The competition for consumer film rental dollars is fierce. A 400-employee company, Netflix offers flat rates for DVD and Blu-ray disc rentals by mail. Users can also stream certain movie titles on the Web and view them on their computers and TV s. Netflix has all but won the race against Blockbuster, a company that seemed invincible only a decade ago and traded at around $29 a share. Today, Blockbuster is in trouble; its stock price has slid to the level of penny stocks.
However, Netflix is still competing with Redbox, Amazon, Apple, and the cable companies, all jostling to become the leading provider of online films. After outpacing Blockbuster, Netflix is vying with Apple for leadership in digital streaming services. Experts predict that DVDs and Blu-ray discs will go the way of such dinosaurs as VHS tapes and, eventually, music CDs. Apple's release of the iPad only intensifies the rivalry among the competing streaming services. Netflix CEO Reed Hastings has no plans to stream films to the Apple device.
Using ProQuest, Factiva, LexisNexis, or the Web, find information about the movie rental market and video on demand today. Research the latest trends in the use of DVD/Blu-ray discs and Web streaming. In a report, discuss the future of this important entertainment sector. Based on your research, expert opinion, and other resources, reach conclusions about the current state and future prospects of the movie rental business. If possible, in your formal report make recommendations detailing how Netflix could modify its business model to survive the cutthroat competition. Use one or more of the techniques discussed in this chapter to track your sources. If your instructor requires it, write a memo or letter of transmittal to Netflix CEO Reed Hastings.