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Competition Case - Netflix and Blockbuster

Essay by   •  June 2, 2011  •  Essay  •  514 Words (3 Pages)  •  2,129 Views

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* Rivalry- For both Netflix and blockbuster the threat for new competing sellers are low to due high start up cost, and the reputation that both companies already have in the industry.

* New Entrants- The technology now available can now allow other companies to enter, example, pay per view, on demand video. For Netflix, they are the leader in the online rental industry so the threat for new entrants is low versus Blockbuster the threat is much higher.

* Substitutes- Other companies are trying but both Netflix and blockbuster are accepted to the public, so the threat will be low. Netflix has an attractive business strategy-allowing customer to be loyal. Blockbuster has been around for some time, using its brand loyalty to maintain the remaining customers.

* Buyers- The competitive aspect of this industry from the bargaining power gives it some advantages. The threat is low for Netflix, while for Blockbuster it is high due to the substitute products and the convenience of other companies.

* Suppliers- The evolution of technology is always changing and new products are always available, so Netflix took advantage and now the supplier threat is low while the supplier threat is high/medium for blockbuster because they decided to use another approach and was much slower to react to the changes.

2. The new technology available is having a high impact of movie rental industry, allowing videos to stream instantly onto a TV or portable device. Economically it has become cheaper and more affordable for customers. In addition, the convenience level has increased allowing easy access. All these forces of change will have a positive impact and the marketing trend will increase for movie rentals.

3. Netflix main goal was to have the greatest customer satisfaction by eliminating the hassle, making it easier for choosing, renting, and returning movies. They have an easy way to pick movies online, no due dates, or late fees, and a convenient way of returning movies. Netflix also has a large variety of movies. Blockbuster on the other hand decided to become the leading source for movies and video games. They also expanded their in-store movie and video games to hardware, software, and accessories.


* Strengths- Blockbuster has many in-store locations, allowing customers to return, rent, and track the customer's preferences. They have In-store video game rentals.

* Weaknesses- Blockbuster did not have the ability to keep up with its competition by trying to go online. The overhead of keeping different store locations versus a warehouse is very costly. Blockbuster lack of availability of different movie titles.

* Opportunities- The most important is trying to expand the movie rental through a mail order system, and trying to expand by going online. Blockbuster can have the ability to do online streaming of video games, music, and video.

* Threats-



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