Blockbuster

(Block)Busting the Movie Rental Industry

June 1, 2005 BEM 106 Final Paper Zhan Wang Harrison Stein Chin Yeung Siu Ruiqi Rachel Wang

Introduction: Since the 1910s when Charlie Chaplin created his first silent films, movies have been a staple in American culture. For over half a century, “the big screen” was the only link between first released Hollywood films and captivated audiences nationwide. The advent of modern technology like the VHS tape and the DVD, however, has provided viewers with a convenient way of viewing movies, new and old, no longer playing in theaters. In addition, cost considerations have made DVDs and VHS tapes ideal for short-time rentals. Thus these inventions and the terms of their usage have helped to create a movie-rental market within the larger movie industry. Rentals and other theater substitutes have become essential to the movie watching experience because the theater no longer holds the monopoly it once did. While movie theaters are still widely popular, many people dislike the inconvenience of finding a local theater playing the right movie, driving there, and then standing in long lines to buy a ticket. Some do not appreciate the large crowds that often include cell phone talkers and loquacious teenagers. And some simply don’t want to shell out ten dollars to a movie that has the chance of being Ishtar. For whatever reason, there is a large demand for rentals and substitutes from audiences who want to see the movies they missed in theaters, the movies released years ago, and the movies that aren’t quite worth ten bucks

Industry Analysis Product VHS and DVD rentals are the primary product of the rental industry. Currently, customers can rent DVDs online or at rental stores to enjoy a movie at a much cheaper cost than watching it in theaters. DVD rentals give customers much needed flexibility, enabling them to enjoy movies in the comfort of their own homes. VHS rentals were made popular in the 1980s when just-released VHS tapes...