Over the years though, Blockbuster has lost it strangle hold over the competition and filed for Chapter 11 bankruptcy protection in September 2010. Blockbuster competition won because they evolved to meet the demands of the current customer. The biggest rival that Blockbuster competed with was Netflix, which was started in 1997 and established its subscription service in 1999. The competitive forces in the movie rental marketplace expanded in the early 90’s with the creation of the DVD movies. Like pervious attempts to move away from VHS tapes, DVDs players were very costly at first.
December 31, 2013 Midterm- Netflix 1. How strong are the competitive forces in the movie rental marketplace? Do a five-forces analysis to support your answer. The competitive forces in the movie rental marketplace are extremely strong and hard for business to keep up with other competitors in the movie marketplace. With many other movie rental businesses in the market, it can make it harder for a business to keep running its business.
In order to finance the purchase of movie theaters and the conversion to sound, the movie studios were buried in debt in the mid to late 20’s to hundreds of millions. As a result, the industry's value and worth plummeted and became doubted by many. By early 1930’s, movie attendance and industry revenues had fallen almost forty percent, and in order to survive, salaries and production costs were cut. Theaters had to resort to lower admission prices and prizes to
2. What forces are driving change in the movie rental industry? Are the combined impacts of these driving forces likely to be favorable or unfavorable in term of their effects on competitive intensity and future industry profitability? Forces driving changes: The economy, changes in technology, cheaper and more convenient alternatives. These forces are most likely going to be unfavorable to the movie rental industry due to the convenience and benefits that come with other packages that are available.
J&J has a strong economy of scale. J&J’s cost efficient production facilities act as deterrents to new entrants looking to enter our consumer segment industry. New entrants are deterred by the amount of capital needed to build new factories capable of mass production. Confronted by J&J’s economy of scale, new entrants are relegated to seek niche market segments. Niche markets can allow for higher margins; however new entrants effectively position their product to a low volume high price model limiting their sales volume.
Video streaming, in relation, only accounts to less than 10% of its contribution margin. Despite that fact, Netflix was set on spinning of its most profitable product until the backlash from customers had its board members rethinking their strategy. This strategy not only confused Wall Street (which ultimately led to its plummeted share price) but left many customers alienated. Another issue is that Redbox, a company that solely relies on offering popular movie content in a cost effective, vending machine-like delivery has undercut Netflix’s DVD sales, and in result, has seen its profit margins dwindle in the last few years. Enter Amazon.
Hollywood vs. History Hollywood often uses American History to make money. Our country is still in its infancy compared to the broad majority of countries around the world. Many movies that are claimed to be “based on a true story” are typically inaccurate, containing dramatic, violent, comedic, or horrific mediums, along with names being changed, details of the actual event augmented, and locations being changed. The inaccurate information that is incorporated within the movie is to obtain a goal to produce big box office revenue and to ensure people will buy tickets and merchandise. However, if changing information to help in the aide to produce a box office hit is necessary, its typically stated within the opening credits or ending credits of the movie.
In 2011 international locations accounted for 25% of sales, since then sales have dropped 22%. International expansion places increased demand on operational, managerial and administrative resources at all levels. ANF started opening huge stores all over Europe and other locations, even though demands in those areas were uncertain. ANF did not fully understand that nature of the international audience. Many of their products are inspired by East Coast tradition which is a slowing trend in international markets because as more and more locations appear, the weaker the trend gets.
Since the availability of many movie rental sites like Netflix that companies must maintain a competitive edge, to remain relevant. If they fail to maintain a competitive advantage, they may become obsolete like the video store. As mentioned earlier, this market is very high threat of substitute products and services. Essentially, any alternative form of entertainment, is an alternative movie rental service. For the scope of the problem, we will focus on in this market alternatives.
| HOW THE STOCK HAS FARED: Stock performance between the day before P&G announced acquisition of Gillette on Jan. 28, 2005 and market close on Feb. 11, 2010. | Five years later, though, things haven't exactly gone as planned. Most of the acquired Gillette businesses have been a drag on P&G's top line, not a boost. Most of Gillette's senior managers (with the notable exception of current P&G Vice Chairman Ed Shirley) have left. P&G's stock has lagged behind key competitors', including Colgate-Palmolive Co. and Unilever, which have beaten P&G 4 to 1 and 3 to 1, respectively, in the stock market.