Movie Rental Marketplace

The competitive forces in the movie rental marketplace are not strong. The reason is that there are only a number of companies that are competing in this industry namely Netflix, Blockbuster and Movie Gallery.

Five-forces analysis

• Rivalry among competing sellers – There are only a few companies that is competing against each other in movie rental marketplace. Main competition are between Netflix, Blockbuster, Movie Gallery and some local vendors

• Buyer – Consumer in this case had very large purchasing power. The main reason is because movie renting can be regarded as something unnecessary. If a buyer reckons that the price to rent a movie is too expensive, they will simply not rent it and substitute watching a movie with some other activities like doing sport, surfing the net and loads more. Apart from that, buyers are presented with a lot of options on the way they watch the movie such as order through mail, streaming online or by subscribing monthly. Buyer power is strong as they are also able to cancel subscription at any time.

• Potential New Entrants – The movie rental industry is not threatened by any potential new entrants. The declining demand in movie renting is not attracting new company to come into the market.

• Suppliers – Suppliers would have significant power in some cases where they are the only that sell a specific movie. However, buyer still has the option of buying the movie when released or wait for it to be air on TV if they don’t mind a bit of wait.

• Substitute products from other industries – This industry are threatened by a strong shift in buyer preference of the way they rent movie. More buyer now prefer to choose movie online and stream directly to their TV at home. There are several companies offering services as such and is posting a huge threat to the traditional movie renting companies.