...Movie Rental Industry Introduction People born in the early 80’s have the advantage of experiencing the digital age from birth. Today people can go online to Netflix, Blockbuster, or VUDU and rent a movie to stream immediately to their flatscreen HDTV or computer monitor. This is a far contrast from mom and pop VHS video rental stores that emerged in the late seventies and early eighties. The immediate download of videos without having to drive to a brick and mortar building to return the video without incurring late fees is a thing of the past. In 1977 George Atkinson opened the first video rental store in Los Angeles offering videos for rent at $10 a day with a $50 or $100 membership to raise capital[1]. Since that first home theater store George opened, there have been a plethora of mom and pop video rental stores that sprouted up. As video renting became more popular due to the availability of the VHS recorder and the DVD player, larger movie rental chains entered the market with better buying power and lower prices. These larger chains were able to offer rental movies at lower prices with a larger selection[2]. The technology revolution has changed the landscape of video renting. Using Porter’s Five Forces model, entrance into the video rental business will be examined. Technologies used to stream movies, download full length movies, renting movies from store front, and renting from kiosks are the available avenues for the budding entrepreneur. With new...
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...Case Study: Place Your Bets: Netflix Versus the Field in DVD Rentals Answer to the Application Question no.1 : Netflix Core Competency: Providing monthly subscription facilities. Providing a choice to make an order list. Not charging any late fees and customers can keep the products as long as they need. Providing the products to the customers’s hand as early as possible to make sure of cost. effectiveness and time efficiency. Providing “Watch instantly” feature to its eligible customers. Netflix strategic Asset: Is highly experienced business since it launched 1997. Has a collection of 100 000 DVDs. Has a features of personalized video recommendation system based on ratings and reviews. Introduced Set-Top box with the help of Roku Inc. Plan to sell LG brand DVD players for downloading and watching movies on TV through Netflix. Has a brand name and a popular business model that was followed by Walmart and Blockbuster. Some Strategies of Netflix’s business model that hard to imitate: Netflix follows “Cost Leadership Strategy” as it has not charged any addition cost of watching movies instantly for their subscribes. Netflix is also using “Differentiation Strategy” as it has introduced Set Top box and DVD players. Netflix has built a partnership network to Roku Inc. and LG. Those things are really hard to imitate by the competitors of Netflix. Answer to the Application Question no: 2 Some advisable things that...
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...consumer environment. In the past decade, Netflix has revolutionized the art of purchasing for in-home movie viewing providing an online phenomenon for the movie rental business. Netflix company strategy and business model has generated a great amount of success with their huge selection of movies, fast delivery, and excessive marketing campaign. Nevertheless, there are some issues underlying their current success that need to be dealt with for future forecasting. Current Issues/Problems Netflix has seemed to master the DVD rental segment of the movie industry. With their extensive selection based product, fast delivery, and wide subscription plan, there is no limit to their success. However, some questions arise with the subject of product differentiation. What happens when technology advances over time and the product changes? If Netflix concentrates too much on their product focus and ignores the future, then a substitute product will take over only in a matter of time. In our current business environment, product improvements are essential and changing rapidly. If Netflix does not plan out the obsolescence of DVD’s then there is no future. The recent introduction of Blu-ray technology has offered a huge advancement in the production of DVDs. Blu-Ray discs offer more than five times the storage capacity than traditional DVDs, and gives the viewer a full HD experience. By 2008, Blu-Ray Disc sales already increased during the holiday season. A survey that was conducted by DEG (Digital...
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... 1. To begin with, at a first glance, Blockbuster and Netflix may be considered two quite identical firms, operating in the movie rental industry. Therefore, it could be inferred that their business models have many similarities, yet, that is not the case. Their core differences are most obvious on their respective levels of value propositions, resources, and the profit formulas that each company has adopted. Firstly, Netflix’s initial idea behind their business model was to become providers of a better home movie service, which become feasible, in 1997, with the introduction of DVD technology. On the other hand, Blockbusters, a well-established company since 1980s, continued to follow the traditional retailing outlet style. A basic difference is the resources of their business models. In 1998, a year after its founding, Netflix boldly adopted a very innovative attitude by launching a website while simultaneously operating online. Thus, Netflix targeted the revolution of new age technology adopters (purchasers of DVD players), while Blockbuster’s main target group was wider, focusing on anyone who decided to watch a movie, especially last minute. The two companies’ profit formulas are different, with Blockbuster’s following the common charging system (a fixed price for every movie rental and additional charges for delayed returns), whereas Netflix, in its early uprise and foundation of its business model, implemented a subscription...
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...2000 and 2003. Up to 2003, market advances were due to rising penetration of DVD hardware, however, as penetration reaches over 80% of households in 2005, and late hardware adopters purchase less software than early adopters, the market is maturing. Price declines are also contributing to slowed growth presently, but over the long term may be the key to driving demand and growth. DVD sell-through carries majority of the market In 2004 the sell-through category accounted for 63% of the market; DVD sales were 52% of the overall market, while VHS sales were 11%. The rental category makes up the remaining 37% of the entire market, with DVD accounting for 26% and VHS nearly 11%. These figures reflect the shift in the market away from VHS and rentals, and towards DVD and sell-through. As evidence of the strength of DVD, most mass merchandisers have discontinued sales of VHS. Increases in hardware penetration drove sales Hardware ownership remains the primary driver for sales and rentals of video software. VCR penetration has remained static at over 90% of households, while DVD player ownership (market-entry hardware now retails for as little as $40) quadrupled to 39% penetration from 2000-02 and nearly doubled to 72% in 2004. Home theater audio hardware penetration nearly doubled between 2001 and 2004, further encouraging home video viewing. Demographic and economic factors positive for market As DVD technology tends to be the domain of younger consumers, the fact that those...
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...Netflix’s New Strategy: Time To Buy? Executive Summary: “Netflix is the world’s largest online DVD movie rental service offering more than one million members access to more than 15,000 titles” (History). In addition to the selection, Netflix provides fast, free delivery. The Company was formed by Reed Hastings and Marc Randolph in 1997. These two men had previous experience in new technologies; Randolph in a computer mail order company called “MicroWarehouse” and Hastings in a company called Pure Software. Randolph also was vice president of Borland International. It was Hastings, using his $700 Million sale of Pure Software that bankrolled the investment. “The DVD format, which can store a high-quality copy of an entire feature film on a single five-inch disc, had been introduced in the spring of the year.” (History). Even with the number of titles limited (less than a thousand at the time), Hastings and Randolph thought the format had the potential to replace video tapes. This was also the same period that the much larger laser disk was coming on the scene. They took the risk that the DVD would out produce other formats and overcome to become the new standard in home video. The company opened on April 14, 1998, with 30 employees and 925 titles for rent. (History) The company initially worked under the business plan of renting and selling DVDs to customers; providing an alternative to the local video store. The case for NetFlix.com (note the upper...
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...news and shows across the United States. Record music and movies in VHS format were also introduced to American homes. With the introduction of the digital format our telecommunications received a tremendous boost, and some of the early media outlets were replaced by more efficient ways of communication. This paper will describe some of the factors behind the recent loss of audience and sales in such media outlets as record music, movies, network TV, DVDs and video games. The introduction of the digital format changed the way we watch TV; high definition made possible to see a picture like never before, like if we were looking through a window. Digitalization allowed for a much better sound and picture quality in CDs and DVDs, which replaced the vinyl disc and the VHS tape. These media, however, continued to evolution so much so that in recent years media outlets such as newspapers, movies, network TV, DVDs and video games became obsolete. Digital is the key factor. Media outlets such as newspapers, movies, DVDs and video games are more tangible and cost more money to produce. These tangible versions of media are temporary, while digital is a permanent, more efficient way of getting and sharing the message. Media outlets such as newspapers and magazines are printed versions and cost more money to produce. They require tons of paper which is disposable and ends up in the trash, polluting the environment, and cannot be...
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...Marketing Plan. A SWOTT (Strengths, Weaknesses, Opportunities, Threats, and Trends) analysis on the service. 500 word with references Founded in 1997 by Reed Hastings and Marc Randolph, Netflix began offering daily DVD rentals to customers via the mail. Seeking to differentiate itself from its competition, Netflix created partnerships with companies selling a complementary good (i.e.) a DVD player (Chiu, Doroudi, Haussler, Khosla and Maltingly, 2007). Netflix therefore offered free rentals with every DVD player purchased. Presently, Netflix is the world’s largest online movie rental service with more than 20 million members (http://ir.netflix.com/). The company provides not only online movie rental service but subscription service streaming movies and unlimited TV episodes via the internet. The company also offers free in home delivery with no due dates, late fees or return charges. This winning strategy and user friendly service has made Netflix extremely successful over the years. SWOTT Analysis Strengths Market Entry Netflix entered the market for DVD rentals with minimal competition which allowed the company to establish its brand whilst providing a large variety of DVDs to customers at their convenience. Thus customers are able to rent and return DVDs at their convenience without the hassle of rushing to avoid late fees. Partnerships By partnering with stakeholders in the movie, electronic and retailer industries, Netflix was able to promote its services and...
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...- Netflix case: The year is 2013. Netflix's early efforts in Online Video and proprietary content have gone reasonably well. Even so competition is increasing, and activist investors are pressuring Hastings to sell Netflix to another company. Pleased with your prior consulting work, Hastings has hired you to make the case to the board for remaining independent for at least the next five years. Explain why this is the right path. I believe Netflix staying independent for at least the next five years is the right path for the company due to a number of reasons. Firstly, Netflix currently works on so many platforms. The company is doing incredibly well on Microsoft platforms, Google platforms, Apple platforms and on all the TVs. Being independent creates a level of ‘hunger’ for the company. With the emergence of the ‘4K’ technology, Netflix will begin to offer ultrahigh definition video formats, with about twice the resolution of a traditional HDTV. Netflix is also very much content based. For instance, recently, several years after the cancellation of cult favorite “Arrested Development”, the company revived the show for a fourth season. It initially received mixed reviews from critics but has attracted a high number of viewership. The company has also allowed rampage viewing of exclusive content in order to differentiate itself from competitors. Secondly, Netflix always gives the audience what they want so they will subscribe. People always want ways to watch what they...
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...and Marc Randolph. Netflix was an internet-based unlimited rental subscription service for DVDs. The DVD became an evolutionary multimedia player, with the capabilities of storing entire feature-length film, as well as additional information such as subtitles in various languages, making of films and information about the actors, directors and producers. With its high quality and additional features, the new DVD technology was an attractive alternative to its predecessor the videocassette. Since the initial launch, Netflix had experienced substantial success, generating revenue growth of nearly 360% from 1998 to 1999. In doing so, they were able to hire on addition employees of 224. Also, they were able to generate an abundance of titles, in order to ensure consumer satisfaction upon rentals. Although, they have reported a net loss for the previous two years, NetFlix business model has revolutionized the way people will rent movies. They have several opportunities to differential themselves from their competitors, i.e. Blockbuster, Hollywood video or HBO and Cinemax. These differentiating advantages are a single monthly subscription fee ranging from $15.95 to $19.95, the subscriber can rent unlimited amount of DVDs each month. With no late fees, Netflix’s model was built on the assumption that consumers value convenience and will embrace services that make their lives easier. Subscribers will be able to keep the DVD as long as desired. With the most important tactic in attracting...
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...given to the organisation’s financial position, its strategic risks and mitigating strategies to overcome these risks. Edited Extracts from Chartered Institute of Marketing (Case study: June 2011) Contents Introduction 4 Movie and TV programme licensing and distribution 5 Netflix, Inc 6 Netflix – advertising and marketing 7 Netflix’s competitors 7 Top ten movie download services 10 Data protection issues 10 The future for the industry 11 The future for Netflix 12 References 13 Home Entertainment Introduction Total global sales of pre-recorded DVDs and Blu-ray discs of movies, TV shows, pop videos and other content for home use have been falling over recent years. Although the newer technology, Blu-ray, is experiencing growth, its adoption is not fast enough to compensate for the overall decline. According to Strategy Analytics there was a 4% drop in the combined sales of DVDs and Blu-ray discs in 2009...
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...DVD From Wikipedia, the free encyclopedia This article is about the storage format. For the binocular vision condition, see Dissociated vertical deviation. DVD DVD logo.svg DVD.png DVD-R read/write side Media type Optical disc Capacity 4.7 GB (single-sided, single-layer – common) 8.5–8.7 GB (single-sided, double-layer) 9.4 GB (double-sided, single-layer) 17.08 GB (double-sided, double-layer – rare) Read mechanism 650 nm laser, 10.5 Mbit/s (1×) Write mechanism 10.5 Mbit/s (1×) Standard DVD Forum's DVD Books[1][2][3] and DVD+RW Alliance specifications Developed by Philips, Sony, Toshiba and Panasonic Weight 16 g[4] Optical discs General[show] Optical media types[show] Standards[show] See also[show] v t e DVD (sometimes explained as "digital video disc" or "digital versatile disc"[5][6]) is a digital optical disc storage format, invented and developed by Philips, Sony, Toshiba, and Panasonic in 1995. DVDs can be played in many types of players, including DVD players. DVDs offer higher storage capacity than compact discs while having the same dimensions. Pre-recorded DVDs are mass-produced using molding machines that physically stamp data onto the DVD. Such discs are known as DVD-ROM, because data can only be read and not written or erased. Blank recordable DVD discs (DVD-R and DVD+R) can be recorded once using a DVD recorder and then function as a DVD-ROM. Rewritable DVDs (DVD-RW, DVD+RW, and DVD-RAM) can be recorded and erased multiple times. DVDs are...
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...or short Blockbuster stock at the time of the case (i.e., late 1990s)? How about Netflix? Why? Before we could answer the first question, status quo of video rental industry (hereinafter referred to as VRI) in late 90s, has to be introduced. In those days, Blockbuster was dominant company in VRI and video games industry, almost on the top of its glory with $ 4,4b total revenues in 1999 and little less than 40% of market share. They operated over 7,000 stores in the US, more than 2,000 stores in another 28 countries. Customers could choose from 2500 movie titles in every Blockbuster branch. Fee for renting the movie was from $ 3 to $ 4. (Shih, Kaufman, & Spinola, 2009; Blockbusters, 1999). On the other hand, in late 90s Netflix was relatively newly established private company. At the end of 1999, they had over one hundred thousand subscribers. Netflix provided only DVD video rental services, based on online ordering (through Netflix web page) by customers and subsequent mail delivery DVDs by the US postal service. Their total revenue was $ 6,6m. Netflix had only one distribution centrum based in Sunnyvale, California. Every DVD in the US was distributed from this place. Netflix new business model (announced at the beginning 2000) was (in 2013 still is) based on monthly subscription. Every customer could borrow 3 DVDs at the same time and they could pick whatever they like. Given that historical background, it is reasonable preferred long-term stock position for both companies...
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...Netflix Netflix, Inc. is the world's leading DVD (Digital Video Disc) rent-by-mail company. The company has over 1 million subscribers who pay a monthly fee of $19.95 for unlimited rentals, considering they have no more than 3 discs out at one time. The company offers more than 15,000 titles and maintains an inventory of more than 5 million movies. For faster delivery, Netflix has opened more than 20 shipping centers around the United States, and most movies arrive a day or two after ordering them online from the company’s website. More than a third of the publicly traded company is owned by Jay Hoag's Technology Crossover Ventures (Netflix, Inc. - Company Profile, Information, Business Description, History, Background Information on Netflix, Inc., 2012). Netflix was founded in Scotts Valley, California, in August of 1997 by Reed Hastings and Marc Randolph, both veteran "new technology" entrepreneurs, to rent and sell DVDs all over the Internet. Reed and Marc were and are very successful business men who have started from the bottom and have built a business that has climbed the charts. When these two first started the company, they had to experiment with the DVD shipment until they found an easy but yet cheap way of sending out the movies to customers. The firm had to experiment with over 200 packages until they finally found one that was suitable for the company and customers. The package is a clear case with a label and the DVD. This package is shipped out for the cost of...
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...refugees to streaming customers as soon as possible. Quickflix will struggle to wean customers off DVD completely until the NBN reaches critical mass and makes streaming practical for everyone. Even then customers are unlikely to abandon discs until the streaming service offers the same range of movies as the disc service. Of course there's also the fact that the quality of streaming services falls short of discs. With Quickflix you can enjoy home delivered DVD and Blu-ray rentals and instant streaming of movies and hit TV shows to your internet-connected devices. No need to be stuck with long term agreements, set top boxes and hidden costs. 2. Will the video streaming part of Netflix eventually put the DVD part out of business? There’s a reason Netflix has held on to its DVD business for so long: It’s incredibly profitable. Forty-seven cents of every dollar Netflix customers spend on DVD subscription plans are pure profits. The contributing margin of streaming is far lower, largely due to the high costs of content licensing. That’s why Netflix has long used the money it has made from DVDs to build out its streaming biz: Physical discs first financed the growth of streaming in the U.S., and then bankrolled its international expansion into markets like Canada and Latin America. Paradoxically, Netflix’s success in streaming could accelerate the decline of its DVD business. Up until now, some customers have still held on to both plans to fill holes in Netflix’s...
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