Netflix, Blockbuster Battle It Out

Netflix and Blockbuster continue to battle head to head in theonline movie rental arena. The monthly rental prices havedropped for DVD entertainment delivered to your door, orderedonline. . . . Entertainment culture at its best, it seems—lots of competitionand that is normally a better price point for the consumer.

[Reed Hastings, the CEO of Netflix, says,] “One of the reasonsour last year has been so successful is the market’s elasticity inresponse to our price cuts one year ago. . . . Obviously, if there’senough elasticity to make additional price cuts work, this wouldincrease the economic pressure on video stores, and the additionalstore closures would further increase Netflix growth for manyyears ahead.”

In 2006, Netflix expects to grow to 5.65 million subscribers withpretax net income between $50 million and $60 million.

III. Read the text and be ready to do the following assignments.

A. Scan the next article for the answers to the following questions:

1. What is Oscar Mayer?

2. Why is making cheesehealthier complicated?

3. What process is known asreformulation?

4. Why did Kraft decideto reformulate a product that was already popular?

Oscar Mayer, one of the brands of Kraft Foods Inc., firstlaunched its Lunchables product line in 1988. The prepackagedlunches quickly became popular, and today thesesnacks are available in many different flavor combinations.They also have come under attack by critics. Kraft is findingways to satisfy these critics and keep consumer demand high.

Slimmer Kids, Fatter Profits?

Charles Davis, a Kraft food maven, is on a healthkick. But then, he has no choice. Making cheesehealthier is complicated. Add too much calcium,and it starts to taste chalky. Take out too much fat,and the cheese emerges from mechanical graterslike Play-Doh. “It becomes a big glob instead ofhaving good shredding integrity,” says Charles W.Davis, vice-president of global technology andquality for convenient meals at Kraft Foods Inc.

Davis can tell you all about finding that delicatebalance between what tastes good and what’s goodfor you. Since 2004, the 48-year-old chemist hasbeen leading a team of scientists, technicians, andengineers working to improve the nutritional contentof Kraft’s popular Lunchables Lunch Combinationsline, a process known industrywide asreformulation.

That means he has spent an inordinate amountof time experimenting not only with cheese butalso with the juice drinks, crackers, deli meats, andfruit snacks that make up these all-in-one meals. Ifyou count all 41 varieties of Lunchables, Davis hascut calories by an average of 10%, fat by 24%, andsodium by 20%.

Why do Davis and hundreds of other peoplethroughout the company do nothing else but experimentin their kitchen labs all day? Because theiremployer has no choice. Kraft, the nation’s largestfood manufacturer, and its competitors risk becomingthis decade’s cigarette companies: vilified forpushing junk to children, restricted by oftenconflictedregulators, challenged in court.

Date: 2016-01-14; view: 739