Case Analysis: Movie Industry Free Essay
1. Why Redbox is a Threat to Netflix’s Future?
Redbox as an online streaming industry has posed serious challenges to Netflix. Compared to Netflix, Redbox is offering its products (video games and movies) at a relatively low price and customers are accessing them with convenience. The company has established its kiosks nationwide hence giving its clients a comfort of access. This enormous market penetration has posed competition to Netflix as Redbox’s mobile apps have made the company to be far ahead in the movie industry. It can be characterized as a direct assault on Netflix as a movie industry leader with Redbox offering streaming movie services at a relatively low price: eight dollars per month. Redbox‘s kiosks are the greatest threat to Netflix since every kiosk holds 630 discs with around 200 various movie titles.
A lot of customers choose Redbox since they pay one dollar per particular day, two dollars for every video game and they can watch and return movies anywhere in Redbox’s kiosks which are everywhere nationwide. Redbox’s kiosks are offering relatively convenient and flexible services since clients can comfortably reserve movies online before visiting a kiosk. Redbox outlets number has grown significantly in a short period since their initial launch when the company had 12 kiosks till now when there are approximately 36,000 kiosks nationwide. This level of expansion is posing threat to Netflix since customers have expediency and ease of movies and video access. Clients have been even given flexibility in watching Redbox’s movies since they can rent them when they are busy, preoccupied with their work, or other things. Compared to Netflix, there is high proportionality that customers are preferring Redbox’s movies and services. The company claims that 68 percent of the US population are living within a few minutes drive of the company’s kiosk. About its growth, Redbox is expanding faster than Netflix. It was started as a new business venture and was experimented with as vending machine for selling various items but after a short time and after proving successful, it was sold to Bellevue. Bellevue joined hands with big companies like Walmart, Kroger, Walgreens, and Kangaroo at the time when the United States was experiencing an economic recession. This gave the company a better opportunity with its lower prices since now customers saw one dollar Redbox rent as luck. It was a serious threat to Netflix which was offering its services at the relatively high price of fifteen dollars per month.
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Compared to Netflix which has experienced significant declines in DVDs sales by 43.9%, Redbox has achieved enormous growth within a short period (within 2 years it has accumulated 200 million rentals). Redbox’s partnership with Verizon has enhanced its success in the video streaming industry. These two companies offer limited and affordable products since their new subscription has leveraged their relationship with different digital content providers. Redbox has been relatively remaining ahead of Netflix in terms of its market sales owing to the fact it has been offering a 20 percent price increase from 1 dollar to 1.2 dollars. The market strategies of Redbox have proved to be successful with the rational decisions of avoiding consumer backlash. The company’s stocks have increased by 36 percent in a year when Netflix’s stocks were decreasing by 43 percent.
Netflix should consider taking affirmative measures in a bid of ensuring the quality and convenience of its products. Then it can remain a successful company ahead of Redbox and other industries.
2. How Will New Competition From Digital Content Providers Force Netflix to Alter its Strategy?
Digital downloadable content is trending so fast that with time DVDs will be replaced. Many competitors such as Apple, Hulu, YouTube, Amazon, and Google Play have a crowded movie rental industry hence posing a challenge to Netflix which mostly relies on DVDs movie streaming. For instance, Apple is offering downloadable movies rentals via its iPhones and iTunes store; many people can now access movies with their iPads and Apple TVs worldwide. Amazon has been offering more than 10,000 titles for a rental fee through its Instants Video service. The reason for it is the fact that after the company partnered with Roku’s Digital Video player it gave consumers the convenience of accessing its movies through the wireless stream to their televisions. Amazon videos can be accessed on Internet, Roku, and Kindle Fire Play Station 3 provided one has connected TVs and Blue-ray players. Amazon has tried to attract consumers since it has come up with a subscription service that provides customers with free two-day shipping for only $79 a year. Netflix has also faced a competitive challenge from Hulu (which was formed by NBCUniversal, Disney-ABC, and Fox Entertainment). It provides easy access to its movies and traditional broadcast shows through its web-based services. Apart from its free Internet services, Hulu has made it possible for its users to watch TVs program content provided they have connections through gaming consoles, Blue-ray players, set-top boxes, mobile phones, and computers with minimal advertisement. Hulu Plus offers its programs in high definition hence attracting many people. In the year 2012 Paramount Films offered 500 films to the YouTube and Google Play rental services. Paramount also joined forces with 20th Century Fox and YouTube to be selling their films through Apple’s iTunes. Google Play is now offering its users high-definition movies that are easily accessible through Android apps. Users of Google Play can even purchase e-books that can be read on their tablets, e-readers, Web, and their phones.
Initially, Netflix had a great market advantage before technological advancement, however, a lot of companies have aggressively flooded the market with their digital products. Therefore, Netflix has to come up with innovations that are relevant in today’s movie streaming industry. If only the company wants to remain in I online industry, it has to come up with new market strategies.
3. New Opportunities in Movie Streaming Business
There is a wide range of opportunities in the movie business with new multi-platform streaming capability. Since customers can now access movies online, movie industries have to shift their attention to online streaming. There is also a high potential for growth for movie industries that use different platforms for movie streaming such as televisions, iPhones, iPads, and Xboxes. As technology progresses, Netflix will face serious competitive business challenges since the popularity of DVDs is declining. As a counteractive measure, the company has to phase out the DVD mail business since it is no longer profitable. Netflix Company has to adopt better market strategies that will help it outdo companies like Amazon, Google Play, and Apple that have continued to rocket the streaming industries. However, the future is bright for Netflix since its competitive edge has been positive in terms of online videos and video rentals. Additionally, the decisive role of developing content provides a clear demonstration that it is successfully adapting to current market opportunities.
