Type: Analysis
Pages: 3 | Words: 823
Reading Time: 4 Minutes

Netflix has continued to dominate the movie renting business, recording high profits as compared to the other movie renting companies, such as, Blockbuster Company, for example. The movie renting business continues to grow, recording remarkable changes through the years. The various channels of access are through: in-store rentals, mail rentals, VOD rentals, and vending machine rentals. The main focus here is on Netflix’s growth and Blockbuster Company, which is its competitor.

Nature of Movie Renting Industry. The market for film rentals, film sales, video game software, movie and TV episode sales, and movie and TV episode rentals in the US is good and profitable. From the sales analysis of Netflix Company, it is clear that the profits are remarkable as they are rising each year. The company’s net income had increased from $21.6 million in 2004 to $115.8 million in 2009. However, this is slowly being overtaken by streaming online movies and TV episodes. This is seen from the increased number of subscribers at NetFlix from 4.2 million in the year 2008 to 14 million at the end of 2010.

The Upcoming Channel of Accessing Movies and TV Episodes. The growth of the movie rentals industry is neither rising nor declining as such. However, the sources of movies and TV episodes are changing. The number of internet sources has increased, and, therefore, it is easier for households to get movies directly from online websites. Therefore, the popularity of in-store rentals, mail rentals, VOD rentals, and vending machine rentals is slowly declining.

The movie rental industries are aimed at reaching out to as many users as possible. Besides from this, they are aimed at making large profits through increasing their rate of sales. Netflix is able to market its products and services well as compared to its long term competitors.

Strategies to Raise Blockbuster’s Profits. Blockbuster had problems that caused low sales that almost led the company to bankruptcy. It failed to match up to Netflix’s sales mainly because its services to the consumer were not up to the right standards. For it to reach the necessary sales for a good profit, the company should have put in place the following measures:

  • It should have lowered the cost of renting the movies to customers offering discounts to subscribers with a large number of orders.
  • Providing consumers with necessary information on the available movies and TV episodes available and their headings.
  • Availing a comprehensive and easily accessible movie library for the subscribers to ease their search for their products.
  • Providing the latest releases of movies so that the subscribers have more to rent.
  • Expanding their advertising projects that should be aimed at reaching out to new subscribers, therefore, increasing their sales.

Comparison of Netflix’s and Blockbuster’s Sales Strategies. Netflix has higher profits and more subscribers than Blockbuster. This is mainly because its main focus is on providing reliable services to its subscribers and those who attract new ones. Blockbuster, on the other hand, has put in place measures that are not very favorable, but were considered as one of the ways to avoid bankruptcy. For example, in 2010, they increased moving renting prices trying to increase sales. This was not a wise strategy as it would result in driving away subscribers.

Netflix’s Revenues













Competitive Forces in the Movie Renting Industry. Due to the large number of companies in the movie renting industry, each of them has to formulate ways of marketing so that they can keep up with the high competition. Some forces have to be put in place, and, generally, they may include; advertising, product delivery, and favorable product pricing among other enticing strategies (Dess, Lumpkin & Eisner, 2010).

Advertising helps customers keep track of what is new in the market, therefore, assisting them to order what they prefer. It also helps get potential subscribers and new customers. With regard to product delivery, when subscribers get movies delivered to them, they are likely to stick to their service provider. Favorable pricing is likely to attract rational consumers. One is likely to prefer goods with low prices. Therefore, when a movie renting company offers products at good prices, the possibility to get more subscriptions is rising. Equally, discounts on products according to quantity ordered within the movie renting company are likely to retain existing subscribers and get new ones who get to know about the offer.

Future of Movie Renting Industries. In the future, the main channel of accessing movies in the United States will be through online streaming. Therefore, the movie renting companies will have to improve their streaming services as most subscribers want fast access to the movies. This will be facilitated by the advancement in internet access, speed, and reliability. Because of this development, Netflix is keen on advancing its online streaming services to ubscribers. Among its main objectives in early 2010 was to transit its customers to internet subscriptions as the trend was on the rise.

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