Netflix has revolutionized the movie rental business

Reference no: EM13721034

Netflix has revolutionized the movie rental business by charging $7.99 a month for unlimited streaming movie service. On the other hand rental movie kiosks like Redbox are popping up by the thousands in supermarkets, drugstores, restaurants and convenience stores around the country. These kiosks stock DVDs that rent for $1 a day. Given the unlimited streaming option, Netflix definitely is a cheaper alternative for consumers who are serious movie watchers. Commenting on the nature of returns to scale and associated cost implications, argue why Netflix is able to keep its prices down compared to physical movie kiosks like Redbox. As part of your argument you should specifically identify the nature of returns to scale that is expected for Netflix and Redbox respectively.

Reference no: EM13721034

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