Running head: Netflix - Competition Netflix - Competition Insert Insert Grade Insert 23 November Netflix Competition in the United States Online competition Netflix has over 20 million subscribers; it is the leading firm in internet subscription services for television shows and movies. Netflix was the first company to break the habit of driving all the way to a store for one to purchase or rent a movie, (noise between stations, 2007) by establishing online subscription. Netflix gives its subscribers the freedom to watch unlimited movies via the internet; however, it faces stiff competition from both the existing competitors and the new entrants.
These include the internet movies and television content providers such as apple’s iTunes, Amazon, Google, and Hulu. com, (Form 10k, 2010 p2). Recently, netflix announced that it had lost 800,000 subscribers to its competitors between June and September. Apple’s iTunes offers an opportunity for customers to buy or rent movies online, while Hulu. com offers a free online viewing of recent television episodes (PBS news hour, 2011). In addition, Blockbuster introduced a total access program that allowed customers to swap a rented movie online, hence attracting more customers (New York Times, 2007).
DirecTV also offers customers a variety of movie channels to subscribe to, and therefore a customer gains access to instant streaming movies through the internet. All these companies pose a great threat and competition to Netflix in their online services. Shops Competition Netflix has also excelled in its shop services whereby, a customer can purchase or rent a movie and even exchange a movie, with no charges on overdue dates. However, Blockbuster has adopted the same strategy whereby, their stores offer movie services, with customers being allowed to exchange movies.
Currently, Blockbuster is attracting netflix customers with an enticing monthly fee of $9.99, with the first month being free (Technology 2011). Despite Blockbuster having numerous rental stores, Netflix has concentrated on the online services; therefore, its stores are relevantly few. Hollywood video was previously facing numerous challenges and in 2010, the management was planning shutting down the remaining stores. The stiff competition has proved unfavorable for the company; therefore, it does not pose as a threat to Netflix (2010).
Movie gallery was once a booming business; however, in 2009, it closed over 2,400 stores and it has faced a second bankruptcy due to the stiff competition from rival firms such as Netflix and Blockbuster (Business 2010). Kiosks Competition Redbox Movie Company has introduced DVD rental machines for $1 a day, a competitive strategy against the Netflix’s DVD mail option (Technology 2011). This cheap option is likely to attract netflix customers (Reuters 2011). Redbox has over 33,000 kiosks countrywide, which are situated in convenient locations such as McDonald’s and wal-mart (Hub pages 2011).
Therefore, Redbox is a rival competitor of Netflix, since it offers cheap and affordable services. Netflix on the other hand has not invented its own vending machine. Moreover, Blockbuster DVD kiosks have over the years being a threat to Netflix, however, with the company’s closure, Netflix is at a competitive advantage. Chiu, et al (2007, p. 4) add that, Netflix has stood the test of time; from the very beginning, it saw the need of customers and decided to reduce the hustle of rushing to the store to return a movie for fear of being charged.
Despite the stiff competition in the movie industry, Netflix has not gone bankrupt compared to blockbuster. It has a competitive advantage, which enables it to maintain its market share, therefore retaining the market leadership. Reference List Business. 2010. Boycott target Movie Gallery shutting down. (Online). Available at: http: //www. onenewsnow. com/Business/Default. aspx? id=1017316 (accessed 23 November 2011). Chiu, R. et al. 2007. Netflix; Entering the Video on Demand Industry through Providing Streaming Movies. (Online). Available at: http: //www. its. caltech. edu/~sdoroudi/Netflix. pdf (accessed 23 November 2011). Form 10K. 2010. Netflix Inc. (Online). Available at: http: //files. shareholder. com/downloads/NFLX/1500335316x0x460274/17454c5b-3088-48c7-957a-b5a83a14cf1b/132054ACL. PDF (accessed 23 November 2011). Hub pages.
2011. Netflix vs. Blockbuster vs. Redbox. (Online). Available at: http: //retrobandit. hubpages. com/hub/Netflix-vs-Blockbuster-vs-Redbox (accessed 23 November 2011). Msnbc. com. 2010. No. 2 rental chain Hollywood Video to close. (Online). Available at: http: //www. msnbc. msn. com/id/37068852/ns/business-us_business/t/no-rental-chain-hollywood-video-close/#. Tsy5K3KHOXY (accessed 23 November 2011). Noise between Stations. (2007). Netflix’s Competitive Advantage. (Online). Available at: http: //noisebetweenstations. com/personal/weblogs/? p=2011 (accessed 23 November 2011). New York times (2007). Stronger competition. (Online). Available at: http: //www. nytimes. com/2007/08/16/business/16netflix. html (accessed 23 November 2011). PBS News hour. 2011. While Netflix stumbles, competitors see new opportunities. (Online). Available at: http: //www. pbs. org/newshour/bb/business/july-dec11/netflix_10-27.html (accessed 23 November 2011). Reuters. 2011. Competitors circle around as Netflix stumbles. (Online).
Available at: http: //www. reuters. com/article/2011/09/23/us-netflix-blockbuster-idUSTRE78L5VT20110923 Technology. 2011. How do the Netflix competitors stack up? (Online). Available at: http: //www. miamiherald. com/2011/07/22/2330597/how-do-the-netflix-competitors. html