| RSM251 | Individual Paper #2 | Professor TsaiL0201 | | |

Cun Yu Wang
997531960

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Netflix
Trends in the Industry In the 1990s, most people rented movies on VHS cassettes and many “mom-and-pop” stores were present. The retail stores reserved most of the shelf space for new releases and had limited selection for other movies. “Late fee” was a must for retail rental stores to encourage on time returns and higher stock turnover. However, in the 2000s, many trends shifted. Instead of VHS cassettes, more and more consumers switched over to DVDs. Moreover, with the convenience of the internet, many people found an alternative to retail shopping to shopping online. With the internet it was more convenient and had more selection.
Effect on Consumer Behaviour The trends in the 1990s caused many customers to buy on impulse. If they felt like a movie night, they would drive to the nearest rental shop and rent the newest release. After completing the movie, customers would attempt to return the rented movie on time to prevent “late fees”. However, in the 2000s, consumers were no longer behaving the same way. With more consumers buying DVD players, they required DVD rentals as compared to VHS. Moreover, with bigger selection from the internet, many consumers place a lower value on new releases than before and wanted movies that suited their interest and preference. Many consumers no longer rented movies based on impulse, but preplanned their rentals.
Effect on Competition The trends in the 1990s were good for the competition, mainly Blockbuster. Blockbuster had the geographical advantage with 5194 locations across US. It was said that “70% of the U.S. population lives within a 10 minute drive of Blockbuster”, giving the convenience needed for impulse buyers. With shelf space mainly dedicated for new releases, Blockbuster