Problem: The Internet has affected the video rental industry in profound ways. Prior to the Internet, brick-and-mortar stores would buy VHS cassettes from studios and rent them to consumers. Advances in information technology transitioned the industry to DVDs, but this did not have a major impact... the stores simply started buying new movies in DVD format. What really changed the industry was the creation of IT linkages between the studios and the stores. Now a studio could see exactly when a particular copy of a movie was rented; this allowed the store to hold many copies of a movie and pay the studio a percentage whenever one of them is rented. It also enabled three new distribution channels: video on demand, mail order (Netflix), and unattended vending machine (Redbox).
Using Porter's Five Forces, describe the changes to the "video rental" industry from the introduction of the Internet and digital distribution. The rental companies' suppliers are the studios. The rental companies' buyers are individual consumers. Netflix and Redbox are part of this industry... they just use different distribution channels than most of their competitors.