Netflix Case

1076 words 5 pages
Case 6 Netflix’s Business Model and Strategy in Renting Movies and TV Episodes

1. How strong are the competitive forces in the movie rental marketplace? Do a five-force analysis to support your answer.

Currently the competitive forces in the movie rental marketplace are not very strong. There are not very many players seeking to gain share in the market. The only competitors that come to mind when thinking of the movie rental marketplace are Netflix, Blockbuster and Red box. The evolution of technology has allowed many people to stream movies from online at no charge, for most and without any required subscription. Places like Blockbuster and Movie Stop are not as vivid as they have been in previous years due to the market shifting
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Currently I catch all my favorite shows and movies on my ipad which is usually free or on the cable bill I already pay monthly.

3. What does your strategic group map of this industry look like? How attractively is Netflix positioned on the map? Why?

My strategic group map would tell me that the two competitive factors are price and availability but would have to add that convenience would be factored in as well. Competitors would include local cable/satellite providers, vendors such as Blockbuster, Netflix, and Redbox as well as local vendors.

Currently Netflix is best positioned. Although they don’t have stores, they offer free trials; such is a great marketing technique because most consumers forget to cancel them. Consumers have the option of mail orders, streaming online, which can be done on the go. Netflix also allows customers to steam videos through gaming systems, such as PS3 with a subscription. All inclusive Netflix has an edge over the competition, considering the prices are competitive and the services are convenient.

4. What key factors will determine a company’s success in the movie rental industry in the next 3-5 years?

• Fuel Cost- if the cost of fuel continues to rise, there will be a domino effect on the price of mailing movies, such will result in a price increase for mail orders.
• Economy – whether or not people have the extra money to spend on leisure activities
• Availability- which channel receives


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