YouTube, the Internet, and the Future of Movies
The movie industry was face with competitive forces that made the industry unattractive. The threat of substitutes was extremely high. This was because the increased levels of high speed Internet made downloading easier and faster, which made pirating movies easier. This increased the threat of substitutes because consumers were no longer buying movies, the consumers started to download movies and television shows free of charge. Because this option was available fewer consumers paid to watch movies, which helped in the decline of the movie industry. The power of the buyer was high and the power of the seller was low. Because substitutes were available the buyer has all the power and choice where to watch their movies. They could choose either to pay or to download movies illegally. These competitive forces that was faced cause a decline in the movie industry. In order to survive, the movie studios made agreements with sites such as CinemaNow and Movielink to sell movie downloads online. Studios such as Warner Brother made agreements with Guba.com and BitTorrent video downloading sites. The success of ITunes showed studios that consumers were willing to pay for legal digital downloads.
In this case, disruptive technology had a great impact on companies. Disruptive technology is new technology that unexpectedly displaces an established technology. DVDs, paid television and movie shows were the established technology, this was how the companies mentioned made their money. Because downloading movies and television shows became more common and easier to do, these companies were at risk because their old technology was replaced by free online movie downloads. Because of the change in technology, these companies had to develop a strategic plan in order to survive. This caused companies to change from old technology and adapt to the new technology.