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Overall competitive attractiveness

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  • 1. Overall Competitive AttractivenessThe overall competitive nature of the industry has to be looked at from two differenceperspectives. The industry is vastly unattractive for new entrants with competition being so stifffor new and smaller companies. New entrants are also competing with low cost substitutes thatmay offer service to a greater capacity than what they can offer to subscribers. Substitutes likered box, Hulu and Netflix may have a greater library of movies and television shows. Newentrants are also dealing with an industry with their being such a small amount of market share toobtain. Larger industry members are also competing to strengthen their market positions andsolidify their current position with their being such slow growth in the industry. The industry isalso unattractive for current industry members with the heavy dependence of suppliers andbargaining power of consumers. Industry members rely on a very limited amount of suppliersand rivalry is considerable strong. Companies not only compete directly with each other but withother companies that offer their services (Video, Phone and Internet) on an individual basis.They compete with companies like Verizon Fios and T-Mobile whom may specialize in aparticular area rather than being diversified across 3 segments. Companies also have to deal withsubstitutes that offer very competitive pricing and change consumer demand as well. Piracy isalso a problem because consumers can easily watch content for free on the internet instead ofpaying for a service.The industry is attractive for current industry members because despite the extreme competitivenature industry members are still able to be profitable. The industry has very low switching costso the opportunity for companies to increase customer retention and implement customer loyaltyprograms is now. The larger the companies subscriber base the more revenue they’re able tobring in so increasing customer retention is one way to increase profitability. The industry isexperiencing slow growth but it is growth nonetheless. This allows companies to increase theirmarket share and strengthen their market position. The international market is also somethingcompanies can tap into with their being faster growth internationally. The U.S market isexperiencing an economic recession which is where a majority of companies mainly do business.Companies in the industry have also continued to make a profit despite bearish economicconditions. Time Warner cable has a 5.6% increase in their total revenue from 2009-2010according to their 10-k. Comcast had a 6.1% increase from 2009-2010 in their total revenueaccording to their 10-k. Companies still have many opportunities to increase their revenue and avariety of mediums to utilize for revenue growth.