Netflix and Redbox Essay

1159 Words Nov 22nd, 2012 5 Pages
Competition in the Movie Rental Industry: Netflix and Redbox

This analysis will cover the movie rental industry and providing recommendations to Redbox and Netflix. Movie rental industry is rapidly changing much of the once dominant force in movie rental Blockbuster is slowly shifting to the now increasing power house Netflix for most consumers’ movie rental choice. The recommendations for Netflix in order to maintain its dominance in the field is to maintain its low cost in subscription, increase its video library, collaborate with Television providers to incorporate Netflix directly into the Televisions.
Recommendations for Redbox is to maintain its kiosk location, but also move into internet streaming where
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With a large alliance with a certain movie studio Netflix could gain a majority of the rights to distribute certain movies that no one else can gain the right to distribute. Redbox is also a key player in tangible products of DVD which they must purchase rights too as well leading to competition to fight for distribution rights.

Substitution Products
Substation products have very little effect on either Netflix or Redbox as each has a fairly low price point, and other forms of entertainment are usually more expensive. One substitute that may make a difference however is Youtube as you can instantly watch thousands of videos for free. Piracy is also a substitute however is become less of a concern with new technological advances.

Driving Forces
The main driving force in the movie rental business is convenience and the quantity of selection. With Netflix you gain both convenience and selection through the use of its streaming ability you can chose from over hundreds of movies and watch instantly. With Redbox the kiosks are placed in very close proximity to major retailers such as Wal-Mart so when buying groceries, it is easy to go rent a movie from Redbox as it is right there.

Strategic Group Map
Grouping for movie rental industry is based on value (convinces and price), and total

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