Netflix and Porter's Five Forces Model Coursework

Netflix and Porter's Five Forces Model - Coursework Example The HBO subscribers are able to watch any available movie on the network at any given time. For instance, Netflix customers have the ability to order movies online at a relative lower fee of $7.99 per month (Jones and Hill 42). Supplier power in the movie rentals is also recognized to be too low. The low supplier power can be attributed to few distributors who all sell their products at the same price. The customers’ bargaining power play a crucial role in determining the pressure they put on a particular market. According to the Five Forces Model, there are threats of substitute and services and they are moderately high. Free online streaming is another source of movie rentals. Websites such as Crackle.com and Hulu.com allow their users to watch movies online free of charge. Even though this provides a free alternative, there is a switching cost for the current Netflix users. Netflix customers can stream movies to their television sets through certain video game consoles. In the process of switching to the free online streaming, customers do not incur the monthly $7.99 fee. However, this only limits them to watch the movies on an internet accessible device (Kaplan 45). The threat of new entrants is the next force. This force can similarly be recognized to be moderately high. There are only a few barriers connected to the entry into the movie rental industry. The first barrier is the need to have the legal rights that will allow the company to supply copyrighted movies to its customers. This barrier seems tricky for a company entering the industry since it will hard for the company to overcome the barrier. Use of online services is another potential barrier to entry. With the current technological advancements, it will important for a new business to include online involvement. This point greatly emphasizes the threat of new companies entering the movie rental industry. With the option of free online streaming, a new web-based company will probably