Imagine you are a manager of a DVD manufacturing plant. Your facility manufactur

Question

Imagine you are a manager of a DVD manufacturing plant. Your facility manufactures DVDs for sale to distributors and you’re seeing changes in the industry, especially with the advent of new technologies such as Blu Ray and the rising popularity of streaming video such as Hulu and Netflix. It seems as though Blu Ray discs, which your firm doesn’t manufacture, are taking over the shelf space at stores everywhere.

Describe the four stages of the product life cycle.

DVDs and DVD players were introduced to the public just 20 years ago; describe what stage of the product life cycle DVDs are currently in and why you feel this to be true, incorporating some of the changes in the way people watch movies.

Explanation / Answer

Netflix dominates market share at 55 percent; a decline from its peak at nearly 60 percent (Chang). This decline is mainly due to competition in market on by Netflix's success since the beginning of 2012 which appears to have pushed the market closer to maturity in the product life cycle.

Because most companies understand the different product life cycle stages, and that the products they sell all have a limited lifespan, the majority of them will invest heavily in new product development in order to make sure that their businesses continue to grow.

But here simply looking at market share might not be the way to understand the product life cycle of Netflix since it offers two very different services: streaming and physical media delivery. Netflix was one of the first to enter the online video rental industry in the introduction stage.

Within the next 12-18 months Netflix will work in the growth stage of the media streaming product life cycle. Netflix will use its well-known national brand name to satisfy the needs of its 30 million patrons and draw new customers (Company Timeline). It plans to develop and introduce new streaming technology to the market that will increase revenue and market share

The company gained more than 25% of market share within its first ten years and is currently experiencing both growth and maturity in the product life cycle (Netflix Revenue). If we separate the products, we see that the streaming market shows a pattern of growth while physical DVD and Blue-Ray rentals show a pattern of maturity.

A product that with is DVD players, which is currently in the decline stage of the product lifecycle. About 20 years ago, DVD players were cutting edge technology and rapidly replaced by older VHS players. Between the years, DVDs experienced rapid growth and were the main way that most Americans watched movies at home.

During this period, broadband internet technology had not reached a point where videos could be easily compressed and streamed over the web. Today, it is now possible for people the rent and download movies on the interest through services like Netflix, Hulu, and iTunes. Furthermore, high capacity Blu-ray disks have become the preferred way to watch high definition content.

The convenience of web-based entertainment has caused DVD player sales to go on the decline and there is little hope that they will ever recover. In the coming years I would expect DVD player sales to decline further and eventually become fully obsolete in recent future.

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