Netflix Essay

993 Words4 Pages
1. How strong are the competitive forces in the movie rental marketplace? Do a five-forces analysis to support your answer. Rivalry Among Sellers – Rivalry is very high because of the numerous competitors. This is apparent by the inconsistency in the numbers of Netflix’s customer base. If there is something new that comes out that is more convenient to use, with a cheaper price, customers are going to be more likely to switch to the other option. Buyers – Customers have high buying power because of the many different options that are available to them when acquiring access to a movie. Suppliers – Supplier power is high because they are the ones who determine the timing of when a movie becomes available and set the costs of the movies. Substitutes – Substitutes are a strong force for the company because of all the competitors within the industry. It is so easy now to control an account, one could easily end a subscription and subscribe to another one within a matter of minutes. Barriers to Entry – The barriers to entry are weak. It takes a lot of capital to create the operations that it would be required to compete with these multimillion dollar companies who already in operation. 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. Competitors are going to try and make costs as low as possible in order to attract new customers. Another impact with technology will be the ease of gaining access to pirated movies
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