SAMPLE OF A SWOT MATRIX FOR REDBOX
Strategy statements are generated by matching S with O, W with O, S with T, and W with T.
Each created strategy statement must be identified by the number(s) of the selected O or T combined with the letter(s) of the selected S or W.
| This model will leverage strengths to take advantage of or capitalize on opportunities (SO Strategies) and avoid, overcome, or improve upon weaknesses to take advantage of opportunities (WO Strategies) | Strengths | Weakness | |
| a. Partnerships with outside organizations such as door-dash to generate new customer base
b. Ability to maintain customer base in gaming area c. 41K kiosks in inventory for DVD distribution d. Development ability to extend content to alternate digital platforms Low R&D costs, as methodology is to copy-cat successful moves of other organizations e. Primary stakeholder (38%) in Flextronics, company that creates Redbox kiosks f. Minimal HR costs as all ground level operations are sub-contracted g. Redbox perks – loyalty program – 34 million members and increases 2% monthly h. Successful marketing campaigns generating first time customers i. Extensive customer survey & analysis – knowing what customers want (providing it is another story!!) |
a. Inability to lower operating costs and offer lower consumer prices for digital media costs to rival Netflix
b. Inability to host cable television offerings to rival Netflix or Hulu c. Inability to offer exclusive original content (Redbox originals are not offered while amazon, Hulu, Netflix do offer original branded content) d. 20% of budget spent on kiosk maintenance, programming, and stocking e. Lacking in broad team culture due to high use of sub-contracting f. Debt to earnings ratio of 1.26 g. Lack of cashflow for re-investment, expansion, R&D, etc. h. Poor kiosk locations. 50% declining in use i. Cost to move kiosks to alternate locations very comparable to new kiosk acquisition and placement j. Inability to maintain customer base (market share) following new customer contact |
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| Opportunities | 1. Annualized 2.0% decline in network cable subscriptions over past 5 years
2. Recent Pandemic influences at-home activity 3. Netflix physical disc rental declining at 3.0% annually past 3 years 4. Expansion into digital market (in addition to physical DVD/Blu-ray) due to an average of 26 minutes/day/user of an internet connected device 5. Hulu cost per rental movie is 2 to 10 times the cost of Redbox rental 6. Netflix rental is 2 to 10 times the cost of Redbox rental 7. 70% increase in digital media subscriptions over 5 years 8. Increase in gaming use due to an average of 14 minutes/day/user of a gaming console 9. Competing companies reducing physical DVD/Blu-ray availability; greater market share of DVD/Blu-ray/Game rental 10. 37% of all households with TV have access to more than one digital video on demand service |
SO
1/7d – Increase R&D budget by 25% to provide multiplatform delivery of streaming and on-demand content to customers reducing cable subscription.
2a/i – Expand partnership to all food delivery services and develop partnerships with papa johns & Domino’s to offer movie night program and expand customer base
3/5/6c/i – Research methods to reduce costs of DVD rental to undercut Netflix/Hulu and take advantage of their declining customer base. Market decreased pricing and kiosk locations in local markets. Comparison marketing to Hulu/Netflix.
8b – Develop subscription program and market referral program within the gaming sector to increase and maintain gaming customers.
1/4i – Tailor content based on survey & analysis to provide targeted content |
WO
1/7/10a – Develop tiered service beginning with limited content free option, basic subscription, and elite subscription to take advantage of those eliminating cable and those with multiple digital services.
10j – Mimic content of other digital providers to maximum extent possible, market within the content of other digital providers.
2h/I – take advantage of pandemic and digital trends to increase digital subscriptions to augment decline in kiosk earnings.
4g – research divestiture opportunities, cost saving measures, and ways to increase earnings to fund R&D efforts to expand fully into digital markets
1/4/10c – Develop partnership with TV/Movie studios to create original content.
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| This model will leverage strengths to eliminate or minimize threats (ST Strategies) and address or correct weaknesses to overcome/reduce/avoid threats (WT Strategies). | Strengths | Weakness | |
| a. Partnerships with outside organizations such as door-dash to generate new customer base
b. Ability to maintain customer base in gaming area c. 41K kiosks in inventory for DVD distribution d. Development ability to extend content to alternate digital platforms Low R&D costs, as methodology is to copy-cat successful moves of other organizations e. Primary stakeholder (38%) in Flextronics, company that creates Redbox kiosks f. Minimal HR costs as all ground level operations are sub-contracted g. Redbox perks – loyalty program – 34 million members and increases 2% monthly h. Successful marketing campaigns generating first time customers i. Extensive customer survey & analysis – knowing what customers want (providing it is another story!!) |
a. Inability to lower operating costs and offer lower consumer prices for digital media costs to rival Netflix
b. Inability to host cable television offerings to rival Netflix or Hulu c. Inability to offer exclusive original content (Redbox originals are not offered while amazon, Hulu, Netflix do offer original branded content) d. 20% of budget spent on kiosk maintenance, programming, and stocking e. Lacking in broad team culture due to high use of sub-contracting f. Debt to earnings ratio of 1.26 g. Lack of cashflow for re-investment, expansion, R&D, etc. h. Poor kiosk locations. 50% declining in use i. Cost to move kiosks to alternate locations very comparable to new kiosk acquisition and placement j. Inability to maintain customer base (market share) following new customer contact |
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| Threats | 1. Studios allowing digital release of new movies via Netflix and Vudu due to cinema closures
2. Younger generation demonstrates tendency toward digital media vs physical DVD/Blu-ray 3. Rising maintenance costs of mechanical kiosks and web integration 4. Netflix offering original content in partnership with large studios 5. Hulu offering original content in partnership with large studios 6. Hulu and Netflix recently available on demand and for download across all platforms (android/apple) 7. New competitors in Disney Plus and Apple TV pulling roughly 40% of market share (though much of this market share overlaps) 8. DVD/Blu-ray disc player purchase and ownership decline 6% over past year, 10% past 5 years 9. Live TV + time shifted TV viewing reaches 4 hours/day/user 10. Cost of studio/brand licensing to enter digital market |
ST
2/8b – Shift entertainment content to digital platforms and increase game offering and availability within kiosks.
3e – Seek majority stake in Flextronics and eliminate subcontracts using Flextronics as build and maintenance for kiosks.
6d – R&D to develop platform specific software with ability for limited downloads of Redbox digital content
7h – market within ad space within competitor content
8c – Partner with mapping services (Google maps, ways, apple, Garmin) to display Redbox locations to increase awareness of kiosk locations. Market Redbox locations within local markets. |
WT
1c – Partner with studios to allow digital release via Redbox digital platforms.
4/5c – Develop partnership with TV/Movie studios to create original content
2j -develop program/marketing to bridge initial customer contact at kiosk with digital offerings.
3d/g – shift to digital content and eliminate bottom 50% earning kiosks. Expand capacity of top 50% earning kiosks. Reallocate maintenance funds to R&D.
1/4/5/10f – consider sale or merger to studio entity and use of Redbox platforms as distribution channel for studio content.
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