Differentiation in the Media Industry

Question:

How do companies in this industry differentiate themselves from one another?

Note: 

This post is essentially exactly what I wrote for my section of the draft paper. It's about how different media providers market their services/products (specifically how they choose to price them).

Summary*:

This article sums up Netflix's new marketing move: dividing online streaming and DVD sales into two separate services, each for $8 instead of the 2-for-1 package for $10. Customers, shareholders, and stockholders were not happy. Netflix stock dropped after the announcement, and the vast majority of Wall Street Journal readers said in an online poll that the marketing move will harm the company.

The most intriguing quotation in the article came from Wedbush Securities analyst Michael Pachter: "...streaming-only customers are more profitable to Netflix than its DVD customers. But he believes that state of affairs won't last as studios charge Netflix more for the digital licensing deals it relies on. 'On the DVD side the studios have zero ability to raise price. [...] On the streaming side, the studios have 100% leverage.'"

Opinion:

There are many companies that offer similar services to those of Netflix. I will describe their differences here (in almost identical language to the opening paragraph of my Marketing section draft).

Since Netflix, Inc. was founded in 1997, companies in the media distribution industry have all been following its example by offering easy DVD rental delivery to their customers. The fad today is to offer online streaming of movies and television programming for a monthly or yearly fee. Netflix was the first to do this, charging $10 per month for both services—DVDs and streaming. Blockbuster caught on—too little, too late—and began offering the same delivery service in 2004, also for $10 per month.

Redbox, founded in 2002, lets customers rent movies from kiosks in supermarkets and drugstores and return them in any convenient kiosk for as little as $1 per DVD. Websites, such as Amazon.com (e-commerce) and Hulu.com (online streaming) have also caught onto this trend: In 2011 Amazon launched Amazon Instant Video to customers already paying the Amazon Prime fee, and Hulu introduced Hulu Plus for $8 per month, to offer more services and maintain a higher profit margin.

Sources:

http://www.amazon.com/gp/help/customer/display.html/ref=hp_3757_wipiv?nodeId=200572880

http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/09/blockbuster-files-for chapter-11-bankruptcy-sets-plan-to-reorganize.html

http://www.hulu.com/plus

ttp://ir.netflix.com/

http://www.redbox.com/history

https://www.blockbuster.com/signup/m/plan

http://www.theklaus.com/images/portfolio/editorial_cartoons/Netflix_Defeats_Blockbuster.jpg

*http://online.wsj.com/article/SB10001424053111903374004576581000189433470.html