Competition in the Movie Rental Industry in 2008 Netflix...

Competition in the Movie Rental Industry in 2008: Netflix and Blockbuster Battle for Market Leadership Although the corporate strategies implemented by Netflix and Blockbuster have allowed them to become leaders of competitive advantage in the movie rental industry, they sometimes encounter strategic issues that slow down their product and services process. My research of Netflix and Blockbuster will enable me to present a SWOT analysis and recommendations for each company. Netflix, founded in 1997 by Reed Hastings, has achieved its goal of becoming the largest online movie rental service in the world. By the end of 2007, Netflix recorded revenues of $1.2 billion. With a library of 100,000 movie titles and a subscriber base of over†¦show more content†¦Rivalry among industry competitors – Netflix and Blockbuster are in a highly competitive industry. Competitors include merchant retailers, such as Wal-Mart, Best Buy, and Target; video and game store like Hollywood Video, Movie Gallery, and Game Stop; supermarkets, convenient stores such as Publix, and McDonalds. The significant rival is Hollywood Video which offers movie and game rentals (Xie Lin, 2008). Bargaining power of buyers -Buyers are not in concentrated groups and do not buy in large amounts. However, within the entertainment industry, customers have a lot of alternatives and have no switching cost. However the introduction of DVDs, influenced customers to purchase DVDs since the cost is almost the same cost of rentals. This makes buyer power moderate (Xie Lin, 2008). The five forces of competition of the movie rental industry presents little force against a competitor’s market position based on buyer power, supplier power, and new entrant threats. However, threat of substitutes and rivalry among competitors can affect the amount of profits a company will gain and retain. Netflix SWOT Analysis The presence of Netflix and Blockbuster in the movie rental industry has assisted me in developing this analysis of each corporation’s strength, weaknesses, opportunities, and threats as followed: Netflix’s strengths are: Good reputation,Show MoreRelatedBusiness980 Words   |  4 PagesVideo rental industry Definition: Branch of the entertainment industry that engages in renting prerecorded video material for home and personal viewing Significance: After starting in 1979 with a single retail outlet in Los Angeles, the video rental industry boomed during the 1980’s and became a fixture in consumers’ spending during the 1990’s, grossing an average of $1 billion yearly. 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