Netflix Competitive Analysis

Competitive Analysis

Blockbuster Inc. and Movie Gallery are currently the two strongest competitors in the market, and therefore pose the biggest threats to Netflix. Amazon, Intelliflicks, and Cleanfilms are all present in the market, but don't possess enough force at this time to be considered a threat to Netflix.

Blockbuster

As of right now, Blockbuster is the biggest competitive threat to Netflix. Blockbuster was incorporated in 1989 in Delaware and is a major renter of home videocassettes, DVDs and video games throughout the Americas, as well as Europe, Asia and Australia. Blockbuster operated about 9,100 stores in the U.S. and 24 other countries, as of Dec. 2004. In the summer of 2004, Blockbuster launched an online rental program that provides a challenging competitive match for Netflix. Blockbuster's online debut was in development for years. In 2002 Blockbuster purchased FilmCaddy, an online movie rental company that became Blockbusters internet channel. Blockbuster completed consumer research, both qualitative and quantitative, and found that online customers preferred a program that would give them both Internet convenience and in-store benefits. Blockbuster decided to incorporate its extensive network of stores to provide a powerful competitive edge. In addition, the chain has said it will invest $170 million this year alone in its online-rental operation. Financially, Blockbuster has revenues of 6.10 billion, with a gross profit of 3.61 billion, and a negative net income of 1.42 billion. Blockbuster currently offers a lower price of $14.99 a month for a comparable unlimited package, allowing three movies out at a time, and also includes two free in-store movie rentals a month. It also offers free shipping and postage, no return dates, and no extended viewing or late fees. Where Blockbuster falls short however, is in their movie selection, offering only 30,000 titles compared to Netflix 45,000.

Movie Gallery

Movie Gallery, Inc. is the third-largest company in the specialty video retail industry based on revenues and the second-largest in the industry based on stores. Movie Gallery owns and operates 2,482 stores located primarily in the rural and secondary markets throughout North America. Since the company's initial public offering in August 1994, Movie Gallery has grown from 97 stores