FiveForces

// Industry Description // This is a competitive industry with various companies, such as Redbox, Blockbuster, and Netflix, trying to differentiate themselves from others. Redbox offers low cost movie ($1 per night) and will expand its number of rental kiosks to almost 20,000 by the end of 2010. Netflix offers various rental options such as quick-turnaround mail-order rentals and online rentals. Blockbuster has recently entered online streaming services and installed its own rental kiosks in 2009 resulting in a hybrid physical-mail rental service. Local movie rental stores still operate and compete by offering low rental fees and extended rental periods. Public libraries also offer free video rentals. // Entering the Industry // Our recommendation is to not enter the movie rental business unless an organization focuses on online video renting and convenient services. There would be challenges to offering a significant difference in price from existing competitors as well as reaching the scale of Redbox’s kiosk network. However, a new entrant could focus on offering more convenient services such renting and reserving movies via mobile technologies and social networking sites, high quality video downloads, rental kiosks in high-traffic locations other than grocery stores (such as airports), and offering videos through new mediums (i.e. Xbox, Play Station and Wii).
 * Analysis**
 * Threats of New Entrants **
 * Dominance of existing players in the market (i.e. NetFlix, Redbox, Blockbuster)
 * Cost of entering market is high
 * Rapid changes in technology and new media
 * The reach of services and scale of kiosk networks of existing players
 * Decreasing marginal returns
 * Competitive pricing
 * Netflix patents (mailing and response envelope, renting online, user ratings)


 * Rivalry Among Competitors**
 * Physical stores or physical locations of kiosks
 * Mail ordering
 * On demand streaming
 * Pricing
 * Length of rental periods
 * Zero to minimal late fees
 * Number of available products (i.e.-long wait times for new releases)
 * Quality of movies
 * Download time
 * Threat of Substitute Products or Services**
 * Video on-demand services through cable and satellite operators
 * Illegal movie downloads and video piracy
 * VHS-DVD-BlueRay
 * Free online movie sites like Hulu, Internet Movie Database, YouTube
 * Pay per view
 * Movie Theaters
 * Supplier Power **
 * Households with computers or mobile devices provide a large market for these services
 * The more movies released for rent, the smoother the industry
 * Supplier agreements with companies like Sony Pictures, Universal and MGM
 * Movie studios selling movies to multiple movie rental companies


 * Buyer Power**
 * Different choices available
 * Knowledge of $1 rentals (in some locations)
 * Free online movie sites like Hulu, Internet Movie Database, YouTube
 * Desire for convenience