Instruction for Case: Netflix’s Business Model and Strategy in Renting Movie and Tv Episode.
Instructions for Analysis of Case 6
1. How strong are the competitive forces in the movie rental marketplace? Do a five forces analysis to support your answer.
Below is an analysis of five forces model of competition in the movie rental industry:
Rivalry among companies competing in movie rentals
Rivalry is centered on such factors as
• Price of movie rentals (rented either individually or via a subscription plan); variety of subscription plans to choose from.
• Convenience in renting movies (including returning rented DVDs).
• Breadth of selection (size and diversity of movie rental library).
• Availability of the DVD
Of course, DVD availability is not a factor when the rented movie is being streamed over the Internet by video-on-demand providers.
• Ease of browsing through all the selections to determine which movies to rent.
• Policies and fees (if any) regarding how long the renter can keep the DVD (or view the movie if it is downloaded or rented online).
• Advertising and promotion—Much of the advertising is being done online in the case of both Blockbuster and Netflix; however, Blockbuster utilizes in-store promotions on a regular basis. But the DVD rental business is not one that is a heavy user of TV, radio, and newspaper advertising on a regular basis.
• Image and reputation.
Most movie rental competitors pursue some version of a differentiation strategy to try to set themselves apart on the basis of one or more competitive factors.
Several factors were working to intensify rivalry among movie rental industry participants:
• All rivals are actively and busily launching fresh promotional initiatives (the free trials and unlimited streaming at Netflix, for example) and engaging in new marketing tactics and market maneuvers (Redbox’s rush to deploy more of its distinctive red kiosks and Blockbuster’s initiatives to reinvent itself) to spur their movie rental revenues and build a loyal customer base. The large number of fresh strategic initiatives on
1. How strong are the competitive forces in the movie rental marketplace? Do a five forces analysis to support your answer.
Below is an analysis of five forces model of competition in the movie rental industry:
Rivalry among companies competing in movie rentals
Rivalry is centered on such factors as
• Price of movie rentals (rented either individually or via a subscription plan); variety of subscription plans to choose from.
• Convenience in renting movies (including returning rented DVDs).
• Breadth of selection (size and diversity of movie rental library).
• Availability of the DVD
Of course, DVD availability is not a factor when the rented movie is being streamed over the Internet by video-on-demand providers.
• Ease of browsing through all the selections to determine which movies to rent.
• Policies and fees (if any) regarding how long the renter can keep the DVD (or view the movie if it is downloaded or rented online).
• Advertising and promotion—Much of the advertising is being done online in the case of both Blockbuster and Netflix; however, Blockbuster utilizes in-store promotions on a regular basis. But the DVD rental business is not one that is a heavy user of TV, radio, and newspaper advertising on a regular basis.
• Image and reputation.
Most movie rental competitors pursue some version of a differentiation strategy to try to set themselves apart on the basis of one or more competitive factors.
Several factors were working to intensify rivalry among movie rental industry participants:
• All rivals are actively and busily launching fresh promotional initiatives (the free trials and unlimited streaming at Netflix, for example) and engaging in new marketing tactics and market maneuvers (Redbox’s rush to deploy more of its distinctive red kiosks and Blockbuster’s initiatives to reinvent itself) to spur their movie rental revenues and build a loyal customer base. The large number of fresh strategic initiatives on