Case 6: Netflix

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1. Threat of New Entrants: Because firms like Blockbuster and Redbox are so well known and have a reputable name, I think the threat of new entrants is fairly low. Not to mention, the increasing trend toward subscriptions, internet streaming, and video on demand will most definitely prevent more movie rental firms from entering the marketplace. Threat of Substitute Products: The threat of substitute products is relatively high in the movie rental marketplace as a whole. With firms like Netflix, there is an increasing amount of consumers who pay for a subscription and can stream movies directly to their TV, computer, tablet, or even cell phone. With this subscription, they can also get movies mailed to them via postal service. The price of these subscriptions is significantly cheaper and more convenient than renting a movie, and with Netflix, consumers don’t have to worry about late fees. Bargaining Power of Suppliers: The bargaining power of suppliers is pretty low. Suppliers only have power if they are the only one that carries a specific movie, and chances are, if the movie can’t be bought from one supplier, it can be found fairly easily from another. Bargaining Power of Customers: The bargaining power of buyers is fairly high. Renting movies is a luxury, and if a consumer doesn’t have money to spare, they are going to first use their money on buying necessity items. If they don’t have money to rent movies or pay for a subscription, a consumer may choose to borrow from a friend, or illegally download pirated movies. Furthermore, the customer is free to cancel a subscription at any time. Competitive Rivalry within an Industry: The intensity of competitive rivalry within the movie rental marketplace is very high. Subscription-based movie providers like Netflix, local movie rental stores, video on demand, and cable companies providing movies on exclusive

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