How strong are the competitive forces in the movie rental marketplace

How strong are the competitive forces in the movie rental marketplace

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1. How strong are the competitive forces in the movie rental marketplace? Do a five forces analysis to support your answer. Threat of entry - The costs of developing a Web site. - Developing order fulfillment capability to equal the short delivery times offered by Netflix and Blockbuster. - The added investment in DVD inventories. - Expenditures for advertising and promotion needed to draw visitors to the web site Competition from substitutes - Acceptable substitutes are readily available and competitively priced (in some cases). - Buyer costs to switch to substitutes are relatively low. - Many consumers are familiar with and comfortable with using substitutes (buying their own movie DVDs, going to movie theaters, and watching movies on TV). - There are many, many entertainment substitutes for watching movies altogether. Rivalry among companies competing in movie rentals Rivalry is centered on such factors as - Price of movie rentals (rented either individually or via a subscription plan); variety of subscription plans to choose from. - Convenience in renting movies (including returning rented DVDs). - Breadth of selection (size and diversity of movie rental library). - Availability of the DVD: of course, DVD availability is not a factor when the rented movie is being streamed over the Internet by video-on-demand providers. - Ease of browsing through all the selections to determine which movies to rent. - Policies and fees (if any) regarding how long the renter can keep the DVD (or view the movie if it is downloaded or rented online). -
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This note was uploaded on 11/16/2011 for the course ECON 101 taught by Professor Peter during the Spring '11 term at FH Wiener Neustadt.

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How strong are the competitive forces in the movie rental marketplace

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