Movie Rental Industry



Movie Rental IndustryVinh TranManagement Information Systems AnalysisNovember 17, 2013Diana HilburnSouthwestern College Professional Studies Movie Rental IndustryThe movie rental industry is constantly evolving to keep up with the demands and trends of the consumers. It used to be that we have to take numerous trips to the movie rental business to comb the shelves and realizing that someone has already rented it. Your disappointment will turn into a compromise with whatever movie is in stock. It is now a thing of the past or has become less common due to new venues of renting movies. Online rental has allowed us to stay in the comfort of our couches and just click away. It is all about the cheapest and most convenient when it comes to the highly competitive movie industry.Buyer PowerWhen it comes to the movie rental industry, the buyer power is especially high due to the numerous numbers of choices available to the consumer. There are multiple sites for streaming or renting a movie nowadays. One can rent online through Netflix, Hulu Plus, iTunes, Amazon, or Vudu. The old-fashion way of going to the local video stores, such as Family Videos and Blockbuster, is always a good experience. Ordering pay-per-view from the ease of our own sanctuary through local cable providers is good for the time crunch or inactive people. There are also multiple forms of non-legal ways to watch a movie without having to pay for it.Supplier PowerAs mentioned earlier, there is an abundance of places to rent a video; hence supplier power is low for the industry. This is the ideal situation for the consumers since it is the customers that determines the price and puts the pressure on the market. In order to stay competitive and stay in business, companies must control costs and increase volume. Keeping fixed costs such as copyrights, equipment, and supplies can be very costly. Having a large volume of renters by lowering the cost is the only way to maintain the competitive edge.SubstitutesThere are many alternatives to viewing a movie in regards to the online format. The high threats of substitute products and services are relatively high due to the technological advances. There are a number of free smart phone and iPhone applications to watch movies or shows for free. YouTube is a very popular application that millions of people use to view many movies each and every day. Pirated movies are also becoming easier and more accessible to the common viewer. Hulu and Crackle are just a few of the free websites out there that offer consumers free viewing of most shows and movies. New Entrants and BarriersThe threat of new entrants is quite high, since it is especially simple to enter the movie rental market. The toughest and most expensive barrier is to acquire the official rights to provide copyrighted movies to the subscriber. Negotiating and obtaining copyrights from movie studios can be tricky since everyone wants to make money from the entertainment industry. Getting a contract from Universal Studios can be complicated but the ease of the online distribution method makes it worthwhile. New web-based corporation can stay in business relatively easy because of the low overhead costs compare to a brick and mortar establishment. Nothing can beat free online movie streaming in this struggling economy. RivalryThe lack of loyalty and no switching cost for the movie renting industry is the result of the extremely high competition among the rivals. Businesses are constantly promoting and cutting prices to attract new customers, hoping to retain the current ones. Each competitor must distinguish themselves by offering something that is unique and appealing to the consumer in order to stay competitive. Oppositions no longer require to develop an enterprise of considerable size to be deemed a threat. The online environment is certainly making competitors better prepare to compete in the renting business.Overview of the IndustryJust like any other industry out there, the rental world is a highly competitive and “cut throat” commerce. If you have the resources and the means, then it is ok to enter the rental business but otherwise it is definitely not a wise choice to enter. Netflix has gained the competitive advantage and technological edge, just like Apple did with the iPod. Being the first innovator and constantly keeping up with the demands of the customers is what it takes to be successful. The rules are continually changing and the playing field has indeed been altered. ConclusionThere are just way too many competitors to enter such a market, especially in the United States. The only way to be successful is to step-up shop globally. There are developing countries that have yet to see such an industry. Being the first to enter the global market will have its advantages and its perils but it is the only way to flourish in such a competitive business. As international affairs continue to develop, awareness may be worth considering on a larger level. Particularly in regards to the convenience of online products and services, many of which can be ordered around the world. ................
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