said in January 2023: The silver lining is that that the market for entertain- ment is huge and Netflix is still small by comparison. For example, in the more than 190 countries we oper ate in, our $30 billion of annual revenue compares against the combined $300 billion pay TV/streaming industry in Mexico, Brazil, and Poland, we are less than 5 percent of TV viewing. And in our larg est markets like the US and the UK, we are still less than 10 percent of TV screen time....(and) stream ing overall across all markets accounts for less than 40 percent of viewing. Netflix top executives firmly believed going forward that the vast majority of time people spent ||| О ୮