Blackmagic Design: Porter’s Five Forces Analysis

Sierra Wilson

Plaster School of Business: Missouri Southern State University

MGMT 452: Strategic Management

Dr. Carson

February 26, 2023

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Mr. Petty,

As CEO of Blackmagic Design, you are well aware that it is important to analyze the industry in

which we are a part. A smart way to analyze the camera and film industry is to use Porter’s Five

Forces Model. “According to Porter, the likelihood of firms making profits in a given industry

depends on five factors: (1) barriers to entry and new entry threats, (2) buyer and (3) supplier

bargaining power, (4) threat from substitutes, and (5) the degree of rivalry of competitors in the

industry” (Morris 2019, p. 51). Therefore, the Five Forces Model allows us to see Blackmagic’s

likelihood of making a profit. It is also important in ensuring that our company is able to keep

prices low. As you (Grant Petty) once stated, “Blackmagic design is dedicated to allowing the

highest quality video to be affordable to everyone, so the post production and television industry

can become a truly creative industry” (blackmagicdesign.com).

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Threat of New Entrants

The threat of new entrants is one of the aspects that I have analyzed in evaluating Blackmagic

Design in relation to Porter’s Five Forces. Looking at the threat of new entrants is important for

the business because it helps the company to understand the amount of disruption that could be

caused if new organizations decide to come into the industry. “...the threat of entry will largely

depend on how high entry barriers are and how many organizations are in the industry” (Bruijl

2018, p.2). According to the IBISWorld camera and film report, “the barriers to entry in this

industry are low and steady” (Pigott 2022). Part of the reason that barriers to entry are low is due

to the field having “no licensing agreements, government regulations, or resource constraints that

are significant enough to prevent companies from entering the market” (Pigott 2022). Therefore,

the threat of new entrants is high since the barriers to entry are low; basically, any new company

could enter into this market with few issues. The implications of low barriers to entry are that

“firms in the industry generally make lower profits when the industry is easy to enter” (Morris

2019, p. 63). What is interesting about the current camera and film wholesaling industry is that

“The relative ease of entry into the industry magnifies the threat of disruption…However, the

current rate of entrants is low, suggesting that there is a limited number of new companies that

are potential innovators within the industry” (Pigott 2022). Therefore, Blackmagic is currently in

a good position in the industry.

Threat of Existing Substitutes

The threat of existing substitutes greatly depends on the number of alternative choices. There are

many substitutes for the products that Blackmagic Design sells. However, most existing options

are much more expensive than Blackmagic products (Schifrin 2022). An example of a substitute
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to the Blackmagic Pocket Cinema Camera is Sony’s FX30 (McKnight 2022). Both Blackmagic

and Sony’s offerings are relatively cheap for a cinema-ready camera (around $2,000). Three

other possible substitutes to Blackmagic cameras (and its DaVinci Resolve system) include Ari,

Sony, and Red Digital Cinema cameras (Schifrin 2022, p. 70). Miller’s definition of substitute

products includes “goods or services from outside a given industry that perform similar or the

same functions as a product that the industry produces” (2019, p. 57). One example of a unique

substitute is the iPhone 13. “The iPhone 13, which launched in September 2021, features two

12.0-megapixel cameras that shoot video in 4K, a resolution often used in profession TV and

cinematography” (Pigott 2022). The threat of existing substitutes does not have significant power

over Blackmagic’s current market position.

Power of Suppliers

As we know, Blackmagic manufactures all 209 of its products, which is unheard of in the

hardware business, aside from Samsung or Sony (Schifrin 2022, p. 68). Therefore, Blackmagic

Design is the both the manufacturer and supplier of its merchandise which allows us to retain

control over our product offerings and boost our profit margins, often yielding lower prices for

consumers (Pigott 2022). We are also able to include value-added information, such as hour-long

videos featuring you (Grant Petty), in instructional videos for company products (Forbes 2022).

As the supplier and manufacturer, we dictate the resources and materials that are used in our

cameras. We also have the ability to write our own code for the Da Vinci Resolve system

(Forbes 2022). Basically, being the manufacturer and supplier allows us to not have to deal with

an external entity having control over the resources we need.

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Power of Customers

Our customers have significant power, since they have many alternatives (as mentioned above).

Buyers can use this power to their advantage in trying to bargain with the company. However,

Blackmagic Design enjoys having a low-cost strategy compared to some other cinema camera

makers, which allows the customer to have less power in that regard. A Gui Program News

article states that customers of Blackmagic include Los Angeles-based firm InvisEffects, as well

as Hollywood studio Muse VFX (2019). Other examples of customers are “...YouTubers and

budget-conscious independent filmmakers” (Schifrin 2022, p. 69). Another time that customers

have power is when the switching costs are low. The decision is up to the customers, since they

may be good or bad at learning a new system. Overall, customers of Blackmagic Design have a

relatively large amount of power.

Competition in the Industry

Competition in the camera and film industry is large. According to the IBISWorld report, “This

industry’s largest barrier to entry and success is its high level of competition” (Pigott 2022).

According to craft.co, Blackmagic Design is privately owned, which means that we do not owe

anything to stockholders, and we do not have to report to a board of directors. Being a private

organization also implies that we can innovate quickly without needing to ask for permission

from stockholders, and we can set our own prices. Being privately owned gives Blackmagic

Design a competitive advantage over our competition, especially since “Operators within the

industry compete primarily based on price” (Pigott 2022). The companies in direct competition

to Blackmagic Design include Epson Europe, Avigilon, AverMedia Technologies, Mobotix, and

Ambarella (“Blackmagic Design competitors” 2023) as well as Td Synnex, Fujifilm Holdings,

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and Canon (Piggot 2022). While there is an abundance of competition in the industry, it is not

currently a major threat but should continue to be monitored.

Conclusion

By analyzing Blackmagic Design through the lens of Porter’s Five Forces Model, we are able to

understand our place in the camera and film industry in regard to the new entry threats, buyer

and supplier power, threat of substitutes, and the degree of competition in the industry. The

industry is easy to enter, there is a high degree of rivalry, and both buyers and suppliers are

strong. Blackmagic Design has done well in growing in the field and becoming a low-cost

competitor. Also, being a privately owned firm gives us a competitive advantage which allows us

the ability to be a strong firm in the industry. With that being said, continuing to monitor the

company through Porter’s Five Forces Model will be crucial to ensuring that Blackmagic Design

makes a profit and continues toward the vision of creating a truly creative industry.
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References

Blackmagic Design competitors and similar companies. (2023). Craft. Accessed 20 February

2023. Retrieved from https://craft.co/blackmagic-design/competitors.

Bruijl, Gerard. (7 June 2018). The relevance of Porter’s Five Forces in today’s innovative and

changing business environment. Accessed 20 February 2023. Retrieved from

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3192207.

Leading the creative video revolution. (2023). Blackmagicdesign. Accessed 20 February 2023.

Retrieved from https://www.blackmagicdesign.com/company.

McKnight, Heath. (2022 October 2). The Sony FX30 vs the MBPCC 6K G2 – Which affordable

cinema camera is right for you? No Film School. Accessed 23 February 2023. Retrieved

from https://nofilmschool.com/sony-fx30-or-blackmagic-pocket-cinema-camera-6k-g2

Morris, John. (2019). Strategic Management 2E. Creative Commons.

https://open.oregonstate.education/strategicmanagement2e/front-matter/introduction/

Pigott, Matthew. (2022, July). Camera & film wholesaling in the US (IBISWorld Industry Report

42341). Retrieved from IBISWorld database. Accessed 20 February 2023.

Schifrin, Matt. (April/May 2022). Video Voodoo. Forbes. Accessed 20 February 2023.

Tv and streaming Series Select Blackmagic Design. (2019). GUI Program News, 30(1), N.PAG.