Competition in the Movie Rental Industry in 2008: Netflix and Blockbuster Battle for Market Leadership

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Competition in the Movie Rental Industry in 2008: Netflix and Blockbuster Battle for Market Leadership
Although the corporate strategies implemented by Netflix and Blockbuster have allowed them to become leaders of competitive advantage in the movie rental industry, they sometimes encounter strategic issues that slow down their product and services process. My research of Netflix and Blockbuster will enable me to present a SWOT analysis and recommendations for each company.
Netflix, founded in 1997 by Reed Hastings, has achieved its goal of becoming the largest online movie rental service in the world. By the end of 2007, Netflix recorded revenues of $1.2 billion. With a library of 100,000 movie titles and a subscriber base of over
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Netflix’s weaknesses are: Limited to internet rental access, and long waiting period for new releases.
Netflix’s opportunities are: To provide Video on Demand media access, music and movie download, and acquire partnership with gaming industry.
Netflix’s threats are: Low DVD rentals, government regulation of rental distribution, high level of competition, and new movie media technology.
Blockbuster SWOT Analysis
Blockbuster’s strengths are: national and international recognition provides movie and game rentals, various vices for rental access (i.e. stores, kiosk, and internet), offers snacks and beverages for purchase in stores, and accommodates all customer types.
Blockbuster’s weaknesses are: Poor distribution process, increased operating expense, decreased reputation, limited new released video games, unable to compete with game distributors (i.e. GameStop), and constant rental policy changes.
Blockbuster opportunities are: Unlimited access to downloadable media libraries, increased production of brand movie rentals, and partnership with gaming system industry.
Blockbuster’s threats are: New video formats, decreased DVD movie rentals, increased competition, and government regulation of movie rentals.
The SWOT analysis shows that Netflix and Blockbuster have strong strengths and opportunities, however in order to Netflix to maintain its competitive advantage there needs to be an upgrade in innovation and technology that will strengthen their reputation and

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