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? There are more than one force that are driving change in the movie industry. Examples are competition from rivals, a major increase in buyers or users of these movie rental businesses, innovation in cost and giving low cost to these movie rentals.
These lead firms to use whatever resource they have as weapon to gain competitive advantage. If you at the rivalry in the online DVD rental industry, you see that it is high. Rivals in this industry carry a feebly differentiated product, which intensifies threats from rivals. In this industry, the cost to switch or change suppliers is very low; making it easier for consumers to have less brand loyalty. They can switch wherever there is a lower cost being offered.
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.
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.
•Price- $7.99 for all you can watch is cheaper than one night out at the movies. With internet ready large screen TV’s dropping like a rock in price, the Netflix experience becomes even more appetizing. •Forward
They have created or made renting of movie very cheap to subscribers and these in a way scares new competitor. And with the huge capital involved in starting up a rental industries, the new entrance would also seem for better delivery options, these has in a way keep competitors away. (c) Buyer Power If a buyer does not want to rent a movie or does not have the money to pay for a subscription, they simply would not order it. Buyers have alternative options, other than going to a movie rental company store or having movies
The idea is that people will rent movies in places they would have to go to anyways, or rent movies after walking past one of the kiosks even if they were not considering to in the first place. The organization’s goal was to rapidly increase the number of kiosk locations so the company could serve more people or even better serve them, as customers could return a DVD to any of the Redbox kiosk, not necessarily the one they got it from. Another key element of the company’s strategy is the partnerships with not only the retail chains but also the movie studios, wholesale distributors and third party retailers, which enabled the company to provide latest releases in the high-traffic locations. Strategy used by Redbox: Low Cost Provider Redbox utilizes a low-cost provider strategy mainly as it focus on not having the expenses that other physical stores have to deal with. As stated before, the company does not have to deal with a lot of employees’ wages and benefits, expensive rent, electrical bills and so many other maintenance expenses associated with keeping a store.
Buyer power is high when the consumer has several choices to choose from, and is low when there are limited options. Competitive advantage is created when it is more attractive to buy from your company instead of the competition. In considering entering the movie rental business, buyer power would be low. This might be different than what most would think when entering the movie rental business, but times have changed and there are not many options available any longer. The next of the five forces is supplier power.
Keeping a movie rented from Redbox for a good period will add up to the tab. Netflix allows the subscriber to keep any movie in the account as long as the monthly fee is paid. In additon, using Netflix allows movies streaming without the hassle of returning any material; on the other hand, Redbox can be cheaper if returning the DVD by the next day is not a problem. In order to achieve video streaming or watching a DVD requires additional equipment. Video streaming devices include computers, SMART TV, SMART Blu-ray, Wii, Playstation, Xbox 360, tablets, and smartphones.
Based on these conclusions the report highlighted a number of issues and recommendations that Amazon.com should take into consideration in the future to enable their strategy to continue to be a worldwide success. These include: 1. Amazon.com need to maintain their focus on providing what is best for the customer and the lowest possible price to ensure continued market growth. 2. The long term success of the firm is partially dependant on the management and employees of the firm.