Netflix Case Study Analysis

BSAD449

DB 2

1. How strong are the competitive forces in the movie rental marketplace? Do five-forces analysis to support your answer.

Threat of new competition: Due to costly processes such as obtaining licensing agreements, advertising and marketing and experience in the business field, the level of threat is considerably low.

Threat of substitute products/services: Rental kiosks, movie theatre, paper view television and video rental stores; which are all considerably low threats as many of these substitutes are becoming obsolete or cannot compare to the level of business

Bargaining power of customers: The customer can be considered as to not really having any say because the prices of the provided services are based upon the products.

Bargaining power of suppliers: Movie production companies may apply limits to their licensing agreements in order to strengthen their power, but this can be considered low because of their need to sell their product.

Competitive rivalry: The offering of free online video service through Hulu and Amazon’s offerings of thousands of movies and television shows that may be instantly streamed.

2. What forces are driving changes 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?

The convenience of video on demand and internet streaming are the driving forces in the movie rental industry. I believe these forces are deemed to be favorable when considering competitive intensity and future industry profitability for internet and cable companies that offer VOD- streaming movies directly to in-home devices; as for movie theater’s and rental business- not so much. I believe companies like Netflix will continue to strive in their business because of the convenience of being able to choose between thousands and new and old movies and television shows in the comfort of their home...