Netflix 2010 Case Study

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1. How strong are the competitive forces in the movie rental marketplace? Do a five-forces analysis to support your answer.

Five Forces Analysis of Movie Industry Rental:

Rivalry among competing movie rental:

The movie rental industry is intensely competitive and will continue to be in the future. The rivalry between the competitors is to strategize to set them apart from one another. Some marketing maneuvers are prices for rentals, instant DVD’s, promotional products, and its reputation. Netflix, blockbuster, iTunes, Hulu, and many more are among the competitors. They send Blockbuster, Movie gallery and its associated stores to bankruptcy and it even ended with companies closing doors for good.

Google announced their abilities of Google TV. This let households combine their regular TV experience while accessing music, videos, and photos anywhere on the internet. Hulu who was owned by NBC Universal was also a free online video service that offered TV shows, movies from a few cable networks and movie studios. Also offering a larger library as Netflix offered it customers by purchasing plans. The concept was based on promoting “TV everywhere”, having such devices ad iPad, iPod, or smartphones with wifi capability you could watch TV practically anywhere. Changes in 2009 technology required all TV stations to use digital technology.

Promotion is very important between these rivals when you are trying to promote in a highly competitive environment. For instance, Netflix free trials that the company took to make a new tactics paid off for the company. Redbox and Blockbuster put kiosks at every street corner that you could think of to attract customers.

* Price is one of the biggest attractions that a company has to bring consumers to its company. A way that Netflix brought that was giving potential customers 30 day free trials of instant shows, movies, as well as DVD’s shipped to your front door. This gave customers a feel of what Netflix was offering and gave them 30 days to see if they wanted to continue a membership with more offerings than the trial had to offer. They had trials of 4.99 subscriptions for a limited time to bring in customers. This also led the company to the fore front of the rental industry. Redbox charge $1 for a day of DVD rentals.

* Hulu a free movie and cable network online video service. They had the concept of watching cable anywhere. Hulu consisted of t networks popular shows and movies you could watch anywhere from your came systems, iPods, iPad, or smartphones. They also offered customers the option of purchasing a plan where you could reach a larger library as Netflix offered.

* Redbox gave customers the option to rent DVD’s got $1 from kiosks at different areas in your city. They were placed by supermarkets, gas stations, and retail stores such as CVS, Walgreens, and Wal-Mart. Blockbuster also had a kiosk around different areas as Redbox did.

* Netflix gave companies a run for their money. They made stationary movie rental stores to go bankruptcy or go out of business.

* Video on Demand has started to increase as well. Watching movies over the internet instantly to any internet ready computer, gaming console, and wifi enabled televisions. This increased competition between Redbox and Blockbuster which will presumably take away from their plans and they will soon have to market a new plan.

* Conclusion: The movie rental industry is intensely competitive and will continue to be over the next couple of years. Video on Demand will be a bigger household name going over its competitors. Netflix and Google offering “TV everywhere” have already shown that people prefer the online streaming. Thus putting end to retail rental stores such as Blockbuster, Movie Gallery, and its associated store that closed its doors.

Threat of new competition:

In mid 2010, Netflix marketed a plan that would take them to the top movie rental industry. They made it...
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