Business Strategy Class, Group Assigned a Case

¶ … business strategy class, group assigned a case study. It a 12-20-page paper, responsibility write 4 pages, part write. Here teacher instruction: "A case study assigned group. Additionally a rubric showing material case study included.

Competitor analysis:

Strengths, weaknesses, and strategies of key industry rivals

Evaluate and discuss situation

When Netflix originally broke into the movie rental market, its main rival was Blockbuster, Movie Gallery and independent video rental companies. Netflix offered what was then considered a unique business model of blending a subscription service in which customers would receive DVDs in the mail coupled with streaming content. The awkwardness of the free-standing Blockbuster store has been replaced with a marketplace of competitors offering different ways to more conveniently access films at home. By 2010, Netflix's list of competitors had expanded. For example, Redbox 'kiosk' service did not bring DVDs to customer's doors, but it did allow them to access films very easily from widely available red boxes located in stores. Direct TV and EchoStar enabled customers to access films without leaving their living room chairs. Telecommunication providers, online retailers like Amazon, online rental websites, and even free sources such as YouTube all offered ways in which consumers could watch a wider array of movies at lower cost than the previous generation's rental model.

Competitor analysis of strengths, weaknesses, and strategies of key industries rivals

As a rival, Blockbuster's name is extremely tarnished, and associated with a much older form of accessing films. It is a financially fragile institution, having recently gone through bankruptcy. Its reputation as an online subscription website does not offer any substantial innovation or cost savings, compared with Netflix, and Netflix offers streaming options and DVD rentals simultaneously, making use of two relatively innovative forms of access, in comparison with its rival. The lack of traction of the Blockbuster model is further underlined by the fact that another of Netflix's rivals, Movie Gallery, completely folded.

In contrast to Blockbuster and Movie Gallery, Redbox offers a more substantively unique rental service. With Netflix, a consumer must be a subscriber to obtain access to its DVDs. Redbox is modeled more on the traditional pay-as-you-go plan once favored by Blockbuster. Unlike Blockbuster, rather than offering stand-alone stores, Redbox locates its kiosks conveniently in 7-11s, grocery stores, and other places that many people frequent every day. A consumer can patronize the kiosk impulsively, and the $1-a-day price tag requires less commitment and is less hard on the wallet than subscribing to Netflix. While there is a similarity between the Redbox business model and the outmoded Blockbuster model on one hand, on the other hand Redbox is much cheaper than Blockbuster's $4 rental fees. For consumers who are not dedicated cinephiles and for whom Netflix's more extensive offerings are not particularly attractive, Red Box offers an affordable and easy way to watch popular films at low cost, without making a detour to a specific store.

But for some consumers, the lure of downloading is simply too great and too easy to be forsaken. Amazon On Demand allows consumers to directly download films onto digital devices. This allows consumers to be more selective about the movies they consume, versus paying to gain access to a generalized subscription service. For consumers who are not 'volume users' but want the convenience of downloading not provided by Redbox and a wider selection of films, Amazon may seem like the optimal service. The popularity of the Kindle has further solidified Amazon's reputation as a media portal -- the dominant media portal for many users. Unlike Redbox and conventional DVDs, Amazon on Demand could be streamed directly to handheld devices -- a great plus for time-pressed commuters who wish to entertain themselves on subways and trains, or even people who 'sneak' viewing content at school or work.

Apple provides a similar rival service on its devices to Amazon. Apple TV allows consumers to watch television, movies, and even obtain access to Netflix streaming content. Apple TV's cache partially derives, no doubt, from the image of Apple. Many Apple loyalists will use something just because it is Apple. Apple's service allows viewers to see television shows without commercials for only .99 -- a valuable commodity for consumers pressed for time, and also to gain instant access to many new film releases, faster than Netflix's mailing system. Consumers pay as they go at a higher rate than through Redbox (on average from $2.99-$3.99). For consumers who are wedded to Apple and like to cherry-pick their viewing selections, Apple might seem to be the most viable option. However, Apple is not offering subscription services, so for high-consumption viewers of television and movies, Netflix might still be more attractive.

All of these services are pay-for-viewing services to some degree. However, the Internet has opened up a wealth of other options for consumers who want to view films and television in a convenient fashion. YouTube offers a wide array of video clips uploaded by users. Although it requires a bit more searching, it is possible to see whole films and television programs on YouTube. Occasionally, a user will find him or herself 'blocked out' of a particular film because the content has been removed by request by the copyright holder. But many movie studios and television programs allow their content to be broadcast for free on You Tube, and turn a blind eye in hopes of generating interest in the product.

YouTube is the best-known, but not the only source of free online content. Hulu, for example, offers a wide variety of television programs for free, although it also offers a paid subscription service for $9.95, for premium content which can be delivered to the user's iPhone or iPad. Given that it offers services for free, it may be difficult to convince consumers to pay additional money -- but the ease of downloading to a handheld device is likely to be popular for consumers who do a great deal of traveling, or who are Apple aficionados yet do not like the selection offered through Apple or Amazon.

Identify conclusion that can be drawn from analysis

Ultimately, the competitive war is likely to be waged between subscription services and the pay-as-you-go model. "Which business model for watching movies online will be the winner? Paying upwards of $8 a month for unlimited and instant online access to an older catalog of films and TV shows from a company like Netflix? Or paying $2 to $3 a film for access to newer releases from a service like Amazon's Video on Demand" (Stone 2009). A recent study comparing the user experiences on the two services did not indicate a clear winner. "Frequent movie watchers preferred Netflix and its flat monthly fee, which entitles them to the DVD-by-mail service and access to the online films and TV shows. Others preferred the Amazon service, which resembles pay-per-view, a model they were already familiar with" (Stone 2009).