Movie Rental Industry

Movie Rental Industry Netflix and Blockbuster Case analysis Lydia Floyd Strategic Management MGT422 February 28, 2013 Introduction Netflix private-enterprise(a) strategy In gild for Netflix to understand were the business lies as it relates to the competition it is important to seek the slump strategy in order to be and stay war-ridden. The five competitive strategies are * Low- Cost * Broad Differentiation * Best-Cost * Focused niche ground on low cost * Focused niche radixd on differentiation Since each strategy requires totally a different approached my recommendations forget be based on focused niche based on differentiation.Netflix originally offered videodiscs on a fee per DVD basis and eventually branched off into the monthly subscription service business. The companion at one point was forecasted to have over 11. 3 one thousand thousand subscribers by 2009 and 8 million VOD (Video on Demand) customers by 2013. (See Exhibit 1) This show up basically shows how the nu mber of video streaming choices has increased over the medieval several twelvemonths. So the connection is moving in the right steering as far as broaden their differentiation strategy.The contiguous stage shows how Netflix compares to the its main competition and how the companionships net benefit valuation account exceeds a competitor like Blockbuster. The attached SWOT analysis for Netflix mentions or so very important points that are associated with a focused differentiation strategy. The confederacy is staying committed to how to service the niche better than the competition and speaks to the areas that appeal to particularized customers such as offering services that allow subscribers to go hold up to pilot episodes of a television series.This analysis will allow the company to identify areas to concentrate on strategically and to make a lowest diagnosis to where the company stands overall. Strengths * Increasing competition per member viewing is on the * Customer s opting out is the lowest it has ever been. * Clearest stigma identity Watch TV shows & celluloids anytime, anywhere * Netflix has surpassed the competitions in improving personalization of customer choices because of large membership base * Price $7. 99 per month * Exclusive Con ten-spott Of Netflixs top ten TV shows, six are only on Netflix, and not acquirable with competitors. Netflixs DVD subscription service is extremely profitable, with contribution margins around 50%. * go allow customers to go all the way back to the beginning of the showtime season for TV shows Weaknesses * DVD subscriptions are down 8. 47 million subscribers in Q3, 2012 compared to 13. 81 million subscribers 1 year ago. * Brand suffered when the company changed the pricing * It could take three years for a full brand recovery in order to see noticeable difference to profit margins * Streaming subscription contribution margins are much Opportunities International expansion (global) * passe-partout pro ductions offer a way for the company to connect with customer emotions. bon ton will be offering 4 TV series this year that will only be on Netflix * Lack of use of account and credit cards Latin America. * Internet TV. Threats * As Hastings pointed out, With speculative commercialises comes competition There is a clear transition from linear TV to Internet TV and competitors want in on the profits. * Contracts with Disney, Sony, and Universal * Hulu, offers its customers TV shows immediately after they are aired for the first time. Hulu, Amazon, and HBO competitors making much investments in streaming options * United Kingdom is a very competitive The sought after competitive advantage over other movie rental competitors was to deliver compelling customer value and customer gaiety by eliminating the hassle involved in choosing rent and returning movies. take forward the company has 2 primary strategic objective 1 to continue to assume a large DVD subscription business and to billow rapidly to internet based delivery of content as that merchandise segment developed. (Case page c-102) The companys revenue has continued to grow substantially over that last couple of years. The next exhibits show the monetary position from the end of 2006 to end of 2008 going from 996,660 to 1,364,661 with the net income margin universe at 6. 1% by 2008 which shows the company profitability as it relates to expenses and liabilities. The next two slides just give a visual for where Netflix compares to blockbuster as it relates to sales thru 2010Reference Page Thompson , A. University of Alabama 2008 Case 5 Competition in the Movie Rental Industry in 2008 Neflix and Blockbuster battle for market leadership http//beta. fool. com/danielsparks/2012/10/31/netflix-swot-analysis/15522/ http//www. slideshare. net/only1kiku/techindnetflix Gamble, John E. , Strickland, A. J. , & Thompson, Arthur A. , 2010 Crafting and Executing schema McGraw Hill/ Irwin New York New York http //finance. yahoo. com/q? s=NFLX&ql=1