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Blockbuster Case

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Movie Rental Industry: Blockbuster Case
David Cook founded Blockbuster video in 1985, opening the first store in Dallas Texas and has grown to become the world's number one video chain. Mr. Cook took the idea of video rental and improved it by creating the video superstore concept. Many family-owned video rental stores could not compete against Blockbuster' stores. Blockbuster stores were highly visible stand-alone structures that appealed to customers. Blockbuster His stores had a wider selection of videos and offered longer hours of operation.
He focused on creating a family image for his stores by including a children's section and excluding adult movies. He also made it possible for busy people and people with children the opportunity to view movies for a longer period by starting the 3 day rental period. In 1986, Mr. Cook sold 33% of Blockbuster to h, m & Flynn and in 1987; he decided to leave the company making Mr. Huizenga CEO (Smiley, 2010).
Mr. Huizenga had experience growing small companies but no experience in retail, so he hired the best managers who were capable of developing a retail chain. Under Mr. Huizenga's leadership Blockbuster experienced major growth. By 1992, Blockbuster had over 3,000 stores (1,000 franchise and 2,000 company owned). Blockbuster had established 3 operating divisions to manage functional activities. These three divisions cut cost for the company by eliminating the outsourcing of these jobs.
Years ago, almost everyone who rented a video got it from Blockbuster or a local video store. Blockbuster was a household name. Back in 2002 Blockbuster was thriving as the dominant source for movie rentals, enjoying a lofty market capitalization of $6B. They had tremendous market share. But they got comfortable with where they were in the market. Development of new technologies cost money. New ways for people to view movies are risky

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