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The Movie Rental Industry

Please answer and discuss the questions below.

1. What are the various ways that a movie studio can get us to pay money to consume their product (a movie)?

2. One of those ways is to let us rent the movie. What are the various different methods or ways we can RENT a movie? (the case describes at least 4)

3. The way we usually consume movies is different from the way our grandparents did. They went to movie theaters and we usually buy or rent a movie to watch at home or online. Even how and why we rent movies has changed over the years. People used to rent movies by driving to Blockbuster and renting a VHS tape. Things have changed with technology, customer preferences, competition and the internet. What is changing about why and how and where we rent movies?

4. Think about the various 5 forces of the Movie Rental Industry and answer the following questions:
a) Who are the various rivals who compete in the movie rental industry?
b) Who are the customers of the companies in the movie rental industry?
c) Who are the suppliers of the companies in the move rental industry?
d) What are substitute products that we could choose to buy instead of renting a movie?
e) What are some companies that do not currently compete in the movie rental industry, but could choose to become new entrants into this industry?

5. What were Netflix sales in $ (Revenues) in 2011? What was Netflix $ profits (Net Income) in 2011?

Solution Preview

1. What are the various ways that a movie studio can get us to pay money to consume their product (a movie)?
- Movie studios can "ensnare" the customers by offering quality of the movie, HD definition audio and video. Three dimensional (3D) movies are also a magnet. If all of these will not work, companies would usually offers raffle tickets and discounts to encourage people to rent or go to the movies.

2. One of those ways is to let us rent the movie. What are the various different methods or ways we can RENT a movie?
- These are some of those methods: discount, rent two free one, free membership to movie shops, and points system.

3. What is changing about why and how and where we rent movies?

The movie industry had been revolutionized by technology. Drastic changes happened with the advent of the internet. The boom years of the 1970s and the 1990s saw the rise in home movie viewing, thanks to the magic of the videocassette and, later, the VHS. Hanks (2013) noted that during "the 1980s and 1990s, retail video rental stores boomed with Blockbuster video rental chain with more than 4,500 stores making $785 million in profits on $2.4 billion in revenues or a profit margin of over 30 percent". With the coming of the internet in the late 1990s, digital movies replaced analog movies. With this change in technology, subscribers can buy movie access online. The format became popular because digital movies delivered more ...

Solution Summary

This is a discourse on how movie studio entice people to rent and watch movies. It also discusses the five forces of the Movie Rental Industry including sales of Netflix as a movie rental company.

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