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1020748
1020748
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power
Firms in other √
industries attempting
substitute products
Supplier bargaining √
power
Threat to new entrants √
attract customers
among competing
prices and they have strength enough to demand for favorable prices and other terms. Customers
in the movie industry are many and they keep growing with time. This is what made Netflix’s
The strength of firms from other industries trying to win buyers over to substitute
products is low because movie watching is clearly preferred over other entertainment activities.
Movies have the advantage that they can be watched either solely or alongside other programs on
television. The other advantage with movies is that they come in different media including DVD
Movie supplier bargaining power is low because the decision by one supplier to decline
supplying materials or services to movie rental firms would not affect as much because there are
multiple alternatives. For example, if those supplying movie rental firms with materials such as
discs on which to write movies or those supplying them with internet services withdraw their
services movie firms would use their large economies of scale to contract other suppliers (Hitt et
al 153).
The possibility of having new entrants in the market of movie business is medium
because potential entrants are not many but at the same time the possibility is significant and
cannot be ignored. This owes to the emergence of new options of providing movie service such
as live internet streaming through the internet. Under the internet movie service provision option,
there exists different alternatives including unlimited and per-view packages (Hitt et al 153).
The results of the movie industry analysis indicate that the industry is a viable venture for
making profits. This is because movies have a ready market owing to the ever-growing clientele
and its diversity in terms of age and taste. A firm could decide to specialize in either children or
adult movie viewership or combine both sections. A movie rental firm could also decide to
combine two modes of service provision like Netflix’s live streaming and order by mail (Hitt et
al 154).
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Movie industry is changing in the modes used tending from order by mail to live internet
streaming. Emergent technologies are one of the driving forces of change in the movie rental
industry. Emergent technologies especially those that use the internet have the capacity to
revolutionize movie viewership. Android applications and personal computers with inbuilt
internet accessory devices have brought about the need to modify the availability of movie rental
services to suit the convenience of users’ devices. Internet options are a significant driving force
of change in the movie industry. Continued changes in the internet service provision have been
aiming at increasing internet speeds and reliability. Increase in internet speeds and reliability will
increase movie viewership thereby increasing profits for the movie rental industry (Hitt et al
154).
The future of the movie industry is tending to the internet especially live streaming.
Whereas there is still a good number of people today who watch movies from television sets,
future possibilities are that cell phones will be the primary medium from which people will
watch movies. This is evident in fast-growing advancement in the technologies such as smart
phone applications that allow users to access internet and watch movies from different sites.
Such changes will call for movie rental firms to build, continually, their capabilities in order to
meet the diverse needs of their viewership. Adapting to new technological advances will at first
cause ‘movie rental firms’ to incur costs characteristic of new product launch followed by a
One of the key success factors in the movie industry is expertise in internet technology.
Movie firms with excellent internet technology will do better than those with without. The brand
images of different movie rental firms will play a key role in their success. For example, initially,
customers had immense trust for Netflix’s brand image but its missteps caused the fallout of
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many of its customers. Companies that will have large economies of scale will compete more
favorably than other companies will. This is because large economies of scale will allow them to
bear costs of adapting to changing customer needs and losses that could result. Movie firms that
will afford their customers the convenience they will need will do better than those that will have
Netflix rented out its movies through both streaming and DVD-by-mail via the same
website and in one price package. Its customers made both orders at ago and they favored its
convenience. In 2011, the management decided to separate the package in order to have order by
mails done on a website and having a price separate from those of the streaming option. The
separation also doubled the price and customers were not happy with the change and expressed
their dissatisfaction by terminating their subscription with Netflix. The CEO’s apology and
clarification did not save Netflix’s negative customer evaluation of the change (Hitt et al 160).
Netflix tried to resort back to its initial strategy but the damage had already happened and
the change could have saved much. It also tried to change the strategy by expanding into other
parts beyond USA but met new challenges. For example, new subscribers in Latin America had
not embraced internet usage as extensively as those in the U.S had and it was not easy to make
them adopt movie viewership without piracy. Netflix’s move to collaborate with television
service providers was effective and helped to secure a sizeable subscription that helps to make up
for the lost customers. The reduction in Netflix’s subscription was because of the pride of the
management that emanated from confidence that drew from the company’s previous profits (Hitt
et al 162).
Works Cited
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