1. How strong are the competitive forces in the movie rental marketplace? Do a five-force analysis to support your answer.
At the moment a lot of people are downloading and watching movies online. Some of them it’s free no monthly payments required. There are also pirating movies online for free and other free sources are available. It is available through online piracy to get the same movies which are offering Netflix. Five -force analysis:
Threat of substitutes:
Probably other websites which offer to watch movies online for free and satellite companies. Walmart, Blockbuster, Sky store online. Also pirating movies on the Internet which is for free and illegal. Substitutes price availability.
Suppliers Bargaining Power:
It is very High. There are not a very big choice of suppliers. It is important to chose the right supplier fo your demand. Suppliers has the power on the movies. It is important to maintain good relationship with movie providers.
Barriers to entry:
Netflix has the leadership position in the market at the moment. The other competitors are not so strong as people not renting DVD’s as much, as few years ago. Netflix outcompeted his competitors because provide high quality, high definition and wider product selection, advanced technology. Actually entry into movie market and attract the customers it’s not so easy.
Buyer Bargaining Power:
Buyers is the most important and powerful in this type of business. If the buyers has no money movie rental business will go down. Or if the buyers has alternative options to rent DVD’s in store or stream. Also piracy affecting Netflix. If the price is not suitable for the subscriber he/she will switch to competing company. Furthermore rights of the buyers for e.g. Netflix allows to cancel subscription any time, so you don’t have to sign any contracts. It is necessary to avoid delays in orders, because can increase customer dissatisfaction and affect the company.
There are increase in competitors at the moment. Blockbuster, Netflix, Redbox, Hulu Plus, iTunes, HBO, Amazon, Wudu and TV providers. And these competitors are very active, because every company has to attract the customers and to increase the revenues. Netflix offering one month for free, unlimited streaming. The main factors competitors has to focus on technology, price, various availability provide different packages.
2. What forces are driving changes in the movie rental industry and are the combined impacts of these driving forces likely to be favorable or unfavorable in term of their effects on competitive intensity and future industry profitability?
The economy is the main reason what drives changes in the movie rental industry. In nowadays less and less people are renting movies. As there are other options available for them. Now most of the people have internet at home, so they can download movies online and is more cheaper and more convenience. And it is faster it can take just few minutes, only fast broadband is required. There are a lot of movie providers online one of them is Netflix. They offer for monthly fee to watch movies or TV programs online. There are few companies offering unlimited watching for the same price. Also Internet is getting faster so quality of movies will be better, higher standards. Furthermore could be cheaper price availability from other companies. The unfavorable effect in the future will be more competitors in the same market. Also competing for the license with the same entertainment video providers. Difficult can arise to guess each country subscriber’s taste, lifestyle. The subscriber’s taste can change time after time. Netflix will have to spend on marketing wich required of a lot of money. The favorable effect will be expanding internationally, as will lead to increase in customers, which lead to increase in company’s profits.
3. What key factors will determine a company’s success in the movie rental industry...
References: Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland, (2013). Crafting and Executing Strategy: Concepts and Cases. McGraw-Hill Irwin
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