Eco 550 Assignment 3
Market Model Patterns of Change Quinton J. Fuller
Dr. E.T. Faux
Managerial Economics 550
February 27, 2013
Movie rental is one of the industries that have undergone complete evolution both in the United States and the other parts of the world. In the past, the movie rental industry was dominated by Blockbuster Video, an American chain of rental stores that offers movies, video games, and other forms media entertainment on a subscription basis. Blockbuster Video has its headquarters in Dallas, Texas. Traditionally, Blockbuster used to be a brick and mortar business model but it has changed to become out-of-home DVD rental kiosks and also has an online rental and sale platform that delivers movies digitally and by mail. The competition in the movie rental industry has grown significantly over the past 5 years. Back when Blockbuster was being started, Hollywood was the only competitor at the national and regional level but today, United States alone has over 500 registered movie rental companies.
Today, due to advancement in technology, movie rental companies are running away from the old methods of video renting and have now embraced internet as a business tool. With internet, movie Rental company are able to rent the videos where a customer pays using online merchants like PayPal and the movie is delivered by mail or in one’s digital television. It is also worth to note that there is increasing number of video machines in major stores across US.
Blockbuster Video in the past enjoyed monopolistic business model as they had a store at every town in US. Despite the fact that the company enjoyed the market alone, the number of stores made the company’s operation costs to rise which went so high to the extent of the company being declared bankrupt on September 23, 2010 (Blockbuster Entertainment Corporation. & Philip Lief Group., 2005). The rise in operation costs was due to the decrease in sales that can be associated with the increase in Internet use
Dr. E.T. Faux
Managerial Economics 550
February 27, 2013
Movie rental is one of the industries that have undergone complete evolution both in the United States and the other parts of the world. In the past, the movie rental industry was dominated by Blockbuster Video, an American chain of rental stores that offers movies, video games, and other forms media entertainment on a subscription basis. Blockbuster Video has its headquarters in Dallas, Texas. Traditionally, Blockbuster used to be a brick and mortar business model but it has changed to become out-of-home DVD rental kiosks and also has an online rental and sale platform that delivers movies digitally and by mail. The competition in the movie rental industry has grown significantly over the past 5 years. Back when Blockbuster was being started, Hollywood was the only competitor at the national and regional level but today, United States alone has over 500 registered movie rental companies.
Today, due to advancement in technology, movie rental companies are running away from the old methods of video renting and have now embraced internet as a business tool. With internet, movie Rental company are able to rent the videos where a customer pays using online merchants like PayPal and the movie is delivered by mail or in one’s digital television. It is also worth to note that there is increasing number of video machines in major stores across US.
Blockbuster Video in the past enjoyed monopolistic business model as they had a store at every town in US. Despite the fact that the company enjoyed the market alone, the number of stores made the company’s operation costs to rise which went so high to the extent of the company being declared bankrupt on September 23, 2010 (Blockbuster Entertainment Corporation. & Philip Lief Group., 2005). The rise in operation costs was due to the decrease in sales that can be associated with the increase in Internet use