NETFLIX: MACRO AND INDUSTRY ANALYSIS

Netflix: Macro and industry analysis

Netflix: Macro and industry analysis

Macro Environment: Three significant changes are revealed in the macro environmental analysis during the past 5 years from 2004 to 2008. They are shifting demographics in the United States, increasing interconnectivity, and industrialization in Brazil, Russia, India, and China, which are also identified as the big deltas.

The shifting demographics in the United States

The shifting demographics in the U.S. is explained by the changes of age distribution, shifts in the racial diversity, increasing health expenditure, growth of women in the work force and related disposable income. The population of age 65 or higher increased 13.5% from 34.2 million in 2004 to 38.8 million in 2008. The people aged 65+ accounted for 12.8% of the total U.S. population in 2008 compared to 12% in 2004 (“Data profile”, 2004; “Data Profile”, 2008). This reflects a 6.7% increase on the weight of age 65+ over total population. The Hispanic population in the U.S. went up 15.8% from 40.5 million to 46.9 million between 2004 and 2008. The Asian population in the U.S. increased 10% since 2004 by reaching 13.2 million in 2008 (“Data profile”, 2004; “Data Profile”, 2008). Foreign citizens living in America rose to 22.3 million in 2008, increasing 5.7% compared to 2004 (“Statistics”, 2009). The ethnic diversity in the U.S. tends to be more obvious. The increases of aging population and immigration have contributed to a greater expenditure on health in recent years. Government health expenses augmented 35.3% from $596.5 billion in 2004 to $807.1 billion in 2008. Total expenditures on health per capita grew up by $1,409 or 23.4% between 2004 and 2008 (“Statistics”, 2009). The number of women in the workforce increased 4.5% reaching 67. 6 million in 2008, compared to 64.7 million in 2004. This contributed to a 16% increase or $3,481 on annual disposable income per female during the same period (“Statistics”, 2009).

Increasing Interconnectivity

Rising internet users, online shoppers, mobile phone subscriptions, international trades and global cooperation testify the increase of worldwide interconnectivity. The number of world total internet users reached 1.57 billion in 2008, 72% higher than that in 2004 (“Statistics”, 2009). Online shopping became more popular during the past years due to its advantages of convenience, time and muscle saving, interesting, and price comparability. The internet shoppers had increased 40% since 2006 and hit 875 million in 2008 (“Over”, 2008). Communication through cell phones tends to be more common. The worldwide mobile phone subscriptions went up 130% from 1.76 billion in 2004 to 4.04 billion in 2008 (“Statistics”, 2009). International trades soared in the past 5 years. The world exports increased 75% between 2004 and 2008. The world imports rose approximately 73% in the same period (“Statistics”, 2009). The G-20 Summits exhibit a new global economic format and strengthen global cooperation. The G-20 represents 85% of the world output, and it will replace the previous G-7. The G-20 leaders agreed on realigning voting weights at the International Monetary Fund to enhance the world ...