The Movie Rental Industry
The majority of today’s market research points toward the steady decline in the movie rental industry, with many companies having filed for bankruptcy within the last few years. A number of factors are to blame, chief among them technological advances, not moving with the times and a lack of demand. While the case study highlights Blockbuster’s shortcomings, it inadvertently brings to light the opportunities that arise and the pitfalls to avoid.
Blockbuster initially operated using a traditional approach through its various physical stores nationwide. A few years after its inception, Blockbuster had 787 stores and franchised 795 stores. Cable TV and DVDs were eventually introduced and changes in the rental pattern occurred, …show more content…
This benefited both parties as a customer would be more likely to return. In addition, other businesses decided to thrive on what the competition was lacking. Family Video partnered with ‘Marco’s Pizza’ to give their customers the convenience of ordering a pizza with their movie. There are plenty of companies that movie rental stores could partner with that could benefit both parties.
Taking advantage of the competition’s main weaknesses
One of Netflix and Redbox’s biggest disadvantages is that their movie libraries are limited. Most classics and foreign-language titles are not readily available, with consumers being forced to look for alternative sources. Focusing on curating a collecting of movies that are hard-to-find ensures that clienteles will return to the store.
Another disadvantage is that Netflix relies on a strong internet connection, which, except for a few first-world countries, is hard to come by. This results in a lot of lag on the streaming device and buffering which is quite an inconvenience when it occurs at 5-minute intervals during a movie. Having a physical copy of the movie ensures a hassle-free movie-watching …show more content…
When DVDs were introduced, as stated in the case study, discount chains and Wal-Mart, Best Buy and Target were quick to catch on. Although the profit margin was and is still much lower than a rental, it still meant a source of income existed.
Further market analysis would need to be done to uncover the right demographic. A great example of this would be Virgin Megastores found ed by Sir Richard Branson in the late 70s. After expanding to 4 continents and subsequently filing for bankruptcy, Virgin Megastores in the Middle East was acquired by Azadea Group after music and DVD sales were noticed to not have been as badly affected. Today, Virgin Megastores has a new store opening at the rate of one store annually in the Middle East, with 12 branches in the UAE alone.
Catering to the minority
Netflix introduced a new system that changed the rental business by creating the new mail to order approach and eventually online streaming. They were able to reach their audience nationwide, without the necessity of operating from a physical store. The advantage that Netflix offers to its audience is convenience. Rather than having to physically go to a store to either rent or return a movie at a Blockbuster store, a Netflix user has the ability to receive theirs through mail at the comfort of their own