Porter's Five Forces Model Applied to the Movie Rental Industry

674 Words Jan 1st, 2014 3 Pages
Tarleton State University

Porter’s Five Forces Model Applied to the Movie Rental Industry

Alex Boogren

CIS-450

Holland

Reviewed by: Kelsey Stone

2/18/2013

Porter’s Five Forces Model Applied to the Movie Rental Industry

The movie rental industry has undergone a massive overhaul throughout the past decade in the way that they do business. Consumers now have the freedom to choose multiple different ways to rent their movies, whether it is from an online streaming service such as Amazon Prime, a movie rental kiosk like Redbox, or an old fashioned brick and mortar store. Because of this, I believe that the movie rental industry would be interesting to evaluate using the Porter’s Five Forces Model.
Buyer power in the
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However, the threat of a substitute service is a very real thing. Netflix, Redbox, Amazon Prime, Hulu, etc. are all services that could be substituted for one another. The relatively moderate threat of substitute products or services for this industry slightly increases its attractiveness.
The threat of new competition entering the movie rental industry is low at this point in time. The threat of new competition is low because there are several barriers that will deter most people from entering this industry. The biggest barrier entering the movie rental industry would be the startup costs involved from acquiring enough inventories to compete with the big players in the market. Software costs would also be huge barrier to new competition attempting to enter the online streaming sector of the market. The movie rental industry gets a boost in attractiveness due to the low threat of new competition entering the market.
The final force that will be evaluated is the intensity of competition, which simply means how competitive the businesses in this industry are. Right now, many companies are competing for a limited number of buyers, so competition is fierce. Back in the day of only brick and mortar movie rental businesses, competition seemed to be much more relaxed compared to the way it is now. The flood of new movie rental services has markedly increased the rivalry between businesses since they are all contending for a smaller piece…