VRIO Strategic Analysis of Australian Cinema and Streaming Competitors MKTG3006

Assessment 1A

Team V

Team members:

Casey Jose - Executive Summary, Introduction, Stan analysis, Trademarks and Patents analysis in appendix

Chelsea Lemke (NEO) - Netflix analysis, Conclusion, proof check, comparative analysis, Innovation analysis in appendix

Jaliron Kogoya - Event Cinemas analysis, financial resource analysis in appendix

Luke Piantadosi - Initial project brief, Disney+ analysis, comparative analysis, brand name analysis in appendix

Executive Summary

The cinema industry is a large sector within Australia let alone globally and in 2021 was ranked the 10^th largest in the world in terms of revenue (Hughes 2022). Over the past decade, the interest in movie cinemas has decreased following the popularity of pay TV and new online streaming services which allows consumers to stream new releases from any location with internet access(Caelan 2022).

Introduction

The following report will outline four main competitors within the Australian cinema industry including Event Cinemas, Netflix, Stan, and Disney+. The core competencies from each competitor will be analysed in the VRIO model with each competitors strengths being investigated and discussed in deeper terms. The report will also describe the strongest and weakest rival and how best the weakest competitor can improve their internal to achieve above average returns.

Event Cinemas

Film lovers around Australia are very satisfied with the unique theatrical experiences which Event Cinemas offers (Akbar 2022). Event Cinemas has always been at the forefront of the premiumisation movement of cinema. This has included various benefits including beverage menus, Restaurant standard food, luxurious options for seating, gold class lounges and many more. They always seek to add value for more than 2.5 million Cinebuzz Rewards members (Akbar 2022). They also hold some responsive clientele which is considered an opportunity for the organisation (Amazon 2022). The total current assets of Event Cinemas is $286,470 billion, which is a significant increase compared to the total assets in 2021 (CDN 2022). The organisation has more than 5000 employees who contribute to the success of the organisation, and they also contribute to the various innovative ideas that help the organisation to be at the forefront of the entertainment industry (Celluloid Junkie, 2023). Event Cinemas facilitate digital transformation technologies with lowered maintenance burdens such as AWS. Also, they hire the technology of 4DX which creates seats that vibrate and move (Colley 2019).

Event Cinemas has positioned itself strategically in more than 60 main locations as well as malls around Australian content (Hughes, 2022). The market presence of the company provides a powerful competitive edge against the competitor of the industry. The company has completed a century which offers the advantage of being a household name within the market. The engagement of the company within the diverse business of entertainment ensures that it continues to increase ther revenue sources (Ssw 2023). Event Cinemas has several years of experience in capitalising on market strengths to explore new markets such as New Zealand and Fiji (Zahit, Harisan 2019.p.4).

There are several weaknesses of Event Cinemas. The company continues to increase outside of Australia and sometimes finds itself in difficult situations that need an expanding investment in production and marketing (Ft.Smith, 2021). Therefore, the cost of operation increases on a regular basis. The latest jurisdictions have their own regulations and rules of business. Piracy is also referred to as a major concern for Events Cinema. The expansion in the competition of American films within the global market generally cuts down on the projected revenue that can be translated to cost (Harrison 2019). Lack of proper marketing and an online presence are current weaknesses for the Event cinemas.

Netflix

Neftlix, co-founded in 1997, created an innovative and scalable business model to differentiate itself by providing movies readily available for customers (Rataul, Tisch, Zmborsk 2018, p.4). Netflix have developed strong tangible and intangible resources to position themself as a leading internet streaming service with over 90 million subscribers in nearly every country (Rataul, Tisch, Zmborsk 2018, p.4). Their greatest intangible resource is their reputation and strong branding which they have built consistently over time (Sadq 2013, p.3). Netflix has possessed strong tangible financial resources, enjoying year on year growth with a revenue increase of $25 billion over the past 13 years (Statista 2022). The company has maintained strong technological resources which are reflected in their ability to adapt to technological advancements (Allen, Feils & Disbrow 2014, p.3). The creation of algorithmic recommendations to segment existing audiences and attract new subscribers is another reflection of Netflixs technological resources (Asmar, Raats & Van Audenhove 2022). The production and streaming of Netflix Originals is an innovative resource possessed by Netflix to attract new audiences (Rataul, Tisch, Zmborsk 2018, p.2).

Netflixs brand and reputation is a strength that was built on its unique business model, as one of the first in the industry to offer unlimited rentals with no additional fees (Allen, Feils & Disbrow 2014, p.3). There has since been other rival streaming services launched creating increased competition and risk of losing customers.

The strength of unique algorithms provides Netflix with the ability to provide tailored content to users (Rataul, Tisch, Zmborsk 2018, p.9). Another strength includes Netflixs technology advancements for streaming devices to meet customer demand. The organisations ability to stream Netflix on over 700 different devices, was reflected through a significant increase in subscribers (Rataul, Tisch, Zmborsk 2018, p.6). The Economies of scale in Netflixs business model presents another strength for the Company (Sadq 2013, p.2). The ability to offer services online allows for low operating expenditure whilst increasing subscription base (Sadq 2013, p.2).

Netflixs innovation to develop original content has created a point of difference from competitors and has been pivotal to its increase in subscribers (Statista 2022). However, Neftlix have limited copyright on production titles which will result in rights expiring and the content being taken off Netflix (Maddodi & Prasad 2019, p.7). The production of original content also involves huge costs and as a result places debt on the company (Maddodi & Prasad 2019, p.7).

Stan

Stan Entertainment Pty Ltd (renamed from StreamCo in 2014) is solely owned by Nine Digital (Stan 2022) and is an Australian television and movie streaming service. Stans core business is based on fixed assets gained from their more than 2.5 million subscribers (Stan 2022). This has recently changed to also allowing pay per view services assisting with growth in revenues, this new service saw their 2022 revenues grow by 23% in its first year (Shepherd 2022).

Their strong brand trademarks, patents, and general public perceptions identifies a high-quality service and with a reliable company name. Stan itself is a registered trademark of Nine Digital allowing for their strong Australian presence. Although Stan is not Australias number one streaming service they hold 2.5million of the almost 14 million Australians who are signed up to a pay TV service (Shepherd 2022). The blue colour trademark used by both Nine Entertainment and Stan makes their logo rare and in-imitable by other services.

Stans core competencies rely heavily on their original series and documentaries which provides a difference to their competitors in this area. This provides rare, never seen before content which is original and valuable to their name (Canstarblue 2023). Stan uses their connection with the Nine Entertainment company as their way to promote their services by selling content on Nine. Having a large product mix is what draws bigger audiences which is imperative for Stan if they want to achieve above average returns. Stan currently has a media library of over 2200 movies, 580 TV shows with news and documentaries content listed in addition to that (JustWatch 2023).

One of Stans greatest strengths is its low subscription rates and option for a 30-day free trial (Stan 2023). Stan holds 3 levels of subscriptions (Basic, standard, and premium) all 3 levels allow for the option to add on stan sport (Stan 2023). The packages vary in price starting at $10 and finishing at $21 with the add on sport being an additional $15 (Stan 2023). With this strength, comes one of Stans weaknesses. Stan is only available for Australian viewers and cannot be streamed in overseas locations unless computer VPN is allowed in the area (Gill 2023). This is a disadvantage that leaves Stans target audience lower than its competitors.

Disney +

As Disney + is a branch of The Walt Disney Company there are strong tangible and intangible resources associated with the business. They have strong financial and physical resources as reflected in their fiscal year report ending October 2022, showing that they made a total revenue of 83.75 billion USD for the year and held over 200 billion USD in assets (The Walt Disney Company, 2022). They have strong technological resources, reflected by their over 6500 trademarks and over 2500 patent grants (Justia 2023). Their human resources include a strong knowledge of the entertainment industry with over 100 years experience and a skilled and diverse 206 thousand strong workforce (Disney 2022). Their innovative resources show that they have the ability to innovate and promote new ideas, reflected by their heavy investment into original programming (roughly 500 million USD in 2019) (Kaufman 2019) and utilising their creative teams at Marvel, Pixar, National Geographic, Lucasfilm, Disney and Fox FX to develop new content. Their strongest intangible resource is their reputation as they have a strong brand name and high perceptions of quality and positivity. In the 2022 Global RepTrak The Walt Disney Company placed 31st based on how people feel, think and act toward their actions and services (The RepTrak Company 2022).

The strengths of the Disney + streaming service are their large financial capabilities leading to the ability to create unique, trademarked and patented content created by some of the biggest firms in the entertainment industry specifically for Disney + as well as acquire large amounts of staff and invest into their training and growth. Another strength is their high brand value by being associated with The Walt Disney Company. On the other hand their biggest weakness is that a lot of their content is perceived to be family friendly and their streaming service may be overlooked by some adult customers.

Disney+'s core competencies include creating value through their ability to utilise high amounts of financial resources and assets to create a highly competitive and high quality streaming service. Rarity is shown through their access to teams of entertainment leaders such as Marvel, Pixar and Lucasfilm which allows them to create exclusive high quality content within their own organisation rather than relying on outside sources of media like most other streaming services. As a result of Disney patents and trademarks it is impossible for other streaming services to imitate the services provided by Disney + and their partnerships with Marvel, Lucasfilms and Pixar etc. means that no other streaming services can offer these services. Their large, strong and diverse workforce reflects their organisational processes are a core competency to ensure staff are trained, valued and prepared to operate efficiently.

Analysis

The company with the best internal environment has been identified as Disney + due to their strong resources and capabilities. Disney + greatest asset is their relation to the Walt Disney Company which provides strong financial resources, assets, trademarks, patents, workforce, experience, reputation and access to internal unique creative teams. Disney + has the ability to create high quality content within their own company through Pixar, Marvel and Lucasfilm whilst the other three rivals generally wait for outside sources of content. Through Disney + core competencies, they can use differentiation (providing unique and better products) and market segmentation (understanding and focussing on a particular market) to obtain and sustain competitive advantage (Ohio University 2022). Their trademarks, patents and rights allow Disney + to be the sole supplier to the Pixar, Marvel, Lucasfilm and National Geographic content. This allows Disney + to provide unique and high quality content only available to subscribers, gaining a competitive advantageous position in the

Australian Cinema Industry.

The other three rivals showed some similar core competencies, however were not proven to be as strong. Event Cinema showed a strong brand name and reputation, financial assets, HR Policies, a large diverse workforce and opportunities from brand extensions. Netflix showed a strong brand name and reputation, the ability to generate economic growth, technological advancements and innovative technological data sources. Stan presented a strong Australian presence, easy registration process, low subscription rates, product mix and simplicity of operations. However, Stan was identified as the weakest of rivals within the industry due to the lack of availability globally, lack of strong reputation and financial resources. Stan did not show any core capabilities that would lead to a stronger return over other rivals. For Stan to be more competitive, it would be beneficial to develop strategies of differentiation and market segmentation to improve brand name, adaptability and financial resources.

Conclusion

The Australian Cinema Industry is a large market that is continuously evolving through streaming services. There are many competitors in the market, however, Disney +, Netflix, Events Cinema & Stan are companies that maintain core competencies to be competitive. A VRIO analysis and comparative analysis have been completed to determine what rivals have the best internal environment through their strengths and weaknesses of resources. In summary, it is evident that Disney + have the strongest resources and capabilities to be successful within the industry. While Stan lacks strengths in a few core competencies which puts them in a disadvantage to be as successful within the industry.

Appendix

Organisation Name: Disney +

Organisation Name: Netflix

Organisation Name: Event Cinema

Organisation Name: Stan