Methodology
The method we chose to conduct this research was in person surveys. With time being a factor we felt this would be the most efficient and controlled method for our surveys. We were then able to answer any questions that participants had regarding the survey as well as interpret feedback. The questionnaire was made up of 15 questions and 100 people were surveyed. This questionnaire was administered November 10-15, 2011. We divided the survey amongst members of the group and collected responses over the course of four days. Due to the time constraint, some of the participants were friends, family, and coworkers, others were randomly chosen.
Limitations
We had some limitations to this data. This included:
- The primary decisions makers accounted for only 69% of the survey. This could pose a constraint because the other 29% could have had a different interpretation of the questions. The decision makers are defined as the people who purchase the movies in the household. They majority of people we surveyed were 18-25 which could mean their parents were the primary household decisions makers.
- The most common age group was 18-25 (40%); this could be considered a limitation because it would create a bias in the data. However, this could be considered a benefit because this is the next generation of possible Netflix subscribers. However, we do not want to neglect older age categories. More input from that sector could have given us a better understanding of their reasons for not having Netflix.
- The number of surveys was only 100. If we had 1000 surveys completed we would have had a broader variety of demographics and this would have given us a complete set of data to work with. With a larger sample size data would be more significant and accurate.
- Time was a constraint for this research. Our team only had four days to set the objectives, create the survey and collect and analyze the data. This research is a good initial start; however, further research would provide more detailed information.
Participant Profile
Of the 100 participants that we surveyed 43 were between the ages of 18 to 25. This was our densest age group that made up almost half of our participants. 14 people were 26 to 35, 21 people were 36 to 50, 19 people were 51 to 64, and only 3 people were 65 and older. With our method being in-person surveys, and with our team made of students, we found that most of the people we surveyed were also students. This explains the high number of participants who were in the 18-25 age categories.
All the age categories showed a strong preference to using their satellite/cable network provider as their main method of viewing movies. The age category of 51 to 64 showed a strong preference to using their household cable/satellite provider as their main method of viewing movies. The 18 to 25 category which was our largest group surveyed, preferred using “other” and Netflix as their main methods. The large amount of “other” methods of viewing is probably linked to streaming or downloading movies off of an external source. With the pirating of movies becoming increasingly common it is no surprise that there was such a large amount of people who chose this option.
It is noted that the 3 younger age categories displayed more use of Netflix as their preferred method of viewing movies. Participants who were 50 years old or older seemed to favor their household cable or satellite provider as a main source of viewing movies. Because Netflix requires particular technologies and internet functions to run successfully, this could be seen as a barrier for the older generations for subscribing. Netflix is a new method of providing entertainment, and therefore older customers may not be as open to change or perhaps do not know enough about it. However almost all participants had at least heard of Netflix, however some may have been lacking in sufficient information concerning how the system actually works.
Gender
Out of the 100 people surveyed, 61 people were female and 39 were male. For the most part the preferences between men and women were relatively the same, however did differ in certain areas. It seemed that women were more inclined to use Netflix than men. Women also showed a significant increased interest in going to the movie theatre; whereas men were more inclined to purchase movies to own. Both genders selected household cable/satellite provider as their most preferred method of viewing movies.
Income
Of the 100 people that we surveyed there was an even spread of annual household incomes. The most common income bracket was the $20,000 to $50,000 per year bracket, which had 28 people. We found that most people who were in the middle to lower incomes were more likely to use Netflix as their main methods of viewing movies. People in the middle to higher income brackets were more inclined to use their household cable/satellite provider to watch movies. Price may play a significant role in these results and show how the price of Netflix can affect which customers they attract.
Most people who said that they used their household cable/satellite provider were in the middle to higher income brackets. The people who said that they used Netflix most often to view their movies were in the middle to lower income brackets ($50,000 per year and under). Netflix is $7.99 monthly, for a subscription which is considered low for the amount of value that comes with a subscription. This could explain why more people with middle to lower incomes use Netflix more often.
Results
1. Motivation to Subscribe to Netflix chart reference
In our survey we included a question of what a person’s motivation to subscribe to Netflix would be. We included a variety of answers in the question to accommodate all possible participants. After receiving our answers for this question, the majority of our respondents choose ‘New Releases’ (as their motivation to subscribe to Netflix) having 53 out of 100 respondents select this as their answer. This is a major percentage of people selecting this answer, meaning this is crucial information for Netflix in furthering their market share. This is a clear sign to Netflix that this issue of not having new releases in their programming, needs to be addressed to increase their market. On the positive side of this issue, Netflix has managed to sign and keep a large customer base, knowing that they do not carry new releases in their programming.
The second highest answer scored for this question was the option ‘I already have Netflix’ with a score of 20 out of 100 respondents selecting it. This is also positive information for Netflix, because according to this survey they really only have one change to make to create an even larger customer base, to add new releases to Netflix program.
The other options for this section were not really very significant compared to the two mentioned before. Theses options being ‘Better Selection’ having 13 out of 100 respondents choose this, and ‘Different Bundles and Packages’ having 11 out of 100 respondents choose this as their answer. While both these answers do help in figuring out what else people want out of Netflix, these answers have a very low significance due to how little number of times they were selected as a respondents answer.
The information discovered about people’s motivation to subscribe to Netflix is very important. As it is the basis for our objectives that we needed to develop more information on this topic. We ran a cross tabulation between ‘Motivations to Subscribe to Netflix’ and ‘The Method You Use Most to View Your Movies’. This cross tabulation will show Netflix the best way to decide the method they should use to enhance their programming. Now due to Netflix knowing what motivations people would like to subscribe (learning this through our research), the next thing they need to know is how people view these reasons, mainly addressing the issue of new releases because of its response popularity in our research. The most popular response to this cross tabulation was ‘New Releases’ as the motivation to subscribe, and ‘Household Cable or Satellite Provider’ as ‘The Method Most Used to View Movies’. These results could have happened for a couple reasons. The two main reasons being cost and convenience. People who do not own Netflix are having fewer and fewer options to view movies from the comfort of home due to video stores going out of business. This leaves only a couple options in viewing movies. Going to the theatre is a big option, which has become very expensive, and is difficult to take a whole family for a reasonable price. Another reason could be that people just want to stay in the comfort of their home to watch movies. Watching movies through the household cable or satellite provider just becomes the easiest and most convenient for people to view their movies.
Another interesting piece of data we found in our research for ‘The Method You Use Most to View Your Movies’ is how popular the ‘Other’ option was. We originally had put this option in as an answer, as a way for people who download or pirate movies to contribute to our research without having to admit it. Looking at our research there is a large number of people who use this method to view their new releases and movies. This is good information for Netflix to know, even though Netflix cannot beat the price of this method, being free, they will know how they are losing opportunities to sign new clients, which then can be fixed to obtain more clients.
2. Methods in which people view their movies versus how many times they watch movies chart reference
Chart (?) represents a cross tabulation between the methods in which people view their movies compared to how many times they watch movies per month. This was our most significant cross tabulation we performed as the association between these two variables had a p-value of 0.009 representing a high level of significance. Out of the 6 methods in which people watch movies; household cable or satellite provider, subscription to an internet based Movie Company, renting from movie store, going to the theatre, purchasing from the store, or other, we found that 34.6% of participants watch movies the most through their cable or satellite provider. According to our research, out of this 34.6% the period in which people watch movies the most was 1-2 times and 3-5 times per month, which corresponds well with the most frequent answers for the question of how often people watch movies; the response that people gave most for that question was 3-5 times per month (33.6%), and 1-2 times per month (25.5%). This data taken from our survey allows for more insight for Netflix of what market to target most in Canada. This category also held the most participants answers of watching movies over ten times a month or more which illustrates that the cable and satellite movie market should be targeted first by Netflix as it migrates north to Canada. For the methods of “renting from the movie store” and “purchasing movies” ranked the lowest for people viewing movies 1-5 times per month. This was the period where people viewed movies the most according to our survey, and the fact that our lowest ratings were found with these two methods tells us that the methods of purchasing and renting movies is becoming obsolete. This holds true as our statistics from the “other” category, as well as the “subscriptions to internet based movie companies” category shows a growing number of people who view movies three times or more. This points out that the expansion of Netflix into Canada would be a successful venture as more people appear to be drawn away from renting movies from video stores, to the convenience of renting on-line through cable, satellite, torrents/downloads (other), and companies such as Netflix.
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Reasons for not subscribing to Netflix. chart reference
The first answer we wanted to get from our research was to find out why people decided not to subscribe to Netflix. When analyzing the results we found that the main reason people passed on buying Netflix was the lack of selection they provided to the consumer. Of the 100 participants who completed the survey, 40 choose the option of “lack of selection” as their main reason. This is an important piece of data for Netflix to have as it gives them an idea of what they need to improve to increase the number of subscribers to Netflix.
The second leading factor why people choose to not to purchase Netflix was price, at 25 participants. The result of 25 percent of the people choosing price as their leading factor why they would not purchase Netflix was surprising, as Netflix is already very inexpensive. Upon reviewing the data closer a few conclusions can be made why there was an influx of people that choose price as a main factor. The bulk of participants that choose price as a main factor 11 of 25 came from the age category of 18-25 came from this age bracket. This is an important factor to consider as most of these participants may be taking some sort of post secondary education. As a student making multiple payments on tuition, rent, food, cell phones, transportation, and all other expenses that fall into the student budget, an extra expense such as a Netflix subscription, may be an expense that gets cut out of the budget, thus describing the large amount of participants that choose price as being an important factor in their decision to purchase Netflix.
A third piece of data that would be of interest to Netflix would be the trend of the steady decline of Netflix users as you move into older age categories. The number of people in the 18-25 age brackets that had Netflix was 11.This was followed by the 26-35 age bracket that received 4, 3 or the category of 36-50 and 1 for 51-64. This decline could be worrisome for Netflix as it may show its lack of popularity among older age groups. This data can provide Netflix a reason to target specific age categories, and create marketing strategies that appeal to these age groups. There is one limitation however with this data, as the sample size for the survey was relatively small. It would be within the interest of Netflix to further investigate these results to make clarify the legitimacy of this trend.
Finally, an interesting statistic to look at was why price is a main factor for consumers, is the cross tabulation between reasons why people don’t have Netflix, and preferred method to watch movies. Most of the people who had price as their main reason for not purchasing Netflix preferred to watch their movies on their household cable/satellite provider, and by renting movies from the store. This might cause some confusion because both methods can be more pricy than Netflix. An answer to this data may be found in the cross tabulation between reasons for not having, and how many times you watch movies. Participants that had price as their primary factor also fell into the category of watching movies 1-2, and 3-5 times a month. People may rather occasionally purchase a movie than subscribe for a month on Netflix. Another possible limitation on these statistics of how many movies people watch a month is how many of these movies involve a monetary transaction. For example there are some movies on a satellite network that are of no cost, and DVD’s that may have been purchased years ago may also fall into the amount of movies that people watch a month. A person who identifies themselves with watching 3-5 movies a month may not be paying, as these 3-5 movies may be DVD’s, and free movies on cable; as a result these participant find no need in paying any money for an another source for movies such as Netflix.
4. Method for viewing movies vs. Reason for not having Netflix chart reference
This chart was one of the most successful cross tabs we performed as the p-value for significance was a staggering .000. This was the most significant cross tab to us because it shows that the large portion of the population who views movies through their household cable and satellite provider’s main reasons for not having Netflix is the lack of selection. This may be a result of the ability to get new releases with cable and satellite, as opposed to Netflix who is yet to acquire new releases. Most of the participants who took our survey view movies through household cable or satellite providers, and to know that their main reason for not subscribing to Netflix is due to lack of selection is extremely significant and crucially important in targeting this particular market. The very fact that the selection offered by our client is sparse, contributes to their inability to be able to satisfy the public who want a large selection of movies offered from Netflix compared to that of their home cable or satellite providers. According to this chart, we feel that an increased selection of movies would entice the customers who belong to the movie dominated cable or satellite market, and therefore the establishment of a predominant client base will ensue.
Conclusion:
We have attempted to determine and investigate the variety of methods for increasing Netflix's Canadian market share.
Key findings include:
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Younger participants were more likely to be Netflix subscribers.
- Most participants currently watch movies through their cable or satellite provider.
- The key motivations for people not subscribing or discouraging them from subscribing to Netflix was lack of new releases and selection.
Of the 80 survey participants not having Netflix, 34 participants indicated that their method of viewing most commonly used for viewing movies was through a household cable or satellite provider. There was only one participant who indicated both that they were subscribed to Netflix and that their most common method of viewing movies was through their household or cable satellite provider, suggesting that Netflix may be able to expand their Canadian operations considerably by targeting this market. . This suggests that despite the lower price of a Netflix subscription, people were more inclined to use their household cable or satellite provider. This indicates that price is not the main factor in their chosen method of viewing movies. It is likely that these participants prefer the selection of movies offered using this method, opposed to Netflix.
With the availability of new releases being a dominant factor in the decision to subscribe or not subscribe, it is plausible that a perceived lack of new releases may have contributed to the ultimate decision of survey participants to not subscribe. A survey participant's price sensitivity may either drive that survey participant towards Netflix or towards entertainment alternatives they place higher value on (e.g. Subscription to a Winnipeg Jets game package).
Geographic area greatly influences demographic data and, consequently, further marketing research may be desirable if markets outside Winnipeg are in need of demographic and subscriber profile data. If we were to research outside of the Winnipeg area, our findings would differ and we would get a different perspective on how people view movies. If Netflix was to further their research, we recommend that they expand their research into different geographical areas.
Our research was mostly conducted with people ages 18 to 25. Amongst these participants they were more likely to subscribe to Netflix, despite having lesser incomes than older participants. Netflix is loosing out on this older market, who are able to purchase a subscription, however are not motivated to do so. We recommend that Netflix further extends their research to focus groups examining why those aged 35 and older are not subscribing to the same extent as young survey participants is recommended. High income individuals were also less likely to subscribe, something which future qualitative research could explore in more depth. By doing these focus groups, we would be able to identify the real motivations and discouragements. These older demographic groups are an opportunity for Netflix to increase their target market.
If Netflix offered an a la carte selections or bundle option to their membership they might encourage new subscribers and garner a larger share of the market. A new marketing strategy incorporating our key findings and/or further marketing research conducted as part of a new marketing strategy may allow Netflix to increase its market share in the online media streaming and video entertainment segments in Canada.
