However, couple of years after its inception Netflix introduced a monthly subscription model of flat fee where users can go for unlimited DVD rentals without due dates, late fees, shipping or handling fees, or per title rental fees. The nature of subscription will determine simultaneous DVDs that a user can rent at a time. This model allows users to watch movies as per convenience without the pressure of returning movies till they are ready to watch the next one. For Netflix it means a continuous and steady rental and revenues and a great way to decrease idle shelftime for their movies. The subscription system of Netflix is a web-based system that allows customers to order DVD online using a web service that quickly delivers by mail movies they can keep as long as they want.
Redbox is in a highly competitive environment that is evolving quickly. Redbox differs in this competitive market because it offers consumers convenient, quick, and hassle free access to affordable movies. Compared to Netflix and Blockbuster, Redbox offers more physical locations as well as the lowest price available to rent a DVD or Blu-ray in the very competitive marketplace. Redbox, Netflix, and Blockbuster represent the major market share holders but the movie industry has a bigger connection with direct competitors as well as new entrants and suppliers and other substitutes. New entrants would consist of GameFly and Blockbuster Express.
Low price: Its’ $1 per day rental price is considerably cheaper than the $4.5 rental fee charged by rental movie stores. Customers can rent a movie with no late fees and no membership fees and DVD could be returned at any location. Customers could also purchase new and used movie DVDs for a typical price for previously
As is stated in the article, the company used to have a major competitive advantage in terms of movie selection, where, “…customers could browse through thousands of titles…” (Hitt 106). Now, the entire scope of the market has changed and Blockbuster was much too slow to respond. The recent moves that it has made will surely generate profits, but not enough to sustain the company in the long run, seeing as there is nothing that differentiates Blockbuster’s services from that of its competitors. In order to fully gain lost market share back, the company would have to create some sort of highly innovative way of viewing or renting movies that none of its competitors has already thought of; It would have to be something that is rare, difficult to imitate, not easily substituted, and able to generate above-average returns. Unfortunately, at this point it looks as if none of this will come into fruition because Blockbuster has essentially decided to latch on to other companies, creating a sort of symbiotic relationship where the company feeds off of the success of its competitors.
So, to solve this problem, the movie and television studios decided to do something about this. YouTube has now negotiated with CBS, Universal Music, Lionsgate, Electronic Arts and other media companies who have the copyrights to “claim” their videos and start showing ads alongside them. So now, YouTube and the copyright owners share the revenue. Although even today, not many DVDs are bought because everyone started to watch movies and such online. At least today, the industry got their credit and half of the profit made.
Video and Digital Rental Industry Though video rental companies such as Blockbuster and Hollywood video have been around for generations, the digital age has caught up with the standard rental companies. Digital rentals and online streaming has cut down profits for these types of companies to the point of sending them into bankruptcy and buyouts. With easy access of online content, consumers have chosen to place their entertainment funds into digital rental over the cost of renting films via traditional physical stores. The effects of digital content on the industry have completely changed business models all around. In the past visiting a video rental store and spending time browsing the categories and titles was the norm and almost ritual for some households.
Alexander Johnson English 100 March 29 2013 Professor Dellasanta Movie Cinema and Netflix Online There are different ways to experience a movie but two of them are almost alike, Netflix and Cinemas. The Movie Cinemas are too costly,and Netflix is an at home movie theatre experience that is cheaper. The Movie theaters cost per each movie while netflix you can pay one month of and get all the recent movies that just came out on dvd and television shows you might have missed. As the whole movie theatre experience goes you can basically get that at home with netflix but you just have to connect to a television or a projector. The reliability of a movie loading at home on a laptop or computer is faster and you do not have to wait for the previews to end.
1. Who are the key stakeholders in the Netflix case? Netflix Reed Hasting (CEO of Netflix) Scotts Valley (Founder of Netflix) Marc Randolph (Software developer of Netflix) David Wells (CFO of Netflix) Andy Rendich (CEO of Qwikster) Employees of the Neflix Distributors includes film studios Shareholders Investors Partnership Company Microsoft Xbox 360 Blu-ray, Disc Players Apple Macintosh Customers Subscribers Industry analysts 2. There are several missteps by Netflis in this case. - Misconception of the demand of DVD rental Netflix could not anticipate accurately the demand of the DVD rental. They assumed that unlimited streaming service had more demand than DVD service.
The competitive forces that challenge the television industry include: a. Traditional competitors: Television networks and content producers are continuously devising new, more efficient ways to increase the number of viewers and increase the amount of revenue gained from advertisers. The cable industry that relies on a captured audience of viewers who pay a monthly subscription for television content is most threatened by these changes. b. New market entrants: Web sites like Hulu.com, YouTube.com, Facebook, CBS’s TV.com, and Joost are all new avenues for people wanting to access television content on their own time schedule, with a reduced amount of advertising.
Netflix will give customers more value for the money. Netflix will achieve best-cost status by delivering attractive attributes such as, Better customer service, website features, faster delivery, and offering a wider selection of DVD's at a lower cost than their competitors. Netflix can operate at a level lower than their rivals mainly due to experience and the learning curve. Netflix is incorporating a hybrid of low cost and differentiation targeting value