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Netflix Case Discussion

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Case Discussion #4- Netflix 1. How strong are the competitive forces in the movie rental marketplace? Do a five-forces analysis to support your answer.
In my opinion, they are not strong at all. There are very few competitors that do control market share and a number of small businesses represent the remaining market share in the movie rental market place. Rivalry among competing sellers is common; the top competitors are Netflix, Blockbuster and local movie stores. Large stores such as Blockbuster have physical stores, unlike Netflix, are able to stock their stores with a larger number of available rentals for new releases, while small stores order much lower quantities. The threat of Potential new entrants into the movie rental marketplace places a strain on the current controlling powers, such as Red Box. Red Box is based on an idea that Blockbuster employed, which deployed 50 tester vending machines that rented movies. With new entrant, there is a threat for losing market share. Buyers have limited power, the more you buy, the lower the purchasing price. Also, if there is a demand which the seller is unable to supply, movie rentals stores are readily available through other means. Now, we are able to request the movie online, select for the movie to be mailed or even illegally downloading or streaming the movie from another third party. There are not many substitutes available. Buyers can either wait until an illegal bootleg´ version is available for sale or find other means of getting movies for free via the internet or waiting until the movie is viewable on cable channels through Starz, HBO, etc. Entrant barriers are low, in this industry, but require a large capital. If there is not supply, and demand is high or limited, the seller has the power. If supply is high, and demand is low, the buyer has the power. With movies, since they are copyrighted by

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