Movie Pass

The first new service is aimed at rewarding loyal customers by offering them a selection of memberships that would make their regular movie going experiences more pleasurable and inviting. The membership would consist of four tiers consisting of silver, gold, platinum, and diamond. The benefits inferred upon membership into the various tiers will include:

There are basically six technology-driven threats to the traditional rental model: (1) Cable companies offering Video on Demand (VOD), (2) online movie downloads, (3) online movie rentals, (4) disposable DVDs, (5) illegal movie downloads and DVD copying, and (6) Digital (or Personal) video recorders (DVR). (Jackson) One could also consider traditional pay-per-view (PPV) as and additional substitute. Only one of these seven, online movie rentals has proven to be a major competitive substitute for traditional movie rentals. All other areas, except traditional pay-per-view are expanding rapidly, but some face significant challenges.

The downturn of the economy has taken away many peoples disposable income and Netflix’s limited online library may have caused customers to question if it was worth it or not.

Blockbuster Entertainment, Inc. was once a highly successful and profitable brick and mortar home movie and video game rental store. At its peak in 2004, Blockbuster had up to 60,000 employees and more than 9,000 stores. The idea behind Netflix came from an unsatisfied, embarrassed customer of Blockbuster, Mr. Reed Hastings, now CEO of Netflix, paid a $40 late fee because he returned the movie Apollo 13 six weeks later (Zarafshar, 2013). He began to contemplate ingeniously about a notion to change the movie-leasing pattern into a more pioneering industry. In 1997 Netflix was started as a DVD rental-by-mail business without subscriptions. In 1999, taking a stride additional in the direction of evolving the industry, Hastings began the subscription-based business mode based on renting DVDs by mail with plans reliant on the quantity of titles taken at a time. Netflix put forward 120,000 titles for limitless monthly DVD rental with free shipping no late and per title fees. Since that time Netflix has become one of the most popular subscription services in the world, and is now valued at over $28 billion and steadily increasing. What factors contributed to the success and failure of these two companies?

When AMC Theatres started the MovieWatchers Rewards program, it was a first of its kind free program to give frequent patrons perks for being loyal customers. The chain discontinued the program in 2011 and in its place started the paid AMC Stubs program.

1. Netflix’s original marketing strategy offered several flat-rate monthly subscription options; in which, members could stream movies and shows via the Internet or have disks sent to their homes in a pre-paid and pre-addressed envelope. Free from the despair of due dates and late fees, members could keep, up to, eight movies at a time. Upon the return of a disk, Netflix would automatically mail out the next movie from the customer’s video queue. Members were able to change and update their queues as frequently as they liked. The sheer innovation of Netflix’s strategy encouraged several competitors to enter the market to compete directly,

Instead of various local chain stores, Netflix operated from a single virtual store that offered customers new rental features. The web services platform utilized customization and a user-friendly design to facilitate renting movies. “CineMatch,” a proprietary developed application, tailored the virtual store to each subscriber. This technology produced customized rental suggestions for customers while maximizing potential inventory. “CineMatch” incorporated a subscriber rating system of past rentals to generate more efficient and personalized future recommendations. The web-based services also improved selection through the ability to easily browse Netflix’s large inventory catalog and add selections to a personalized “Queue,” which lists movies customers have scheduled to receive. Instead of being forced to navigate through the traditional genre and alphabetized catalog, Netflix offered an easier movie selection process. Besides the selection efficiencies, members have the ability to share ratings, reviews, and movie selections with each other through the “Community” feature.

Concession sales and ticket sales are the two biggest sources of revenue for a movie theater. Both continue to increase in cost to the consumers and may have reached a price point that is starting

Blockbuster also has a popular program called Rewards and members pay a small fee yearly, which keeps track of customer rentals. Customers receive free rentals when they purchase a number of rentals on certain days and through the month. The Nutley store also offers 30 rentals in a month and the customer must rent the free rental per day for the month.

Under the new leadership of John Antioco, Blockbuster refocused on strengthen its video rental business which led to a brief increase in profits (Davis & Higgins, 2013). However, it was during Antioco’s leadership that Blockbuster would receive crushing blows to its reputation amongst the minds of consumers. At this time, Blockbuster’s current business model relied heavily on gaining revenue from charging consumers late fees (Satell, 2014). Late fees alone amounted to up to $300 million of the company’s operating income (Davis & Higgins, 2013). The company had been earning a large profit from the penalizing of its customers. This at one point was an understood risk, however in the midst of rebranding, Blockbuster introduced the “No Late Fees” campaign. The ambiguity surrounding the newest campaign to offset Blockbuster’s competition led to multiple lawsuits against the company that would later be settled with Blockbuster assuming responsibility (Almeida, 2011). It is during this period that many of Blockbuster’s patrons began to distrust the video rental chain which led to a decline in customer satisfaction as well as a switch in consumer

The CineMatch software also allows Netflix to maximize their library utilization. Increasing the demand for older or smaller market movies not only assists Netflix in better meeting subscriber demand but also decreases the payout of revenue sharing that often accompanies the most popular new releases. Netflix has revenue sharing contracts with most of the major movie studios. Under the agreements the firm pays a percentage of the subscription fees for a predetermined period of time in exchange for receiving the most popular titles at a considerably discount over the whole sale price (Netflix SEC).

Netflix previously had a plan in which it included both online streaming, as well as unlimited DVDs by mail, 4 out at a time, for $9.99 a month (Gregory, 2011). However, in July of 2011, CEO, Reed Hastings, announced that they were going to separate the online and DVDs plan and charge

Some theaters give people and option to go movie hopping where one can see as many movies

✓ There is a nominal onetime membership fee of USD 2 which is immediately reimbursed to the customer on first enrollment and first movie purchase- both equivalents to USD 1.1 each.

Netflix, an addictive media streaming concept born in August of 1997, has revolutionized the way in which we view films and television series. The appealing and amusing service wholly encompasses a wide range of aspects such as its own plethora of original series, video-on-demand titles, rentable DVDs, and even offers its users the ability to watch and live stream content from anywhere they please. Starting at merely $7.99 a month, the streaming service is affordable, accessible, and an overall satisfactory form of entertainment that has expanded worldwide and is continuing to reach a vast majority, all while impacting society is a multitude of negative and positive ways.