Posted: May 18th, 2022

Financial Metrics for Decision Making

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Enterprise Case
25624 Financial Metrics for Decision Making
Spring session 2022
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Basic data and directions
• This enterprise case accounts for 40% of your closing grade.
• You have to full this project on a person foundation.
• Deadline: Friday 14th October 2022, 11.59pm AEST (Sydney time)
• It is advisable to submit through Canvas:
o A written report
▪ .pdf format solely
▪ The report ought to reply every of the questions
o An Excel spreadsheet
▪ .xlsx format solely
▪ The spreadsheet should include all calculations you carry out within the Income
worksheet.
▪ Purpose to construction and format your Excel answer in probably the most environment friendly manner
attainable and use monetary modelling finest practices.
• This activity features a milestone Assessment element that evaluates tutorial English
language proficiency. You might be guided to additional language help after the completion
of this topic in case your outcomes on this milestone activity point out you want extra Help together with your
language expertise.
• All assignment-related queries should be posted on the Canvas dialogue board.
E-mail queries associated to the project won’t be entertained.
From prior expertise, technical difficulties usually might be traced again to college students attempting to
add their work a couple of minutes previous to the deadline. Tip: don’t wait till 11.55pm on
14th Oct to submit your work through Canvas. Late submissions will obtain zero credit score until a
particular consideration with legitimate causes and documentation is filed.
Grading
• Each parts (the written report and the Excel spreadsheet) can be graded.
• The written report can be marked based mostly on the
• The Excel spreadsheet can be marked based mostly on the effectivity and readability with which
options are produced.
• Late submissions will obtain zero credit score until a particular consideration with legitimate rea- sons
and documentation is filed.
Information
• Within the Project web page on Canvas, you can see the workbook Netflix Income Mannequin.xlsx.
The workbook comprises quarterly income and subscriptions information from September 2018 to
June 2022.
• Carry out your calculations based mostly on the information in these spreadsheets.
• Search for extra information as required.
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Netflix’s Newest Pivot
Netflix success is essentially attributed to the corporate’s potential to pivot their enterprise mannequin. The primary
pivot was when the corporate shifted their DVD house supply service to changing into the main on-line
streaming platform. Extra not too long ago, the second pivot was in response to the inherent threat of being a
content material distribution platform: content material producers might refuse to ship their content material through Netflix
(Disney, Paramount, and so on.). Netflix response was to develop into a content material creation enterprise themselves1
.
Each pivots have been efficiently landed, offering Netflix with a sustained improve in subscriptions. The
firm’s reflexes are actually being put to the take a look at as soon as once more, this time as a extra mature enterprise.
Within the first quarter of 2022, Netflix misplaced subscribers for the primary time in 10 years. The drop got here after
the expansion skilled all through the pandemic, gaining hundreds of thousands of customers per quarter by 2021.
The decline in variety of subscribers provides to the difficulty the corporate faces due to the big
variety of households sharing their accounts with households and pals. In response, Netflix started
experimenting with a characteristic that displays whether or not somebody accesses an account from outdoors the
house and presents the power to lift the value by including ‘sub-accounts’ for different individuals.
Throughout the Q1 2022 earnings name, Netflix’s administration unveiled that they have been contemplating rolling
out an ad-supported tier to re-ignite subscription development – particularly in UCAN (USA and Canada). The
market feels way more penetrated given the COVID pulled-forward bump2
. As a substitute of paying the total
subscription, Netflix will provide the opportunity of paying much less in alternate for watching adverts, thus
1 Misra, A. 2020. Netflix – Continuously Pivoting its Enterprise Mannequin to Success. Sep 13, 2020.

Netflix – Constantly Pivoting its Business Model to Success

2 Wells Fargo, 2022. Fairness analysis. NFLX: The AVOD Satan Is within the Element. Jun three, 2022.
https://wellsfargo.bluematrix.com/docs/pdf/d5ef4344-9429-4eb6-bdda-382f2a44advert57.pdf
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eliminating one of many nice benefits of the streaming service over conventional tv. The
timeline to introduce this new subscription tier has been introduced ahead a few occasions.
Netflix is the most costly streaming service, in comparison with rivals from giants like Disney and
Amazon, particularly if we wish the total expertise with the most effective video and sound high quality. So-called
‘sub-accounts’ and new ad-supported subscriptions will develop into the most cost effective manner to make use of Netflix3
.
Along with these measures, Netflix executives need to improve their presence in markets outdoors
america, the place development is stronger, producing extra native content material and enhancing the standard
of its sequence.
The corporate faces a number of potential methods ahead:
• Remaining a pure Subscription video-on-demand (SVOD) participant
• Introducing a second subscription tier with the Promoting video-on-demand (AVOD) mannequin
• Opening sub-accounts to monetise the big section of password-sharing customers
On this context, it’s value evaluating the potential impacts every mixture of merchandise could have on
the corporate’s income stream. Please use the Excel workbook offered to do a quarterly income
three Translated by Content material Engine LLC. (2022). Netflix loses customers for the primary time in a decade and plans to
introduce promoting. CE Noticias Financieras.
https://www.proquest.com/docview/2653220902?parentSessionId=jwgbxZhsHdcKlLloJSTvkPJOu7bpZkXvzVVl
WN5YZPkpercent3D&pq-origsite=primo&accountid=17095
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forecast for Netflix from September 2022 to June 2025 underneath every state of affairs described within the
questions.
In every state of affairs, you may search for information to help your assumptions. This Wells Fargo Fairness
Analysis report might be of nice use.
Learn the report
Please make you to reference your sources and to kind your personal views and to not merely “copy and
paste” from stories.
QUESTION 1. DISCUSSION ON FORECASTING TECHNICS [4 marks]
Earlier than you construct your personal Income forecasts, please watch these two movies created by a tutor who
used Netflix to show forecasting utilizing:
• Holt’s Technique https://youtu.be/55_vmSIba3A, and
• Regression mannequin https://youtu.be/089eZCuBhtg
Within the written report, use bullet factors to:
• spotlight the principle limitations in utilizing these technics
• suggest amendments to the strategies to make them extra applicable to forecast Netflix’s
income
• This Question Assignment doesn’t have a spreadsheet element.
QUESTION 2. FORECAST REVENUE | PURE SVOD PLAYER [6 marks]
• Assuming Netflix decides so as to add preserve their present enterprise mannequin as is, please use the
“Question Assignment 2” part within the Income worksheet to do a quarterly income forecast for
Netflix from September 2022 to June 2025.
• Embrace any inputs and assumptions within the Inputs worksheet
• This Question Assignment doesn’t have a written report element.
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QUESTION three. FORECAST REVENUE | SVOD and AVOD [8 marks]
• Assuming Netflix decides so as to add a second subscription tier with the Promoting video-on demand (AVOD) mannequin, please use the “Question Assignment three” part within the Income worksheet to do
a quarterly income forecast for Netflix from September 2022 to June 2025.
• Embrace any inputs and assumptions within the Inputs worksheet.
• Be sure to a minimum of account for:
o cannibalisation throughout merchandise,
o new potential prospects and
o totally different attrition charges by product
o promoting income
• This Question Assignment doesn’t have a written report element.
QUESTION four. FORECAST REVENUE | SVOD, AVOD AND SUB-ACCOUNTS [8 marks]
• Assuming Netflix decides to:
o add a second subscription tier with the Promoting video-on-demand (AVOD) mannequin,
o add sub-accounts for “sharing-password” prospects
please use the “Question Assignment four” part within the Income worksheet to do a quarterly
income forecast for Netflix from September 2022 to June 2025.
• Embrace any inputs and assumptions within the Inputs worksheet.
• Be sure to a minimum of account for:
o cannibalisation throughout merchandise,
o new potential prospects and
o totally different attrition charges by product
o promoting income
• This Question Assignment doesn’t have a written report element.
QUESTION 5. OUTPUTS [6 marks]
• Within the Outputs worksheet, please use tables and charts to report the important thing outcomes of your
Assessment.
• Please embrace any sensitivity Assessment you decide related
• This Question Assignment doesn’t have a written report element.
QUESTION 6. DISCUSS YOUR FINDINGS [6 marks]
Within the written report, use bullet factors to:
• Talk about your important findings
• Suggest a manner ahead to the Netflix administration
QUESTION 7. FINANCIAL MODELLING BEST PRACTICES [2 marks]
The usage of monetary modelling finest practices within the income mannequin, inputs and outputs can be
marked on this Question Assignment.

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