...Blockbuster vs. Netflix Introduction Blockbuster opened in 1985 and in its “first 20 years of business, the movie rental giant opened 9.100 stores in 25 countries” (Laudon, 2007, p. 121). Netflix launched in 1998 using a new business model and became Blockbusters biggest threat. The paradigm shift in the rental industry from having to travel to a store and rent a movie to being able to have a movie delivered to your mailbox changed the way people think about media entertainment. The next shift will be having the technology to download movies and shows directly to a television. Analysis Blockbuster and Netflix are using two different information system strategies. Blockbuster, which is a traditional retail store with a physical location focused on creating a market niche. It used “an automated point-of-sale system” and was able to use “these data to monitor sales and to analyze the demographics, and rental and sales patterns for each store to improve its marketing decisions” (Laudon, 2007, p. 121). Netflix came onto the scene with a completely different strategy, product differentiation. Emphasizing convenience, they created a system to allow consumers to order movies sent to their customers homes and returned on the individual’s time schedule. Netflix was able to use mass customization and give consumers an individually tailored service without increasing the needed resources. Using the Business Value Chain Model, Netflix has used information technology on almost...
Words: 1034 - Pages: 5
...Blockbuster vs Netflix Q1. (a) What is Blockbuster’s Business Model? (b) How successful has it been? Ans: (a) We can define Blockbuster’s Business Model as a- Bricks Model. Because, * It has video rentals & sales stores. * Customers have to come to the stores to buy or rent movies from these stores. * It is a total physical process. (b) It was a successful model before Netflix entered into the video rental market. The reason behind that is, * They’ve 40% share of the whole U.S. video rental market . * From the video sales they’ve got $16 billion. * Enjoying a market share that will be gaining by very few firms in any industry. Q2. (a) What industry & technology for as have challenged that business model? (b) What problems why’ve created? Ans: (a) Industry -- Netflix Inc, 1998. Technology -- Online based video rental & sales. * Also offering postal service. * No need for a physical verification. (b) Problems created by that industry are, * They’ve offering value to this customer’s by giving the internet service. * People don’t need to go out to buy movies. * No more transportation cost will occur. Q3. (a) Is Blockbuster developing successful solutions to its problem? ...
Words: 715 - Pages: 3
...Strategy: Blockbuster vs Netflix LDR/531 Failure Analysis/Change Strategy: Blockbuster vs Netflix Organizational Behavior Theories The organizational behavior theories which explains Netflix’s success are two; decision-making and systems approaches. Netflix made the monumental decision to become a virtual dvd rental versus a brick and mortor provided a solution in the company’s goal and vision to be ahead of technological advances in the industry. Netflix took on the systems approach in understanding and measuring the company’s input and output processes. Netflix uses the systems approach to integrate and drive processes in developing adaptive capacities, driving innovation. Blockbusters organizational behavior theory focus was on scientific leadership. The company placed a great deal of focus on how to become more effective in the company’s brick and mortor business, redefining company objectives and direction. How employing this theory failed the company was the leadership decision to not pledge the same level or more focus on the click initiative which the company could not capture the needed momentum in becoming competitive with Netflix. Blockbuster could have had a more competitive edge over Netflix sustaining its presence in the industry if only the company could define better performance practices leveraging its click business over its brick and mortor presence. Role of the organization on the Fail/Success So how did an upstart company like Netflix tale down...
Words: 1224 - Pages: 5
...Blockbuster’s lack of blockbuster Frankie L. Jones February 11, 2013 BUS: 642 Thomas Hennefer Abstract Blockbuster video, the once dominant force behind consumers’ movie rental needs has suffered a significant loss in revenue to the rise of RedBox and Netflix. The competitive advantage offered by the two companies has tapped into Blockbuster’s market and cause a lack of blockbuster for the company. Since 2009 the company has continue to reported decreased revenue and profits against its competitors. In 2010 the company filed bankruptcy and has since then implemented new services and products similar to its competitors, however, customer’s still prefer RedBox and/or Netflix. Once upon a time on a Friday night after work, you were looking to go home, relax, and watch a good movie. You come up on a big blue sign with yellow lettering, and think, “I’LL RUN TO BLOCKBUSTER!” Today, we’re looking for the nearest RedBox, or browsing Netflix for a good flick. There was time when families would take a trip to Blockbuster, order a pizza, and make it a movie night. Today, people have the luxury of not even leaving the house to find a good movie; thanks to Netflix. After a routine run to Wal-Mart, Walgreens, or Kroger’s it has become second nature to browse the RedBox, especially since the cost is only $1. But what has happened to good ol’ Blockbuster? Over the past few years Blockbuster video locations have steadily declined. Blockbuster, the once powerful source for movie...
Words: 2466 - Pages: 10
... quality, and pricing schemes. Blockbuster quickly emerged in 1985 and began buying every small store they could, becoming the de facto sole franchise for movie rentals. This changed in 1999 when Netflix first began their DVD by mail service. Netflix rentals allowed viewers and movie watchers to rent movies from the comfort of their own home. Additionally, the customer wasn’t penalized for returning the movie late. The years that followed produced a long, protracted battle that Netflix appears to have survived on top. That being said, both companies made significant mistakes and have lost millions of potential customers in the process. In this paper, a brief history of each of the company will be presented, a diagnosis of the major problems, analysis into these problems, an evaluation of potential solutions and finally, recommendations for Blockbuster and Netflix to be able to address their problems. ANALYSIS Scott Cook founded Blockbuster Video and opened the first store in Dallas, Texas on October 26, 1985. Later bought by entrepreneur Wayne Huizenga, Blockbuster Video grew to over 4,000 stores in the mid-2000’s and earned the spot as the number one video rental store in the country. Blockbuster made frequent changes to their business model, by first adding video games; later music was added. In 1993, Viacom purchased Blockbuster for $8.4 billion dollars but by 2006, they were only worth $500 million dollars. In 2004, Blockbuster launched their online DVD rental...
Words: 2328 - Pages: 10
...NETFLIX Leading with Data Another “David vs Goliath” story that can be seen in this case, where Netflix as a new small player in the industry took the crown of the giants like Blockbuster. Netflix differentiated itself from other traditional movie rental companies and revolutionized the way customers watch movies in the industry by engaging IT to create its competitive advantage. The Video Rental Industry The video rental industry initially started in the 1970s, along with the development of VCR technology. At first, the industry was struggling because it got resisted by movies studios. However, in 1990s, things has changed where studios saw the video rental industry as a good opportunity to increase their revenue. Ever since then, people were able to watch movies directly from home. Later, in late 1990s, DVD format was launched. DVD has become the industry standard and had opened up a way for startup businesses, including Netflix, to compete in the market. As a result of the rapid development of technology and internet evolution, the industry, once again, has shifted into the streaming video online era. Company Brief Netflix is one of the largest online DVD movie rental company in the world. It was founded in 1998 by Reed Hastings, the current CEO, and Marc Randolph. Reed had come up with a brilliant idea over an event that took place when he rented Apollo 13 and was penalized with the $40 “late fee”. Then with the booming of internet...
Words: 894 - Pages: 4
...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
...Netflix vs. Redbox Assignment 1. Netflix: The target segment of Netflix is frequent users. Netflix offers customers an ever-expanding collection of TV and movie titles. The pricing range of the subscriptions varies depending on the type of plan. All plans will allow customers receive a certain amount of DVDs every month. So it is suitable to the frequent users, who may watch the movies regularly every month. They do not need to pay the money, which is related to the number of movie they borrow. And they are given the capability of renting as many movies as they can in a month for a fixed subscription fee. It may reduce their cost. In additional, for frequent users, they may frequently go out for the movies. So it is more convenient for them to rent Netflix’s movies, most of which are available on the Internet. Redbox: The target segment of Redbox is casual users. Unlike Netflix, Redbox charges the customers based on the number of movies they borrow, just as the traditional fee. As a result, if customer does not always watch movies, it may be the best way to choose Redbox. Netflix’s monthly subscription is too much for them, as they will be charged even if they do not watch the movies. Because such customers will only borrow a small amount of movie occasionally, it is cheaper for them to pay the money separately. And it is also very convenient for them to borrow and return the movies due to the Redbox’s kiosks, which can be found everywhere. 2. Netflix’s advantage:...
Words: 946 - Pages: 4
...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
...Blockbuster Meaning A thing of great power or size, in particular a film, book, or other product that is a great commercial success About Blockbuster: Blockbuster Inc. is a leading global provider of in-home movies and games entertainment. Introduction: provides Blockbuster Video stores and Online rental services. worldwide brand operating in more than 20 countries majority in USA Its stores are ubiquitous more than 8,000 stores Slogan: "The Movie Store at Your Door" PRODUCTS: Retailing and renting of DVD Blu-ray Video games. SIGNIFICANCE: Easily available Unlimited selection Wide variety of movies from different genre Small stores cannot compete Changes: 2004: launched online rental service Gain market share No late fees Video rental stores Important change was hiring a new CEO, James W. Keyes. CEO: James W. Keyes(since july 2007) former CEO of 7-Eleven(2000-2005) Vise president and chief operating officer of 7-Eleven DOWN FALL: unable to determine profitable goods missed sales opportunities financial difficulties Lost customer to Netflix REVIVAL: Quantitative approach JAMES W. KEYESQUANTITATIVE APPROACH: 1) computer models to figure out the best way by saving both money and time. 2) Inventory model 3) Queuing theory 4) Capital budgeting 5) Production scheduling 6) Planning for manpower development programs. 7) Transportation and aircraft scheduling 8) Preventive control and replacement problems ...
Words: 1596 - Pages: 7
...Discuss this product or service in terms of its current target market demographics using U.S. Census Data. The product/service I chose is in store movie rental and purchase. I.e. Blockbuster Videos. While DVD sales declined for a third straight year in 2009, consumer appetite for viewing movies at home remains very healthy as new physical and digital services for buying and renting movies gain in popularity. The proliferation of movie rental kiosk machines over the last year was probably the most visible sign of consumer interest in viewing movies at home. To understand the impact of rental kiosks and other movie services on household disc purchasing (DVD and Blu-ray), a survey was fielded to panelists who were identified as disc buyers and asked them to report their movie transactions from channels not tracked by scanning. This included rental transactions (both physical and digital rentals) and downloads. One finding from the study was that average disc purchasing (buy rate) among households who also rented movies on physical DVD or Blu-ray declined in 2009 at a steeper rate compared to the average for all disc buying households. The buy rate among households renting a movie on DVD or Blu-ray declined by -11% in 2009 vs. -7% among all disc buying households. Survey results indicated that 34% of these renting households had rented a movie from a kiosk. In addition, households renting from a kiosk are increasingly turning to kiosks to rent movies with 63% reporting that...
Words: 1471 - Pages: 6
...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
...NETFLIX Inc. Case Study BMGT500 Submitted by: Moid Ahmad Under guidance of: Mr. Roger L. Powell Introduction Netflix Inc. is considered to be in the video entertainment industry, which distributes to consumers through movie theaters, airlines, hotels, and in-home (Netflix, Inc; 2009). Netflix and its competitors serve in-home consumers specifically through a number of alternative channels, making up the different strategic groups or segments of their portion of the entire industry which includes brick and mortar (Blockbuster) and DVD vending machine rentals (Redbox), mail delivery (Netflix and Blockbuster), and online rental (Netflix, Amazon, and iTunes), pay-per-view video (available from specialty suppliers such as HBO and Showtime through your cable provider), and on-demand services (VOD; those offered through digital cable providers), as well as brick and mortar (Wal-Mart and Best Buy) and online purchasing (Amazon and iTunes). Historically speaking, this industry began as stand-alone brick and mortar rental stores such as Blockbuster and the later entrant Hollywood Video/Movie Gallery (which for the most part were all corporately-owned, with small portions of franchised locations) and local rental businesses. They started in VHS and progressed to DVDs along with technology and household adoption. They would typically carry about 2,500 titles and performed better when copies were rented and out of the store—the longer period the better. (Spinola) This would...
Words: 3702 - Pages: 15
...CORE ISSUES 5 Price Pressures 5 Competition 5 International Expansion 6 ANALYSIS 6 Industry Analysis 6 Business Model 8 Company Analysis 9 Competitor Analysis 11 Amazon 11 Blockbuster 12 Redbox 13 ALTERNATIVES 13 Additions of Subscription Fee Package 14 Introduction of Netflix' Pay-For TV Channels 15 Domestic Elimination of DVD-mail-in Services in 16 Strategic Partnerships 17 International Expansion 19 Market Strategy 20 RECOMMENDATION 22 CONCLUSION 26 REFERENCES 26 EXECUTIVE SUMMARY Netflix is the world’s leading subscription service provider, offering its members access to an extravagant collection of TV shows and movies. Initially, the company offered its subscribers a low price, single monthly plan, consisting of both the unlimited Internet video streaming service and a DVD-mail-in service. Subscribers could “watch TV shows and movies anytime, anywhere.” In July 2011, Netflix eliminated the combined plan and separated the two services into their own monthly plans. If subscribers wanted to continue receiving both services, they were obliged to sign up for both the services separately, Consequently, the resulting price increase of the new “combined” plan significantly increased subscription cancellations and resulted in a 50% drop in Netflix’ share price over one month ( Yahoo Finance, 2013). The Internet video streaming industry becoming increasingly more competitive, particularly due to the fact that many substitutes exist and...
Words: 6770 - Pages: 28
...CH 2 Netflix vs. Blockbuster: Case Study #1 Explain Netflix’s marketing strategy. Can it sustain its competitive advantage? Why or why not? Netflix is a great company with a massive market share that allows it to reach millions of customers around the world. A key component to its continued success is sustainable competitive advantage. Netflix has a major lead over its competitors in device distribution allowing them to reach millions more potential customers than its competitors. According to the case study “the Nintendo Wii alone expands Netflix’s potential members by 30 million users”. By making their service accessible to the vast majority of consumers in the United States and abroad they are able to solidify competitive advantage. Netflix’s library of titles is far larger than its competitors. Blockbuster may be able boast a number of titles close to Netflix but lacks in original content ex. House of Cards and Orange is the New Black. By boasting a massive library of titles coupled with original content Netflix has a unique advantage over its competitors. This has the potential to change with Amazons announcement that they will be entering the streaming market with original content as well. I believe that the final competitive advantage that Netflix has over its competitors is the brand itself. You will often hear Netflix mentioned in popular culture whether that is in commercials for the award winning series House of Cards or when Justin Bieber raps “… at my crib watching...
Words: 702 - Pages: 3
