How well does Redbox compete with Netflix

Talkin go money

Netflix (NFLX NFLXNetflix Inc200. 13 + 0. 06% Created with Highstock 4.26) is now a household name, with millions of new subscribers joining each month to watch streaming movies and television on their computers or to the Internet connected devices. Netflix streaming now accounts for more than 35% of all Internet traffic in the United States, making it a force to be taken seriously. But Netflix had humble beginnings, starting as a pay-per-rental, mail-in service in 1997 to compete with traditional stationary video rental stores.

Netflix currently has a market capitalization of nearly $ 29 billion, is a member of the S&P 500 index, and employs more than 2,200 people worldwide. (See also: NFLX: Should You Buy, Sell, or Hold?)

Netflix and its rise to dominance

Because Netflix adapted its business model so quickly that it was able to remain a dominant player. In 1999, a subscription service was introduced that allowed customers to retain DVDs for a short period of time with no late fees for a low monthly cost. In 2000, Blockbuster Video turned down an offer to acquire Netflix for $ 50 million and instead launched its own competing DVD service for letter sharing alongside the retail locations. Blockbuster filed for bankruptcy and closed all branches at the end of 2013. Dish Network (DISH DISHDISH Network Corp. 50.82 + 5. 72% created with Highstock 4. 2. 6) bought his remaining fortune. Other competitors have also fallen by the wayside, including Hollywood Video and Redbox.

In the mid to late 2000s, streaming digital media and downloadable music and video file services began to steal market share from Netflix as more and more people viewed media online. The company took notice and also turned to offering streaming video services. By 2010, Netflix had renamed its letter filter service as a subsidiary called Qwikster and began focusing solely on digital distribution. Meanwhile, the company was rapidly losing subscribers and saw quarterly earnings drop 88% in 2012.

Netflix has again adjusted and lowered its subscription fees while taking on the production and exclusive distribution of its own original television series, including the critically acclaimed House of Cards. > and a restart of the cult favorite Arrested Development. At the end of 2014, the company had over 57 million subscribers in almost 50 countries. Netflix and other streaming services have grown while pay TV continues to lose subscribers. New Potential Threats to Netflix

Netflix has proven to be adaptable and able to successfully overcome competition, a fickle customer base and an ever-changing technological landscape for the media. New competitive dynamics could force Netflix to adapt again.

The streaming TV room appears to be the fastest growing sector for competitors to gain market share from Netflix. Traditional television companies have come into play with a large, loyal audience base.

Time Warner (TWX TWTime Warner Inc94. 46 + 1. 27% Created with Highstock 4.26) unveiled its 2014 HBO GO app, free for subscribers to its cable channel and a day later CBS (CBS CBSCBS Corp56. 96 + 2. 82% Created with Highstock 4.26) announced its own streaming service, CBS All Access. Online streaming service Hulu began producing and distributing its own original programming through its website and mobile app and Amazon (AMZN AMZNAmazon.com Inc1, 120. 66 + 0. 82% Created with Highstock 4. 2. 6) develops original content in addition to traditional streaming with Amazon Prime. In public, Netflix does not view television providers' streaming services as a threat, as these providers cannot broadcast Netflix's own original content and television is merely a complementary service to its primary movie streaming product. However, HBO, CBS, and Amazon could all immediately compete with their own streaming movies. (More on this under:

Will Hulu and Netflix replace cables? ) There are also new threats in the form of streaming movies over torrent networks, a legal gray area, from services like Popcorn Time. Unlike traditional torrent applications that allow users to download and share media files, Popcorn Time has a built-in media player so the viewer never has to participate in an illegal download. However, the company encountered legal opposition in numerous countries and industry groups and was closed in 2014.

Still, there were popcorn time clones like Popcorntime. io, Time4Popcorn, and Cuevana (which is aimed at a Spanish-speaking audience). Because of the potential to distribute content illegally, stream over torrent services do not pose a serious threat to Netflix yet, and viewers should only do so at their own risk. That is not to say that a peer-to-peer (P2P) video streaming system that can legally work is not being further developed as Spotify did for P2P streaming music. (

See also: Spotify makes internet music money. ) A potential threat to Netflix could come from movie studios themselves. Following the Sony Pictures hack that did the

Surrounding the interview, many theaters and distribution channels refused to take the perceived risk and dropped the film. After some deliberation, Sony decided to release the film digitally in a limited number of outlets - a circumstance that was well received by viewers. The apparent success of film self-distribution via digital media could be an unforeseen force that could grow quickly to dominate the market. The bottom line

Netflix has become synonymous with its ability to adapt quickly and focus on an ever-changing market with increasing competition. What started as a humble direct-by-mail DVD rental company now has 35% of all top downstream Internet traffic dominates when streaming video content to users.

Now that most of Netflix's revenue is generated through digital distribution, new competitors have emerged, including Amazon Prime and Hulu, as well as traditional TV media outlets like HBO and CBS. While illegal streaming and downloading always exist to some extent, attempts to normalize it through Popcorn Time have largely failed, so the bottom line is that it doesn't seriously affect Netflix. Film studios' self-distribution via digital channels - an unexpected accident resulting from the Sony Pictures Hack - could prove to be a real threat in the future.