We can understand the characteristics of a DVD renting service business model and a video streaming service business model using Rayna & Struikova’s business model framework to compare to analyse the business models, and then consider how the characteristic differences between information and digital goods caused a change in the business models.
The value network includes:
These complementary assets create a high barrier to entry into the market for competing businesses and ensure market dominance.
Offered the latest movies that are no longer at the cinema.
Implied urgency and limited availability through a fixed number of DVDs.
Reactive pricing with newly released movies are priced higher than older, less popular movies allows the revenue to be maximised.
Shops were the primary distribution channel, although delivery through mail existed for a short period of time.
The target market was people who owned DVD players and watched movies at home.
Understanding customer behaviour through sales data which is used to plan the distribution of upcoming movie releases to optimise the number of DVDs available in the most popular shops.
The revenue model involved customers having membership so that the shop could record which DVDs were rented by which customers and a rental fee with late charges.