One hotly contested and highly competitive industry is the movie rental business. You can rent videos from local video rental stores, you can order pay-per-view from the comfort of your own home, and you can rent videos from the Web at such sites as NetFlix. Using Porter's Five Forces Model, evaluate the relative attractiveness of entering the movie rental business. Is buyer power low or high? Is supplier power low or high? Which substitute products and services are perceived as threats? Can new entrants easily enter the market? What are the barriers to entry? What is the level of rivalry among existing competitors? What is your overall view of the movie rental business? Is it a good or bad industry to enter? Why?
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Redbox has done a good job of competing by using the low price of its product verses it competition. Before redbox an average rental was between 3 and 4 dollars for one or two nights. With redbox lowering the price to one dollar a night and using the convenience of an atm style platform it set the competitors scrambling to match that price point.
I have a different view of the movie industry then most I feel because of the situation I am in as owning my own store for the last ten years. When I first started out we only had vhs tapes and they were very expansive to buy for rental which was offset by the fact that you could not buy new release at Wal-Mart for 30 to 45 days so the customer had to rent from you. With the invention of the dvd the studios began selling to Wal-Mart on the same day it came out at the video store, so now customers could buy it instead of renting it of course the price came down but so did the profits. Then with redbox entering the market the total price point changed. The dollar price point does not leave much room for profit unless there is a large turnover. The small mom and pop stores are hard pressed to compete in this market because they can not buy in volume or sell as many products to make it affordable.
If I was starting my