...Group 3 13 May, 2010 Netflix - Group Case 1. Describe the competitive environment of the video rental industry. During the time that this case was written the Video / DVD rental industry had matured from a Mom and Pop Shop in the local town or down the street to the business model that Blockbuster had implemented. Location, Location, Location was the model. Open more stores and increase your market penetration. Blockbuster had approximately 7,800 brick and mortar stores, each carrying approximately 1000 titles.1 These DVDs were owned by the store and the volume generated mainly came from recent release rentals and new movie sales. The market, outside of the Blockbuster market was fragmented, with several copycats of Blockbuster, and continued existence of smaller, possibly regional rental shops. No viable Internet distribution model existed when Netflicks was launched. The...
Words: 1469 - Pages: 6
...Fall 2011 | BlockBuster Case Analysis | | 1. What role has Netflix played in the development of Blockbuster’s strategic planning? How important is Netflix to Blockbuster’s future strategic plans? Before answering this question ,I would like to highlight that It s clear after reading the case that blockbuster main problem was making strategic plan without considering its scorecard as they never anticipated change or tried to early explore strategic alternatives and they never examined consumer or competitive responses. In a nutshell they were always reactive and not proactive and they never considered that new entrants always seek market space that leaders ignore. To answer this question, I will try to answer the three major strategic marketing questions “Where to compete?”, “How to compete?” and “When to compete?” and apply my answers to Analyze Blockbuster case Where to Compete: * Blockbuster’s targeted the whole market of home movie viewers in the US. Afterwards, they started to target international markets. Blockbuster service their customers through rental stores and they kept using the same business model. However, they failed to understand the change in consumer behavior as people became more busy and don’t have time to visit their stores. * Netflix targeted same market but with different approach as they offered mailing system of movie rentals that go directly to customers and that was very convenient solution and they started capturing...
Words: 1906 - Pages: 8
...I. Strategic Profile and Case Analysis Purpose Blockbuster L.L.C., as it is known today, was opened in October of 1985 before access of the internet had become hugely successful (Blockbuster, 2013). By the end of the century, the video rental industry was seeing signs of extinction. In 2004, Blockbuster offered its first online DVD rental, and attempted to offer its own streaming by purchasing Movielink (Hitt, Ireland, & Hoskisson, 2011). Per this case analysis, the Movielink strategy failed to attract the immediate cash-flow Blockbuster had expected which resulted in bankruptcy. By April of 2011, Dish Network, with14 million subscribers, acquired Blockbuster for $320 million in a court auction (Blockbuster, 2013). Products and services include; Blockbuster, Blockbuster Video, Blockbuster online, Blockbuster Night, Blockbuster GiftCard’s, Blockbuster Game Pass, Blockbuster Movie Pass, Blockbuster Rewards and in 2006, the Blockbuster Total Access Program. The strategy of this program was based on returning the disc through a prepaid envelope or exchange at a retail location. The retail stores offer rewards and special promotions for visiting retail stores. Blockbuster Movie Pass is tied to a Dish subscription; “the company can offer content to which it already has the rights to through program deals for its satellite TV business” (Fritz, 2011). The purpose of this case study is to analyze the current internal and external factors of the evolving home entertainment industry...
Words: 515 - Pages: 3
...Jackie Sutton Case Study Report COMPANY NAME/WEBSITE/INDUSTRY Company Name: Blockbuster Website: www.blockbuster.com Industry: Video rental BACKGROUND/HISTORY Blockbuster was founded by David Cook and opened its first store in 1985 in Dallas, Texas. When the company first began the main focus was on home video rentals but in 1987 Blockbuster won a major lawsuit against Nintendo and paved the way for customers to rent video games as well. The company reached its peak in 2009 and then started to see intense competition from other video rental companies like Netflix. Although the company filed for bankruptcy in 2010, it was purchased by the Dish Network family in 2011 and “is a leading global provider of in-home movie and game entertainment with over 2,500 stores throughout the Americas, Europe, Asia and Australia. The Company is one of the strongest and most recognizable entertainment brands in the world.” (“Company overview,” 2011). Prior to its 2011 Dish Network acquisition, James Keyes served as the CEO. “Dish Network reported that its Blockbuster unit had turned a $13.9 million profit for the first quarter on revenue of nearly $334 million” (Frankel, 2012). SWOT ANALYSIS Strengths * High brand familiarity. * Successful operations in global markets. * Loyal customer base. * Wide array of choices offered to customers. | Weaknesses * High operating costs. * More expensive than some competitors offering same services. * Rentals need to be returned...
Words: 2868 - Pages: 12
...Strategic Management Netflix Jorge Tarzijan Questions • 1. Would you have been long or short on Blockbuster stock at the time of the case? How about Netflix? Why? • Note: Assume that long means to buy shares of the company and short means to sell. • 2. Did Netflix provide similar services for consumers that Blockbuster did? How did this evolve over time? • 3. Compare Blockbuster’s and Netflix’s business models. How might the differences affect the respective company’s strategies? Would you have been long or short on Blockbuster stock at the time of the case? How about Netflix? Why? • Key points (choices) in Netflix’s business model: • The recommendation system: It includes: • • • • • A ranking of titles that closely matched the customer’s preferences A listing of the ratings of the film by other Netflix customers A collection of reviews by subscribers There was a filter that screens those movies that were out of stock (to avoid customer frustration). Customer information may generally become an important competitive advantage. Would you have been long or short on Blockbuster stock at the time of the case? How about Netflix? Why? • A national inventory system: • The combination of a large national inventory, a recommendation system that drove viewership across the board catalog and a large customer base made Netflix a force to be reckoned with, especially as a distribution channel for lower-profile and independent...
Words: 673 - Pages: 3
...Bonnell’s decision was presumably based upon the positive recognition given to the Atari name brand by teenagers, and adults in their 20’s and 30’s. The key issue facing Infogrames is whether name branding is a source of sustainable competitive advantage. Conclusion and Recommendations Infogrames’ implementation of a name branding strategy will not be successful for two reasons. First, the following analysis reveals that there are three key success factors for software companies participating in this industry. Infogrames’ acquisition of Hasbro does not help them to better meet any of these three objectives. Second, Infrogames has rationalized the acquisition of Hasbro based on the name branding strategy using the Atari moniker. The analysis, however, reveals that there is no competitive advantage gained on the software side of this industry for name branding. In short, consumers do not appear to make their game purchases with any regard whatsoever for the company that produced the game. As such, the acquisition of Hasbro, and the name branding strategy, will be a failure for ISEA because neither the acquisition nor the branding strategy contributes to the key success factors identified for this industry or to achieving a sustainable competitive advantage. Analysis External Environmental Conditions (General Industry): The gaming industry is growing, but it is consolidated, which produces a high level of competition between companies fighting for market share....
Words: 1507 - Pages: 7
...* How strong are the competitive forces in the movie rental marketplace? Do five-forces analysis to support your answer. Firms in Other Industries Offering Substitute Products There is a small amount of possibilities for substitutes. The only substitutes would be illegally obtaining the movies by downloading or streaming, purchasing “bootleg” DVD’s, or waiting until the movie is aired on public or cable TV stations. Suppliers of Raw Materials, Parts, Components, or other Resource Inputs Consisting of only a small number or suppliers, buyers do not have the upper hand. If suppliers run out of stock or decide to cut supplies short, there are not many alternatives to obtain DVD’s or right to a movie. The seller has the power to control distribution and prices. Buyers Buyers have limited powers and options. An avid movie renter is limited to the selection available in store or library on line. The movie rental companies are limited to the supply they can purchase and stock their stores with. They are unable to control prices, but larger companies do have the upper hand since they can order larger quantities to get a better deal. Rivalry among Competing Sellers There are very few competitors in the movie rental industry of which consist of Netflix, Blockbuster, and small businesses. These few control overall market share of the industry. The main competition is between Netflix and Blockbuster. Blockbuster is currently the leader in movie rentals until Netflix...
Words: 3503 - Pages: 15
...Movie retail industry includes such companies that rent DVDs, Blu-ray discs and even video games which are usable on home-based electronic equipment (Espedido Julian, 2010). Many companies are participants in this lucrative business and they include such companies as Wal-Mart, Netflix, Blockbuster, Intelliflix, Redbox and GameZnFlix among others. Both Netflix and Blockbuster companies are presently the leaders in the rental movie industry and therefore the major rivals in the rental movie industry. As to Blockbuster, it has a quite lengthy convention in the business. The Blockbuster has existed since the year 1985, even as Netflix entered its 12th anniversary this year. This gives Blockbuster an edge of existence over its close competitor Netflix. This paper intends to critically provide an in depth analysis for Arthur Thompson's case study entitled "Competition in the Movie Rental Industry in 2008: Netflix and Blockbuster Battle for Market Leadership." It will comb thoroughly issues like the trends which affect either negatively or positively the movie rental industry with utmost reference to Netflix and Blockbuster in respect to their fight for the market headship, scrutinize in detail the competitive movie rental industry environment, and by extension give detailed discussion on the use of both the SWOT as well as reasonable scorecard to evaluate Netflix's battle strategy for market leadership on the whole. The video rental industry (formally known as home entertainment or leisure)...
Words: 1316 - Pages: 6
...Case Discussion #4- Netflix 1. How strong are the competitive forces in the movie rental marketplace? Do a five-forces analysis to support your answer. In my opinion, they are not strong at all. There are very few competitors that do control market share and a number of small businesses represent the remaining market share in the movie rental market place. Rivalry among competing sellers is common; the top competitors are Netflix, Blockbuster and local movie stores. Large stores such as Blockbuster have physical stores, unlike Netflix, are able to stock their stores with a larger number of available rentals for new releases, while small stores order much lower quantities. The threat of Potential new entrants into the movie rental marketplace places a strain on the current controlling powers, such as Red Box. Red Box is based on an idea that Blockbuster employed, which deployed 50 tester vending machines that rented movies. With new entrant, there is a threat for losing market share. Buyers have limited power, the more you buy, the lower the purchasing price. Also, if there is a demand which the seller is unable to supply, movie rentals stores are readily available through other means. Now, we are able to request the movie online, select for the movie to be mailed or even illegally downloading or streaming the movie from another third party. There are not many substitutes available. Buyers can either wait until an illegal bootleg´ version is available for sale or find other...
Words: 1380 - Pages: 6
... PROFESSOR BUCKLEY Case: Netflix’s Business Model and Strategy in Renting Movies and TV Episodes (case 6 in text) 1. How strong are the competitive forces in the movie rental marketplace? Do complete five-force analysis to support your answer. The five force model of competition contains 5 sections of competitive forces which include: suppliers, buyers, potential new entrants, firms in the industry offering substitute products and rivalry among competing sellers. * Suppliers- my analysis shows that this is the strongest force in the industry. They are the one that set market prices and control the distribution of their product. The amount of movies produced all depends on them. If suppliers decide to vertically integrate forward, businesses like Netflix and blockbuster will definitely be wiped out of business. * Buyers- these are the people that accept the market prices. They have no say although the market works to satisfying their needs. They have limited choice in terms of finding other entertainment sources except visual entertainment and therefore accept whatever restrictions the market sets for them. This is not a strong force in this industry. * Potential new entrants- considering that competition is high in this industry and many businesses have set up their market status it is hard for new businesses to enter this market. Netflix is a dominant business in the market and has almost managed to wipe put blockbuster and movie gallery into bankruptcy...
Words: 2704 - Pages: 11
...Case Analysis Blockbuster vs. Netflix 1. Mission/External Analysis 2. Industrial Analysis 3. Internal Analysis 4. Financial Analysis 5. Assumptions/Challenge/Objectives 6. Alternative Analysis 7. Resolution For years Blockbuster dominated the movie rental scene crushing the local competition with its wide selection, huge inventories and longer rental periods. Over the years though, Blockbuster has lost it strangle hold over the competition and filed for Chapter 11 bankruptcy protection in September 2010. Blockbuster competition won because they evolved to meet the demands of the current customer. The biggest rival that Blockbuster competed with was Netflix, which was started in 1997 and established its subscription service in 1999. The competitive forces in the movie rental marketplace expanded in the early 90’s with the creation of the DVD movies. Like pervious attempts to move away from VHS tapes, DVDs players were very costly at first. As time went on, DVD’s players became cheaper to produce and many of them where incorporated with home theater systems due to the demand of people who wanted to watch movies on their own big screen. With this boom in DVDs’ it created a demand in the movie rental marketplace. Since Blockbuster was apart of Viacom, which was a multimedia conglomerate, they were able to provide them with supplier power and buyer power. Blockbuster was able to outspend the competition, which in...
Words: 1620 - Pages: 7
...characteristics of the online movie rental business? 2. What is Netflix’s vision? 3. What is Netflix’s strategy? What type of competitive advantage is it trying to achieve? 4. How do Netflix’s business model and strategy compare to those being employed by key rivals, particularly Blockbuster? 5. How is the online movie rental business changing? What are the underlying forces of change and how are they impacting the industry? 6. What key factors determine success in the online movie rental industry? How important is technology to Netflix’s success? 7. What does an analysis of Netflix’s performance, both financial and strategic metrics, reveal? What is the story of the numbers in case Exhibits 3, 4, 5, and 6? How does its performance compare with that of key rivals—as shown in case Exhibits 7 and 8? 8. What do you see as Netflix’s competitive strengths and weaknesses? Is there a good market opportunity here for Netflix? What external threats does the company need to be concerned about? 9. Do you believe that Netflix has built a sustainable competitive advantage in the online movie rental business? Why or why not? 10. What does Netflix need to do to strengthen its competitive position and business prospects, given the competitive actions of Wal-Mart and Blockbuster? What specific actions should founder and CEO Reed Hastings take? 11. How are Blockbuster and Wal-Mart likely to react to the strategic moves that you have recommended that Netflix make? 12. Would you buy stock...
Words: 1035 - Pages: 5
...Blockbuster: Movie Rentals in the Digital Era SWOT Analysis Internal Strengths If a strength or a weakness is ambiguous, explain the reasons that you have to classify it as a strength or a weakness. * Overall size of the company: Blockbuster is #1 in the industry. In the entertainment industry size is very important. Large companies are able to get better deals from movie studios. * Management team is open change. The management of the company appears to be open to new ideas. This will allow the company to adopt to new challenges. * Aggressive expansion and acquisition performance. The company seems willing to expand to new areas. They have a successful record of successfully acquiring other businesses. * Established name and customer loyalty. The company has a very widely recognized name. Many consumers are very loyal to Blockbuster. It is very likely that they will purchase the company’s products if they are offered through a different format. * Offers rentals via stores and online * Strong international presence. Blockbuster has established a very strong brand equity in many countries of the world. This is a major strength if the company wants to expand internationally. Internal Weaknesses * Many format changes over its history has created consistency issues. This has resulted in confusion among consumers. Many consumers have negative feelings towards Blockbuster based on their past experiences. * Lack of first mover...
Words: 893 - Pages: 4
...Blockbuster Analysis Company Background Information The first Blockbuster store opened in 1985 in Dallas, Texas and has now expanded to operate 6,500 video rental stores (“Blockbuster Inc.,” n.d.). The chain began as a competitor to smaller video rental stores with a much wider selection in movie and eventually game rentals (“Blockbuster Inc.,” n.d.). Blockbuster quickly grew and opened stores across the nation along with its first stores in London and Canada in the late 1980s (“Blockbuster Inc.,” n.d.). In 1994 Viacom bought out Blockbuster after the company had acquired two music companies, Sound Warehouse and Music Plus, making it a very successful corporate giant in the video rental business (“Blockbuster Inc.,” n.d.). Although Blockbuster has faced many challenges with its “new ownership, increased competition, and a relatively soft market for videos,” Blockbuster has been able to remain in the movie rental industry (“Blockbuster Inc.,” n.d.). Despite the company’s struggles and dwindling cash flow in the late 1990s, Blockbuster decreased its rapid expansion, but slowly continued to open stores so that it featured a store close to every large neighborhood in the country (“Blockbuster Inc.,” n.d.). Currently, Blockbuster is still facing struggles in the video rental industry but is working to compete against its newer main competitors, Netflix and Redbox (Merced, 2010). After filing for bankruptcy in late September of 2010, Blockbuster was purchased by...
Words: 7812 - Pages: 32
...Netflix in 1997. During this time, Netflix offered DVD rentals by mail. As Netflix went public in 2002, shortly a year later their subscription reached the one million mark (Netflix Management, 2011). Recently, Netflix is recognized as one of the 50 most innovative companies, ranking number eight for “streaming itself into a $9 billion powerhouse (and crushing Blockbuster)” with 20 million subscribers (fastcompany.com, 2011). This success shows how Netflix embraced a business approach where their mission was to take the troublesome experience of everyday consumers and transform them into a business opportunity. A will describes and evaluate Netflix’s innovation strategy, the specific products offered to their members, and the benefits that the company brings to its customers and employees. To begin, innovation goes beyond an invention. It captures the opportunity for change, growth, and market leadership that allows leaps within the industry in multiple ways. Netflix’s Innovative Overview The outlook for Netflix has developed a trend of continuous growth with subscribers and providing products with a substantial cost advantage by distributing a wide variety of titles that appeal to different customer groups. The success of Netflix was simply listening to consumer’s feedback regarding the services and products in the DVDs rental industry. As a result, Netflix absorbed the lucrative cost in unattractive late fees. Instead, Netflix offers no late fees, no membership required, the ability...
Words: 2063 - Pages: 9
