Remembering that Porter's 5 Forces include: Barriers to Entry, Buyer Power, Supplier Power, Threat of Substitutes, and Rivalry, I believe that Amazon overcomes the barrier to entry in the acquisition of Lovefilm and also enters a potential profit pool. Although Amazon was already allowing customers to digitally purchase movies online they are now able to rent them to customers. With the acquisition they have eliminated the time and resources needed to purchase rights to movies. They are now able to start gaining revenue from the beginning. Although the article below states that Lovefilm had a pre-tax loss, Amazon should be able to turn it around relatively quickly with their brand name and customer loyalty.
Lovefilm which operates in Europe will now be able to enter the US market which could have been difficult before due to the strong hold that Netflix has on the US. Amazon already having a STRONG presence in the US will be able to sell subscriptions to their rental industry with ease. Amazon has overcome the barriers to entry in the online rental market which was held by Netflix and should be able to create a profit pool out of their already loyal customers.
http://www.ft.com/cms/s/0/9aa7315e-2482-11e0-8c0e-00144feab49a.html?referrer_id=yahoofinance&ft_ref=yahoo1&segid=03058#axzz1BaqBYQJf
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