Premium Essay

Rental Business

In: Business and Management

Submitted By darkwings
Words 684
Pages 3
One hotly contested and highly competitive industry is the movie rental business. You can rent videos from local video rental stores, you can order pay-per-view from the comfort of your own home, and you can rent videos from the Web at such sites as Netflix. Using Porter's Five Forces Model, evaluate the relative attractiveness of entering the movie rental business.

Is buyer power low or high?
Buyer power in movie rental business can be considered very high. As mentioned in the question, customers have wide range of choices to rent movies, from local stores to pay-per-view, to Red Box at most of national grocery chains, to online streaming and renting such as Netflix, Hulu, etc… With the technology for Internet TV in many homes today, customers can sit back on their couch and enjoy the convenience of watching any movies on demand at their fingertips, provided by Netflix, Hulu, Amazon or iTunes.

Is supplier power low or high?
Supplier power is low in movie rental business. Brick-and-mortal movie renting stores such as Blockbuster, Hastings, or local stores are losing their grounds in this battle for customers because they may not have the tremendous amount of copyrights to movies or the capacity of their stores to keep those DVDs. Online, there are more and more competitors joining the business, such as Netflix, Hulu Plus, Amazon Instant Video, and Apple iTunes. Each of these online competitors has obtained rights to a huge selection of movies, and the advantage of maintaining those movies digitally (which help cut down the maintenance cost, compare to brick-and-mortal stores).

Which substitute products and services are perceived as threats?
There are several options customers can seek to substitute renting movies from any of those companies mentioned above. For those who do not frequently rent movies or do not have the need to watch older shows,

Similar Documents

Free Essay

Taxi Rental Business

...Radio cab market is slated top grow at a rate of z1% per annum  Business model can be differentiated into ‐ different fleet – z2 and z3 g p g g  Revenues garnered for this particular sector occurs through 2 significant heads such as z4 and z5 Drivers Drivers &  Challenges – Increase in disposable income and  p p g transportation spending  – Influx of tourists – Demand from corporate sector – Change in mindset  Hard and soft skills’ training for cab drivers  Increasing entertainment options inside radio  cabs   Radio cabs with Wi‐Fi service Challenges – High fares – TRAI regulation on SMS cap – Unavailability of parking space Trends   Collaborations with other service providers  marking the sector  PE investments in the sector  Technological advancements in radio cabs  Exclusive radio cabs for women Exclusive radio cabs for women Major Players Competition Company 1 Company 4 Company 2 Company 5 Company 3 Company 6 RADIO CAB MARKET IN INDIA 2012.PPT 2 •Introduction •Market Overview M k tO i •Business Model •Revenue Model •Revenue Model •Drivers & Challenges •Government Participation  •Government Participation •Trends •Competition •Strategic Recommendations Appendix •Appendix RADIO CAB MARKET IN INDIA 2012.PPT 3 Ease of booking and quality customer service work towards  shaping growth for radio cabs in the country   SAMPLE  Radio Cab Market – Overview   • Radio cabs business have emerged as one of the fastest growing businesses in India...

Words: 2103 - Pages: 9

Premium Essay

Dvd Rental Industry

...Movie Rental Industry Introduction People born in the early 80’s have the advantage of experiencing the digital age from birth. Today people can go online to Netflix, Blockbuster, or VUDU and rent a movie to stream immediately to their flatscreen HDTV or computer monitor. This is a far contrast from mom and pop VHS video rental stores that emerged in the late seventies and early eighties. The immediate download of videos without having to drive to a brick and mortar building to return the video without incurring late fees is a thing of the past. In 1977 George Atkinson opened the first video rental store in Los Angeles offering videos for rent at $10 a day with a $50 or $100 membership to raise capital[1]. Since that first home theater store George opened, there have been a plethora of mom and pop video rental stores that sprouted up. As video renting became more popular due to the availability of the VHS recorder and the DVD player, larger movie rental chains entered the market with better buying power and lower prices. These larger chains were able to offer rental movies at lower prices with a larger selection[2]. The technology revolution has changed the landscape of video renting. Using Porter’s Five Forces model, entrance into the video rental business will be examined. Technologies used to stream movies, download full length movies, renting movies from store front, and renting from kiosks are the available avenues for the budding entrepreneur. With new...

Words: 1622 - Pages: 7

Free Essay

Applied Research Paper

...Applied Research Paper: Superior Rentals Learning Team B Comm/215 July 14, 2014 Linda Camp Applied Research Paper: Superior Rentals As the business world looks to the future, they are leaning toward a more modern approach. Businesses are going "green" and using recyclable products in their industries. Being an environmentally aware company helps to promote a business, cut costs, and, most importantly, keeps our earth healthy. There are many reasons for a business to become more environmentally responsible. A healthier workplace, positive public response, reduced waste, and legal and tax advantages (Lorette, 2014) are just a few reasons Superior Rentals, Inc. should "go green.” Environmental responsibility begins with research and continues with the implementation of new methods and ideologies to promote a "green" company and a better world. The proposed methods, contained herein, are financially responsible, and relatively simple to incorporate into Superior Rentals, Inc.'s business plan. When businesses “go green,” the impact on the environment is substantial. Superior Rentals, Inc. can positively affect its local market and the world with environmentally sound practices. Alternatives and Discussion Research indicates the following alternatives for Superior Rentals, Inc., and includes discussion of the effectiveness of each alternative. Using Tablets/Going Paperless Using a tablet in place of a cash register has many benefits. Tablets...

Words: 2609 - Pages: 11

Premium Essay

Netflix Case Study

...Since founded in 1999, Netflix has grown to become the world’s largest online movie rental service. In the beginning of 2007, Netflix surpassed 6.3 million subscribers. With a catalog that includes more than 100,000 titles, Netflix is leading the movie rental market. Netflix’s subscription-based business model was a disruptive innovation in the movie rental business. By using the internet, Netflix focused on providing convenient and affordable prices for an entertainment industry that was already highly popular. Based on a product that consumers already loved, Netflix’s business model was profitable because it improved the consumer’s rental experience. The company aimed to become the best cost provider. As part of its competitive advantages, Netflix has an intuitive website (easy to use), personalized movie recommendations, and excellent customer service. Netflix has been rated No. 1 in online retail customer satisfaction by Neilsen Online for the past 3 years and for nine consecutive periods by Forsee/FGI Research (Netflix, 2009). Netflix’s strategy for success has included providing a comprehensive selection of movies; an easy way to choose movies, fast delivery, a no late fees policy and a convenient drop it in the mail return system. These strategies ensured a competitive advantage to Netflix and threatened to make the traditional video store obsolete. A combination of its business model and strategic approach carry out the mission of the company. Diagnosis of Strategic...

Words: 2234 - Pages: 9

Premium Essay

Netflix

...Reed Hastings founded Netflix in 1997 as a home movie service that used the U.S. Postal Service to deliver DVD’s to subscribers. This alternative to the local movie rental store was inspired by Reed’s own experience with extended rental and late fees typically imposed by retail movie rental outlets. While Netflix initially used a similar pricing model, the easily mailed DVD’s appealed to customers at a time when DVD players were gaining popularity and movie rental outlets were still primarily renting VHS cassettes. By 2006 Netflix achieved revenue of nearly $1 billion, offered 70,000 titles on 55 million DVD’s through its 44 distribution centers with a 90% of its subscribers receiving rentals within 1 day. As DVD’s were quickly adopted into American households and retail movie rental outlets, Netflix’s slower delivery service at the same pricing model began to offer less of a service to customers. In response Netflix shifted its business model to a no-late-fee subscription in 1999. Customers were allowed to have multiple movies at any given time and to receive up to four new movies a month. This quickly changed to unlimited rentals. They also developed their distribution network and worked with the USPS to assure quick turnaround time for movies. Netflix core competency is providing home entertainment personalized to the subscribers taste. Netflix’s proprietary recommendation system serves as a merchandising system. Through the use of an initial customer survey and...

Words: 580 - Pages: 3

Premium Essay

Block Buster

...Inc. Blockbuster’s mission statement is “To be the global leader in rentable home entertainment by providing outstanding service, selection, convenience and value.” Blockbuster is an American based chain of retail stores renting DVD, Blu Ray, and video games. They have over 9,000 locations in the US and 25 other countries worldwide. It is headquartered in the Renaissance Tower located in Dallas, Texas. The first store was opened in Dallas, Texas 1985 by David Cook. Cook had started a company called Cook Data Services Inc. in 1982 selling software to Texas’s oil and gas industries.[i] When the industry went flat Cook was searching for another source of revenue. His wife a movie fan suggested getting into the movie rental business. At the time rental stores were small, specialized, and inefficient. These stores were mainly family oriented stores that provided few former big hit movies. Cook recognized if they displayed the movies, provided a large former big hits selection, and set up a computerized system he could provide a higher...

Words: 13411 - Pages: 54

Premium Essay

Netflix Leading with Data

...Blockbuster. Netflix differentiated itself from other traditional movie rental companies and revolutionized the way customers watch movies in the industry by engaging IT to create its competitive advantage. The Video Rental Industry The video rental industry initially started in the 1970s, along with the development of VCR technology. At first, the industry was struggling because it got resisted by movies studios. However, in 1990s, things has changed where studios saw the video rental industry as a good opportunity to increase their revenue. Ever since then, people were able to watch movies directly from home. Later, in late 1990s, DVD format was launched. DVD has become the industry standard and had opened up a way for startup businesses, including Netflix, to compete in the market. As a result of the rapid development of technology and internet evolution, the industry, once again, has shifted into the streaming video online era. Company Brief Netflix is one of the largest online DVD movie rental company in the world. It was founded in 1998 by Reed Hastings, the current CEO, and Marc Randolph. Reed had come up with a brilliant idea over an event that took place when he rented Apollo 13 and was penalized with the $40 “late fee”. Then with the booming of internet users at that time, he and his partner, Marc Randolph, seized this opportunity by creating Netflix. Netflix became one of the first web based movie rental company in US. Originally, the company offered DVDs to its customers...

Words: 894 - Pages: 4

Premium Essay

Netflix Case

...Business strategy Chen Tao Hsu 10.19.2014 Dr. Duane Lefevre Netflix Case Analysis Summary To “Netflix” is fast becoming a common word in today’s society. Everyone knows it, because it is very famous for its service of online movie. It has replaced the traditional DVD rental store and all the rental process can be done through internet with a higher image quality. Reed Hastings incorporated in 1997 and starting movie rental service in 1999. In 2012, there was already over 23 million subscribers and more then 120,000 titles available for online streaming, majorly competing with Hulu Plus and Amazon prime instant video. Analysis Porter five forces analysis The Porter’s five forces model is often used to analyze companies’ level of competition within an industry and business strategy. The rivalry among existing competitors is intense. There are a large number of firms in the movie rental industry and the competition is very high. Several methods for consumers to choose from in-store rental, online rental and mail delivery or video on demand and low level of product differentiation also increase rivalry. There are low switching cost which also lead to aggressive competition and comparable product can be found at many different places. In brief, Netflix major competitors have large levels of capital and also achieved economies of scale. The threat...

Words: 1365 - Pages: 6

Premium Essay

Blockbuster Case Competitive Advantage

...Blockbuster Offers Upside Potential: A Case Analysis 1) Video and DVD rental sales have begun to flatten, and new technology, including digital movies on demand, threatens Blockbuster’s original core business. During the early 1990s, Blockbuster had a competitive advantage over the DVD rental sales. They were able to determine, create, and maintain a competitive advantage over other rivalries like Wal-Mart, Target, and Amazon.com. A competitive advantage is defined as “the ability of a firm to win consistently over the long term in a competitive situation.” Competitive advantage is created through the achievement of five qualities: superiority, inimitability, durability, non-substitutability, and appropriability. I believe that Blockbuster should move aggressively into selling video game players, games, and accessories versus its past focus on rentals. This type of aggressiveness can be called ‘superiority’. An example of superiority is Federal Express. Federal Express was one of the first companies to introduce package tracking capability. It created a system for tracking a package all along its route. Thus, it was better than UPS at knowing where a customer’s package was. Similar to Blockbuster, where if they move into selling video game players, games, and accessories versus its past, they would have the opportunity to invest more customers into the store while rebuilding its DVD sales market from other competitors like Netflix and Hollywood Video today. I believe that...

Words: 2330 - Pages: 10

Premium Essay

External Environment Analysis for Redbox

...the movie rental business via self service kiosks. Redbox is wholly owned subsidiary of Coinstar Inc. Laws and Regulations: There are some specific laws and regulations under which the movie rental business like Redbox should operate. But due to the growing popularity of renting videos through mail, online and kiosks, most of these laws will probably have to change or modified to fit the new way of people renting and watching movies. Age of Renters – This law for who can rent specific videos follow the same guidelines set by Motion Picture Association of America. These guidelines are based on their content, language, sexuality, violence and themes. Privacy Laws – This law protects the video rental records of individuals as the records can be damaging to a person’s reputation and they cannot be disclosed without written consent. Public exhibition – Videos and DVDs are not allowed to be publicly exhibited outsides of a persons home unless for non profit use or educational purposes without a license. Federal Copyright Act – This law governs how copyrighted materials can be used and distributed. The movie studios who own copyrights are the only parties who are authorized to license sites to display movies for protection of their intellectual properties. Antitrust laws – these laws promote or maintain market competition by regulating anti-competitive conduct by prohibiting agreements or practices that restrict free trade and competition between business. The...

Words: 1397 - Pages: 6

Premium Essay

Becoming a Tenant

...Landlord Becoming a Landlord Owning a rental property is one way of achieving the dream of homeownership. But, in buying a rental property you not only become a new homeowner, you also take on the responsibilities of becoming a landlord. Your rental property is not only your home, but also your business. As a business owner, you must adhere to the laws, rules, and regulations that govern rental housing, and have a clear understanding of appropriate rental rules and practices. Before making the decision to buy a rental property, people should assess the willingness to share the home with others, devote time and hard work to manage your business, make repairs and maintain the property, provide services to your tenants, deal with difficult tenants, become familiar with state, local, and federal laws and regulations regarding landlord and tenant relationships, and consult and hire professionals, such as attorneys or tax preparers. You also should take a realistic look at what you can expect as a landlord the rewards as well as the increased responsibilities of operating a business. Advantages of owning a rental property, there are many good reasons to own a rental property. Some of the benefits that you may expect are, A place of your own owning property gives people the feeling of permanence and involvement in the community. Financial incentives monthly mortgage payments may be more manageable due to rental income. A portion of the rental income also may be used to make repairs...

Words: 769 - Pages: 4

Premium Essay

Netflix Case Study

...1. Netflix is customer intimacy-company. They steer there business practices and model whichever way their customers want them to go. Take for example the potential dividing of the business, customers were so outraged that in the end Hastings and Netflix decided to nix the entire idea and stick with the current business model with some minor tweaks. For Netflix it was autonomous, the reason being that they were already functioning through online rentals and were able to just shift some operation and run the streaming service without any changes to the online DVD rental business. We also see the autonomous nature of the innovation with the Hastings’s potential dividing of the DVD and streaming businesses. They would have been able to separate the two branches into different businesses without changing the entire business. Blockbuster was more of an Operational Excellence value company. They had the contacts, supply chain, and managing that brought about the success of the movie rental business. Their enormous late fees takes away the customer intimacy value. They cared more about how to make the most money rather than how their customers felt. For Blockbuster it was systemic. Because they were a brick and mortar only business for many years when they tried to provide online streaming, the entire company needed to change, which it didn’t. And because they could not adjust they failed in the streaming business. 2. Blockbuster used a corporate alliance strategy and teamed up...

Words: 810 - Pages: 4

Premium Essay

Financial Statement Analysis Case Study

...Financial Statement Analysis Case Study Blockbuster versus Netflix By Deng Pan December 9, 2013 Financial Statement Analysis is one of the mainly used methods to evaluate a business. The Return of Equity (ROE) basically provides a big picture of how the business runs. This ratio can be decomposed to three parts: 1) Profit margin (Net income / Total revenue) 2) Asset turnover (Total revenue / Assets) 3) Leverage ratio (Assets / Equity) These ratios represent the profitability, activity, and solvency of the business respectively, which are the three main categories that analysts look at to approach the coverall value of the business. In this paper, I would follow this method, and give the vertical and horizontal analysis of Blockbuster Video’s and Netflix’s performance through 2001 to 2009. Blockbuster Video Business Introduction Blockbuster started their home movie and video game rental services business in 1985. They originally provided the rental service through owned franchised video rental shops, and later added DVD-by-mail, streaming, video on demand and cinema theater into the service category. The company generates the revenue from the movie and video rental fees. The main costs of the revenue are the store rental expense, and the inventory cost. After experiencing a fast growth in late 1980’s and 1990’s, the company peaked in 2004 with up to 60,000 employees and more than 9,000 stores. [1][2] However, if we look at their books from 2001 to 2009...

Words: 1713 - Pages: 7

Premium Essay

Blockbuster vs Netflix

...Netflix Introduction Blockbuster opened in 1985 and in its “first 20 years of business, the movie rental giant opened 9.100 stores in 25 countries” (Laudon, 2007, p. 121).   Netflix launched in 1998 using a new business model and became Blockbusters biggest threat. The paradigm shift in the rental industry from having to travel to a store and rent a movie to being able to have a movie delivered to your mailbox changed the way people think about media entertainment. The next shift will be having the technology to download movies and shows directly to a television. Analysis Blockbuster and Netflix are using two different information system strategies. Blockbuster, which is a traditional retail store with a physical location focused on creating a market niche.   It used “an automated point-of-sale system” and was able to use “these data to monitor sales and to analyze the demographics, and rental and sales patterns for each store to improve its marketing decisions” (Laudon, 2007, p. 121).   Netflix came onto the scene with a completely different strategy, product differentiation. Emphasizing convenience, they created a system to allow consumers to order movies sent to their customers homes and returned on the individual’s time schedule. Netflix was able to use mass customization and give consumers an individually tailored service without increasing the needed resources. Using the Business Value Chain Model, Netflix has used information technology on almost all of the primary...

Words: 1034 - Pages: 5

Premium Essay

Netflix Case Discussion

...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...

Words: 1380 - Pages: 6