Movie Rental Industry Analysis

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The movie rental industry has been widely disseminated lately. The main reason for such widespread is the increase of home video popularity that became possible with the development of innovative technologies. More and more people prefer watching a movie at home than going to the theater or cinema. Naturally, the development of the sphere of the movie rental industry became highly competitive and many companies try to occupy the leading positions there. The main purpose of the paper is to discuss the primary strategic business area in which the industry will operate with high profitability and dwell upon the differentiating characteristics of these strategic business areas.

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The history of the movie rental industry and business development

The development of the technologies was one of the main incitements for the movie rental industry development. The research shows that “half of adults watch at least one movie per week via DVD rental or pay-per-view” (Ferrell & Hartline, 2007, p.432). The movie rental industry develops slowly. One of the traditional ways to rent a movie is to make a movie in a rental store and enjoy it for a low price (Gerchak, Cho & Ray, 2006, p.526). Still, people look forward and try to make it possible to watch movies “via on-demand services or via broadband downloads” (Ferrell & Hartline, 2007, p.432).

First, the VHS tapes were spread and people watched at home. The next step in the movie rental industry development was the DVD invention. The development of Internet technologies and services opened a new field of the movie rental industry development. Now, it is possible to rent a movie online or through computer connections. There are different ways of renting online movies. People may pay for the rent of one watch of one film or buy the month access to the site with lots of films without the right to burn them on DVD. Moreover, people may use catalog marketing and order the movie by mail, telephone or Internet; telemarketing services may be used; moreover, automatic vending becomes popular, still, it has 2% of the market share for now (Pride, Hughes & Kapoor, 2009, p.413).

3D is the other step of the movie industry development. Even though 3D movies were offered to the audience since the time of the cinema industry’s existence, the biggest attempts to create a 3D movie were in the 1950s. The technologies in those times were not on the highest level and the development of the 3D film was reduced. People did not want to watch films with poor quality, even if it was 3D. Still, in 2000 the film industry began the development of 3D entertaining systems with the new forces. Now, the 3D industry develops faster and the technologies have moved on considerably. People can enjoy the highly qualitative products of the movie industry development (Moss, 2010, p. 92).

3D in the movie rental industry

Dwelling upon 3D movies is impossible without pointing to its advantages. There are three main challenges in 3D movies, economical, technological, and artistic. First, the economical advantage is that the 3D copies will cost more with the incremental revenue. Second, technologically 3D video “creates the illusion of volume by projecting two pictures, one for ach eye” (Mendiburu, 2009, p. 9). The level of perfection is higher and more people will desire to watch 3D movies. Third, the 3D movies may allow the directors to show the feelings and emotions on the screen more artistically (Mendiburu, 2009).

Customer need

It is crucial to understand the customers’ needs in the 3D movies with the aim to understand whether the 3D movie Home DVD rental is going to be effective and profitable in the nearest years or not. To understand the customers’ needs, we should consider the research materials on the problem. Focusing the attention on the research conducted by Greif (2005) on November 29-30 2005 with 900 respondents in the USA, it may be concluded:

  • 12% of Americans would go to the cinema frequently on 3D films.
  • 6% of Americans will consult the main idea of the movie and then will decide whether to watch this film or not.
  • 14% of Americans will pay more to watch 3D movies, while 6% will pay more only depending on the main idea of the movie/
  • 37% of American people like the effects that are seen through 3D movies, while 31% admire the depth of the images on the screen in general.
  • 48% of Americans saw 3D movies before and this is important as they have at least the smallest idea of what is a 3D movie and how great it is.
  • The other 52% have never seen a 3D movie and want to watch a piece as soon as possible.

Customer type

The participants of the questionnaire conducted by Richard Greif involved adult Americans. Significantly, people from 18 till 29 would go to the cinema more if the 3dfilms will be on. 18-29 years old Americans, 30-45, and 46-54 will willingly pay $2-3 more for a 3D movie. 52% of 18-29 Americans like 3D movies for their effects, while 33% of their peers prefer depth images. Americans of 30-45 years old prefer the effect when the screen comes on them (42%) and the depth of images (33%). The percentage of preferences of 46-54 Americans are as follows, 32% prefer the effects, while 36% would better watch on the depth of image (Greif, 2005).

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Geographic scope

The United States of America is going to be the geographic scope for the 3D movie home DVD rental industry.

Technology

Technology is one of the main barriers to the 3D movie widespread. The results of the research show that people in the USA are willing to watch 3D movies and to pay more for them. The widespread 3D TV sets will give people an opportunity to buy the system and enjoy the qualitative and impressive video at home. The opportunity to watch a 3D movie at home is important. The present position of affairs is that not many people have an opportunity to watch 3d movies at home; still, they will visit cinemas and will desire to buy a 3D system at home when all films will be presented in 3D at the nearest time.

In conclusion, the 3D movie home DVD rental is the future of the whole movie rental industry. The 3D rental is not widespread for now as the percentage of people who possess 3D systems at home is low. Moreover, the number of movies in 3D is not so high. We are sure that in several years the 3D movie home DVD rental will be widespread as 2D now. To be the first company that releases 3D DVD is a great opportunity to occupy the biggest part of the market segment in the future.

Reference

Ferrell, O. C., & Hartline, M. D. (2007). Marketing Strategy. Stamford: Cengage Learning.

Gerchak, Y., Cho, R., & Ray, S. (2006). Coordination of quantity and shelf-retention timing in the video movie rental industry. IIE Transactions, 38(7), 525-536.

Greif, R. (2005). Measuring the 3D Film Revolution: Understanding the Impact of New Technology on Movie Theater Visitation. An Opinion Dynamics Corporation. Web.

Mendiburu, B. (2009). 3D Movie Making: Stereoscopic Digital Cinema from Script to Screen. Oxford: Focal Press.

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Moss, S. (2010).The Entertainment Industry: An Introduction. Wallingford: CABI.

Pride, W. M., Hughes, R. J., & Kapoor, J. R. (2009). Business. Stamford: Cengage Learning.

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