..........1 Industry Overview………………………………………………………………2-8 Client Profile & Competitor Analysis……………………………………9-17 Comparative Analysis……………………………………………………….18-19 Consumer Analysis………………………………………………………….20-23 Consumer Insights………………………………………………………….24-29 Survey…………………………………………………………………………….30-31 Results……………………………………………………………………………32-41 Recommendations…………………………………………………………..42-45 Appendix I……………………………………………………………………..46-48 Appendix II………………………………………………………………….…49-55 References………………………………………………………………………56-57 Will Haven, Lucy Ross, Jessica Stephens, Lauren West & Bonnie Willard Redbox is leading the way in the premier industry of DVD rental kiosks. With Coinstar as its established parent company, redbox is currently surpassing its competitors with its number of self-service kiosks. Redbox’s growing popularity is facilitated by its physical distribution, which places the kiosk in high traffic locations such as WalMart, Kroger, McDonalds and Walgreens. Due to redbox’s standing as the progressive option for DVD rental, its decision to target the 18-24 year old demographic was evident. This demographic embodies the idea of innovation, experimentation, and dependency on technology, all of which are imperative to transform an introductory product into a nationwide brand. The following report provides secondary and primary research in order to construct an accurate glimpse of redbox and its emergent status within the 18-24 year old target market of the DVD rental industry. This report...
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...(Block)Busting the Movie Rental Industry June 1, 2005 BEM 106 Final Paper Zhan Wang Harrison Stein Chin Yeung Siu Ruiqi Rachel Wang Introduction: Since the 1910s when Charlie Chaplin created his first silent films, movies have been a staple in American culture. For over half a century, “the big screen” was the only link between first released Hollywood films and captivated audiences nationwide. The advent of modern technology like the VHS tape and the DVD, however, has provided viewers with a convenient way of viewing movies, new and old, no longer playing in theaters. In addition, cost considerations have made DVDs and VHS tapes ideal for short-time rentals. Thus these inventions and the terms of their usage have helped to create a movie-rental market within the larger movie industry. Rentals and other theater substitutes have become essential to the movie watching experience because the theater no longer holds the monopoly it once did. While movie theaters are still widely popular, many people dislike the inconvenience of finding a local theater playing the right movie, driving there, and then standing in long lines to buy a ticket. Some do not appreciate the large crowds that often include cell phone talkers and loquacious teenagers. And some simply don’t want to shell out ten dollars to a movie that has the chance of being Ishtar. For whatever reason, there is a large demand for rentals and substitutes from audiences who want to see the movies they...
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...Summary The movie rental industry is a living industry; there are constant changes with advances in technology, rights management, and the slow, but steady, move away from physical Media. Companies such as Netflix, Hulu, RedBox, and Blockbuster are being forced to look at new business models and try to keep up with these changes. Assignment Questions 1. How strong are the competitive forces in the movie rental marketplace? Do a five-forces analysis to support your answer. Threat of New Competition: Netflix has almost zero threat of new competition. Any new competition would have to overcome large capital expenses to get started; these expenses include obtaining TV show and movie rights from the studios. Even if the starting expenses are obtained, the new company would have to be innovative and grab a hold of the market quickly to be successful. Threat of Substitute Products or Services: Netflix has a lot to worry about with this being the strongest of the five forces. Where Netflix offers DVD rental and Streaming service, it is in a market with other viewing formats such as Video on Demand and Pay-Per-View. Many moviegoers have membership to one or more of these services and switch back and forth between them to suit their viewing needs. Bargaining Power of Customers (Buyer Power): Users of Netfix have a ton of buyer power, they can easily compare Netflix to other DVD and streaming services and determine what seems reasonable for them. This causes Netflix to keep...
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... founder and CEO, launched Netflix as an online rental movie service in 1999. Netflix is a company that distributes movies and television by streaming online and mail delivery. There are eight different membership options to choose from each varying in number of DVDs rented out at a time. Netflix also offers to stream movies and television series directly from their website to different devices (i.e. Pc, Mac, iPad, iPhone, Wii, PS3). The over all goals for Netflix are simple: to build the world’s best Internet movie service and to deliver a growing subscriber base and earning per share every year. 1. Identify the key elements of Netflix’s strategy. What competitive advantages is Netflix trying to achieve? Key Elements of Netflix Strategy ! Providing subscribers with a comprehensive selection of DVD titles ! Acquiring new content by building ...
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...easy to use. What Netflix said is “Our business model went from dead, to streaming, but all the money is made on DVD, we’re actually delivering great content and people pay instead of going to Blockbuster”. When Netflix was founded in 1997, Blockbuster’s objective was to remain the world’s largest video rental chain, and operated more than 6,500 franchise stores in 17 countries. It is a slow-cycle market and the Blockbuster monopoly situation of the market ,and the other company supply the similar service, but the Netflix understands that the DVD rental industry is not so attractive because of its low barriers to enter into this industry and potential entrants to market range from the actual studio that it created and own the rights of content to illegal digital distributors. The most important problem is Intensive rivalry of competitors are too high, so Netflix has to do strategies for Instituting Change. They are not the first movers for DVD rental, but they are the first one of the online rental,In the late 1990s, with the booming in number of Internet users,Reed Hastings knows invest in Internet to get in on the very profitable market that was available at that time. Netflix was one of the first Internet companies, which took that advantage by getting into Internet video market. When they introduced this concept, other competitors still used the traditional DVD rent in the real stores. Netflix doesn't need the cost to rent stores, and create economies of scale, Netflix’s founder...
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...October 2011 INDEX INTRODUCTION Page 2 INDUSTRY INDUSTRY SUCCESS FACTORS PORTER‟S FIVE FORCES Page 3 Page 3 Page 3 NETFLIX, THE COMPANY PROBLEMS FACEBOOK BLOCKBUSTER Page 6 Page 8 Page 9 Page 10 CONCLUSION Page 11 RECOMMENDATIONS Page 12 EXHIBITS Page 14 APPENDIXES Page 18 1 INTRODUCTION Netflix entered the video rental industry in 1998, being pioneer on the online delivery channel. They were the first conceiving the digital format that was able to faster the delivery process at the same time it abolished several costs related to the physical points of sales. Being pioneers and developing technologies on which they had patents over could initially be seen as a competitive advantage. The fact of being the first ones operating under this format permitted them to come up with several services before competitors, as the streaming video, the disc rental, the original programming and the household profiles. Not only for being pioneers, but also for the valuable services offered, at accessible prices and with high variety of content, the image among consumers about Netflix was constructive. The share of mind among users was on a general perspective positive and of satisfaction relating to the services they were paying for. Netflix had a great brand awareness and in a positive sense. However, more recent happenings are changing this position. With the years competitors of the industry developed their services, competing more and more...
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...disruptive (troublemaking) impact of Redbox | | |Automated Retail, LLC (Redbox) - a company that offered DVDs for rent at| | |a low rate of US$ 1/day through kiosks - on the US (DVD rental industry.| | |It begins by describing the company's inception (start) , and how it | | |managed to grow rapidly over the years. The case also details some of | | |the important features of Redbox's business model, including the use of | | |patented technology to enhance customer experience. It then discusses | | |some of the problems the company is facing, including its legal disputes| | |with some of the leading movie studios. Finally, the case presents an | | |overview of the competitive scenario in the DVD rental industry, and the| | |company's future prospects. | ...
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...2000 and 2003. Up to 2003, market advances were due to rising penetration of DVD hardware, however, as penetration reaches over 80% of households in 2005, and late hardware adopters purchase less software than early adopters, the market is maturing. Price declines are also contributing to slowed growth presently, but over the long term may be the key to driving demand and growth. DVD sell-through carries majority of the market In 2004 the sell-through category accounted for 63% of the market; DVD sales were 52% of the overall market, while VHS sales were 11%. The rental category makes up the remaining 37% of the entire market, with DVD accounting for 26% and VHS nearly 11%. These figures reflect the shift in the market away from VHS and rentals, and towards DVD and sell-through. As evidence of the strength of DVD, most mass merchandisers have discontinued sales of VHS. Increases in hardware penetration drove sales Hardware ownership remains the primary driver for sales and rentals of video software. VCR penetration has remained static at over 90% of households, while DVD player ownership (market-entry hardware now retails for as little as $40) quadrupled to 39% penetration from 2000-02 and nearly doubled to 72% in 2004. Home theater audio hardware penetration nearly doubled between 2001 and 2004, further encouraging home video viewing. Demographic and economic factors positive for market As DVD technology tends to be the domain of younger consumers, the fact that those...
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...in the movie rental marketplace? Do a five-forces analysis to support your answer. Substitutes: There is a strong force of substitutes. Consumers can buy DVDs at retail stores, rent movies via vending machine like Redbox, rent online, watch movies via TV packages and premium movie channels, pay-per-view movie rental, watch movies on the internet via youtube and amazon.com, and consumers can obtain pirated DVD. Buyers: There is a strong force by the buyers, there are a lot of substitutes and companies have to fight with rivals for a competitive price and customer service. Pleasing the consumer is huge in this industry. Suppliers: There is a mediocre or low force by the supplier because there are a lot of different companies that offer the same goods. The DVD rental industry has a lot of substitutes with the same product just a different way of obtaining the movies. Potential for new entrants: The potential for new entrants is weaker because existing companies like Blockbuster are struggling to earn healthy profits. The convenience of movies online and through TV companies are over powering the in store business models that Blockbuster and Movie Gallery had. Rivalry: The force of Rivalry is very fierce because companies are coming out with new ways of obtaining movie rentals. The internet based companies are making it hard for other companies to rent their DVDs through storefront business models. Netflix leads the pack with the ability to obtain the rental through the mail...
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...Movie retail industry includes such companies that rent DVDs, Blu-ray discs and even video games which are usable on home-based electronic equipment (Espedido Julian, 2010). Many companies are participants in this lucrative business and they include such companies as Wal-Mart, Netflix, Blockbuster, Intelliflix, Redbox and GameZnFlix among others. Both Netflix and Blockbuster companies are presently the leaders in the rental movie industry and therefore the major rivals in the rental movie industry. As to Blockbuster, it has a quite lengthy convention in the business. The Blockbuster has existed since the year 1985, even as Netflix entered its 12th anniversary this year. This gives Blockbuster an edge of existence over its close competitor Netflix. This paper intends to critically provide an in depth analysis for Arthur Thompson's case study entitled "Competition in the Movie Rental Industry in 2008: Netflix and Blockbuster Battle for Market Leadership." It will comb thoroughly issues like the trends which affect either negatively or positively the movie rental industry with utmost reference to Netflix and Blockbuster in respect to their fight for the market headship, scrutinize in detail the competitive movie rental industry environment, and by extension give detailed discussion on the use of both the SWOT as well as reasonable scorecard to evaluate Netflix's battle strategy for market leadership on the whole. The video rental industry (formally known as home entertainment...
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...Netflix The movie industry has evolved in a variety of different ways in the past decade. Our generation is continually developing new ways in technology to watch movies as well as purchase them in a competitive consumer environment. In the past decade, Netflix has revolutionized the art of purchasing for in-home movie viewing providing an online phenomenon for the movie rental business. Netflix company strategy and business model has generated a great amount of success with their huge selection of movies, fast delivery, and excessive marketing campaign. Nevertheless, there are some issues underlying their current success that need to be dealt with for future forecasting. Current Issues/Problems Netflix has seemed to master the DVD rental segment of the movie industry. With their extensive selection based product, fast delivery, and wide subscription plan, there is no limit to their success. However, some questions arise with the subject of product differentiation. What happens when technology advances over time and the product changes? If Netflix concentrates too much on their product focus and ignores the future, then a substitute product will take over only in a matter of time. In our current business environment, product improvements are essential and changing rapidly. If Netflix does not plan out the obsolescence of DVD’s then there is no future. The recent introduction of Blu-ray technology has offered a huge advancement in the production of DVDs. Blu-Ray discs offer...
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...Introduction. Reed Hastings (co-founded) founded Netflix in 1997. During this time, Netflix offered DVD rentals by mail. As Netflix went public in 2002, shortly a year later their subscription reached the one million mark (Netflix Management, 2011). Recently, Netflix is recognized as one of the 50 most innovative companies, ranking number eight for “streaming itself into a $9 billion powerhouse (and crushing Blockbuster)” with 20 million subscribers (fastcompany.com, 2011). This success shows how Netflix embraced a business approach where their mission was to take the troublesome experience of everyday consumers and transform them into a business opportunity. A will describes and evaluate Netflix’s innovation strategy, the specific products offered to their members, and the benefits that the company brings to its customers and employees. To begin, innovation goes beyond an invention. It captures the opportunity for change, growth, and market leadership that allows leaps within the industry in multiple ways. Netflix’s Innovative Overview The outlook for Netflix has developed a trend of continuous growth with subscribers and providing products with a substantial cost advantage by distributing a wide variety of titles that appeal to different customer groups. The success of Netflix was simply listening to consumer’s feedback regarding the services and products in the DVDs rental industry. As a result, Netflix absorbed the lucrative cost in unattractive late fees. Instead, Netflix offers...
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...buying every small store they could, becoming the de facto sole franchise for movie rentals. This changed in 1999 when Netflix first began their DVD by mail service. Netflix rentals allowed viewers and movie watchers to rent movies from the comfort of their own home. Additionally, the customer wasn’t penalized for returning the movie late. The years that followed produced a long, protracted battle that Netflix appears to have survived on top. That being said, both companies made significant mistakes and have lost millions of potential customers in the process. In this paper, a brief history of each of the company will be presented, a diagnosis of the major problems, analysis into these problems, an evaluation of potential solutions and finally, recommendations for Blockbuster and Netflix to be able to address their problems. ANALYSIS Scott Cook founded Blockbuster Video and opened the first store in Dallas, Texas on October 26, 1985. Later bought by entrepreneur Wayne Huizenga, Blockbuster Video grew to over 4,000 stores in the mid-2000’s and earned the spot as the number one video rental store in the country. Blockbuster made frequent changes to their business model, by first adding video games; later music was added. In 1993, Viacom purchased Blockbuster for $8.4 billion dollars but by 2006, they were only worth $500 million dollars. In 2004, Blockbuster launched their online DVD rental store, primarily to compete with Netflix, which was founded in 1998 and had built...
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...Video rental industry Definition: Branch of the entertainment industry that engages in renting prerecorded video material for home and personal viewing Significance: After starting in 1979 with a single retail outlet in Los Angeles, the video rental industry boomed during the 1980’s and became a fixture in consumers’ spending during the 1990’s, grossing an average of $1 billion yearly. With the arrival of digital versatile discs (DVDs) and the Internet during the 1990’s, the industry experienced a period of increasing technological sophistication that has led to the creation and reinvention of new business models. Then the new business model revolutionized the industry. In 1999, Netflix began renting DVDs through the mail for flat monthly fees to subscribers who used the Internet to place their orders. Within two years, Netflix claimed to have enrolled more than 3.5 million subscribers in the United States alone. This model was soon copied by other companies, including Blockbuster, some of which also rented other video-based materials, such as video games. By 2007, more than 9 million households had online subscriptions to video rental services, which were generating more than one billion dollars in annual revenues. Meanwhile, the annual revenues of traditional video stores declined to about $60 million. In 2007, with the rapid increases in the number of online video downloads and new interactive services such as video on demand, many analysts predicted the imminent end...
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... Netflix Inside the large video entertainment industry is Netflix Inc., which was founded in 1997. In 2008 the video rental and retail combined to make up $26.7 billion of Netflix’s market (Schneider, 2010). This market can be separated into a number of different groups DVD vending kiosk, online rental and sales, mail delivery services, and video demand services accessible through numerous devices (Schneider, 2010). Thanks to the advancements in technology the rental portion is dwindling down from physical DVDs to digital downloads. It is simply more convenient to use a video game console, DVD player, or Blu Ray Player to access videos straight from home. Consumers are not limited to watching movies at home, since Netflix has developed the ability to view movies on smart phones or even tablet devices. The ability to watch a movie on demand is growing exponentially. Market Structure Due to fast increase in technology, Netflix is in an Oligopoly structure. One of the primary indicators that they are in this structure is that there are only four major firms in the video rental industry ("Economics Online", n.d.). The video rental industry can be determined to be controlled by Blockbuster, Comcast, Redbox, and finally Netflix. These companies are the only real major players in movie rental industry. Another indicator this is an Oligopoly is because of the barriers that need to be overcome to be able to break into this industry. There are very stringent copyright laws, which...
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