Competitive Forces in Movie Rental Business

Copyright (c) 2012 Morgan D

Movie rental sale place has become highly competitive as there are many players offering very close services and changing their modes regarding operations to win the customers loyalty. The movie rental business has realized a tremendous overhaul with the needs of the customer becoming a key in the proviso from services. In this business, major players wish Blockbuster and movie gallery have experienced financial disaster because of the strong competition that Netflix has introduced in the industry. The success of any certain in a highly competitive market equivalence the movie rental industry is pegged on how well a firm positions itself plus responds to the changing need of the customers (Doctor, 2004). A gain in the market share and an increase in the turnover would ensure growing and higher return on investments.

The movie industry is characterized by a the high bargaining power of customers. The customers have more demands and require high quality movies at their convenience. Failure by any firm to arrange to the changing consumer needs and declining prices will result in loss of customers. This justifies Netflix strategy of having to bring a wide variety of movies, comprehensive subscription, and software that are easy to use while selecting and streaming movies. This shows that the market is highly competitive in this industry.

Secondly, suppliers also have a higher power in the market. The ties that firms will have among the entertainment video providers determine the variety of movies and Televisie episodes that a firm will have in order to satisfy the varying customers demand. The video producers since have a high bargaining power hence making the industry emulous (Doctor, 2004).

Moreover, the threat of substitute products is important for success to be realized. In high competitive industry, the likelihood that new substitute products can be developed is great. If nought well looked into, a certain which fails, to improve and get better and current movies are likely to lose grip in the market. In this market, there are several new movies and TV episodes that are being introduced in the market and which customers will demand. This threat is thus important for the survival making the industry competitive.

Market Driving Force Several factors are responsible for the change realized in the movie rental industry. These factors must affect negatively or positively in the performance of the firm. The factors are further responsible for the increasing competition in the industry. The first factor that drives change in the industry is technology. Technology is improving day by day and transforms the manner in which the products can be sold oppositely advertised. The wide growth of the internet has contrived online advertising feasible and enables quicker streaming of movies. Movies and TV episodes can be transmitted via mails thereby reducing the sacrifice of diction and that of holding stock. Better software that is developed has also made the accessibility of the movie downloading sites and streams are easy even by those who are not pundits in the field.

Technology has also been instrumental in the quality of time that the movie takes to be delivered. It ensures a wider market growth since firms can sell movies in more countries across the globe unlike the conventional way. Firms that have failed to adopt the best technological means and equipment have lost a share in the bustle (Porter, 1998). Since technology has an impact on the cost incurred in the production of movies and their streaming to customers, firms that become been able to adopt it well have realized improvement return thereby increasing competition.

Another factor that is responsible for change is the demands of customers (Botten, 2009). In business customer is king. Businesses that fail to recognize the changing question of their customers and work healthy to the characteristics of the targeted customers resolution acquire small sales quantity besides shorten profitable margin. This has increased the competitive level in the industry, with the firms adjusting f postage delivery to mail birth to satisfy the customers wan. Streaming of movies directly to the customer has also been a current change in the customer’s requirement.

Lastly, the formation of institutional alliances and partnerships is also a change-causing factor. The show rental industry is characterized by the partnership and strategic alliances that accept been formed with the substance objective of reducing costs and enhancing delivery in order to have strategic positioning. This factor has ditto increased competition by forcing firms to improve on their performance and increase their desire to combine with other stakeholders in the industry. The factor also increases competition because regarding reducing the number of firms in the industry hence increasing rivalry among the firms.

Netflix has many strengths polysyndeton opportunities as compared to threats and weaknesses. The business is therefore, taking and more resources vessel be invested to take advantages of the business opportunity. Strong financial groundwork and better cash flow together with financial distress in competitors firms are benefits to Netflix. In general, a business that fails to adapt to the changing needs of the market and remains rigid will not survive in a highly competitive market. Netflix was able to expand and penetrate the market because of the strategic fits and alliances adopted and developed. Their activities were thus customer driven.