Definition Essay I love watching movies like most people do. But is going to the movies better than renting movies? I prefer renting movies and watching them at home. Going to the movies is a never-ending hassle because of the parking, prices and uncomfortable atmosphere. So most of the bigger movie theaters are usually located in major shopping mall an area which creates one of the biggest issues with going to the movies, the parking.
MGMT 211 – Management Foundations Case Analysis #1 Netflix Los Gatos, California CEO Reed Hastings started Netflix in 1997 after becoming angry about paying Blockbuster Video $40 for a late return of Apollo 13. Hastings and Netflix struck back with flat monthly fees for unlimited DVDs rentals, easy home delivery and returns via prepaid postage envelopes, and no late fees, which let customers keep DVDs as long as they wanted. Blockbuster, which earned up to $800 million annually from late returns, was slow to respond and lost customers in droves. When Blockbuster, Amazon, and Walmart started their own mail-delivery video rentals, Hastings recognized that Netflix was in competition with “the biggest rental company, the biggest e-commerce company, and the biggest company, period.” With investors expecting it to fail, Netflix’s stock price dropped precipitously to $2.50 a share. But with an average subscriber cost of just $4 a month compared to an average subscriber fee of $15, Netflix, unlike its competitors, made money from each customer.
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.
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.
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.
They assumed that unlimited streaming service had more demand than DVD service. Before Netflix changed its pricing structure, the customers paid $7.99 per month for unlimited online streaming plan, or an additional $2 per month for the DVD-by-mail service. So the total cost for the user who wish to use both service unlimited online streaming and the DVD-by-email was $9.99 per month. However, this pricing was not financially sensible for the company because of the misconception of the demand of DVD rental service. Therefore, Netflix set the price $7.99 for both service unlimited online movies and unlimited mail-order DVDs respectively.
Which means more money can be spent on players. Sure ticket prices and memorabilia will skyrocket, but people come to see their favorite players. A non-caring position is sometimes taken, such as, “it’s the owners money;let them shovel it out if they want.” Dominant teams sell tickets. How often did a Boston Celtics game get sold out last year? By mid-season the fans were booing their own home team.
Analyze Netflix business model How does Netflix change the video distribution industry? Netflix, headquartered in Los Gatos California was founded by Reed Hastings and Marc Randolph. The core of Netflix business model is deeply rooted in the reason that inspired its creation. Hastings had to pay $40 as late charges for a rented copy of Apollo 13 movie which was then the popular pay-per-rental system that would charge late fees. 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.
EXTERNAL ENVIRONMENT ANALYSIS • • • • Situational Analysis Industry Analysis Competitive Environment Analysis Environment Trends SITUATIONAL ANALYSIS • Politics/Legal – Governmental regulation – little regulation – Supplier agreement – start rent DVD after 28 day DVD in market. • Socio-cultural – Changing in customers’ buying behavior – Changing in customers’ watching method – Customers’ perspective about price, time and quality of services. SITUATIONAL ANALYSIS cont.. • Technological – VHS to DVD - become one of the companies adapt this technology – Changing to stream online – digital age – Wide-spread in gadgets market – PSP, Blue Rays Player and others • Demographic – Increase world population – 6.1 billion in 2000 to 7.2 billion in 2015 SITUATIONAL ANALYSIS cont.. • Economic – Customers can watch a movies without paying more. • Socio-cultural – Most of the people like to watching movies – Changing customers buying behavior INDUSTRY ANALYSIS • Threat of new entrants/ barriers to entry – low entry barriers – Industry leader – Customer loyalty is weak • Power of suppliers – Suppliers own content that company needs. – Licensing deals – Legal issues INDUSTRY ANALYSIS cont.. • Power of Buyer – Customer loyalty is weak (price changes) – Majority of revenue is from customers • Product Substitutes – Alternative methods of receiving content – On demand, purchasing INDUSTRY ANALYSIS cont.. • Intensity of rivalry among competitors – Many competitor – Few emerging market
Basically, what experience they can expect while watching a movie at the theater and while watching a movie at home. Theaters are located in or around town so it would be a choice of what means of travel to use to get to the theater or which movie store to get a movie from if you cannot stream a movie online through the internet. In this new age getting a movie rental can be done online through several devices, through a person’s television, dvd player, or computer to name a few. Theaters cost per ticket for each individual that is viewing, renting or streaming a movie only cost per movie that is to be viewed. The theater offers discounted prices for tickets available to military members, senior citizens, and even for people viewing a movie during certain hours of the day.