...17 countries worldwide. It is headquartered in the Renaissance Tower in Downtown Dallas, Texas.[1] Because of competition from other video rental companies like Netflix, Blockbuster has seen significant revenue losses. The company filed for bankruptcy on September 23, 2010. Strengths * Lead market share of online rentals * Low fixed costs * Worlds largest selection of DVDs * Fastest delivery time of any online DVD rental company with over 35 DCs * Service: over 90% of DVD's are received by customers within one day of ordering * Strong website (shopability, navigation, reviews) Weaknesses * Can't control most important expense: shipping expenses * Older demographic has a hard time understanding their concept * Watch instantly feature only allows a small selection of DVD's * Distribution time * presence in only DVD segment Opportunities * Pricing segmentation (i.e., different plans) * Online distribution * Other types of rentals (Video games, educational, institutional, etc) * Internationalization * Expanding to Video Game rental Threats Rising stamp costs, Other larger retailers launching into similar space (i.e., Wal-Mart, Online digital distribution iTunes, Napster Redbox, Blockbuster allowing the rental of games in addition to movies Like most brick-and-mortar rental businesses, Netflix often has trouble providing enough copies of new, popular movies Strategy Used Blockbuster video began to sell its stock of dvds and video games before they...
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...Netflix Assets We classify our streaming content obtained through a license agreement as either a current or non-current asset in the consolidated balance sheets based on the estimated time of usage after certain criteria have been met, including availability of the streaming content for its first showing. We amortize licensed streaming content on a straight-line basis generally over the term of the related license agreements or the title’s window of availability Content is obtained through direct purchases, revenue sharing agreements and license agreements with studios, distributors and other suppliers. DVD content direct purchases or revenue sharing agreements. Streaming content is generally licensed for a fixed fee for the term of the license agreement but may also be obtained through a revenue sharing agreement. DVD library is its non current asset. The Company amortizes its direct purchase DVDs, less estimated salvage value, on a “sum-of-the-months” accelerated basis over their estimated useful lives. The accounting method for backlog DVD’s was changed after 1994. Our recent survey work suggests that NFLX streaming offering is compelling and should get more so as it acquires additional streaming content. In turn, this is creating a virtuous cycle whereby NFLX sub base grows, leading to greater financial resources to acquire more content to improve the user experience and continue to grow the sub footprint. Additionally we believe DVD costs may fall quicker...
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...like Netflix and VOD). These services can even better serve the customers’ needs for a lower price, while maintaining significantly lower operational costs. This is especially relevant for the VOD, providing both the selection and convenience of Netflix and allowing spontaneous purchases like Blockbuster. Second, Blockbuster’s equity is mostly invested in real estate and movie stocks. Thus, if Blockbuster would decide to alter it s activities to accommodate to the changing market, the resources needed to make this change happen are enormous (time, cost and physical effort). Third, based on their past behavior, it could be estimated that Blockbuster typically operates in a conservative manner, with slow reactions to market changes- this can be exemplified by their very late 2004 response to Netflix, and their blunt avoidance of reaction beforehand. Fourth, taking into account past performance of Blockbuster’s stock before 2006, we can identify a bearish trend, hinting towards the effect of the market forces on Blockbuster. Overall, we estimate that strong market competition from disruptive services enabled by emerging technologies, combined with the current position of Blockbuster, would not allow the company to survive in the market in the long run. We would have recommended being long on Netflix’s stocks. Netflix indeed recognized that VOD composed a significant threat, and that an immediate action had to be taken to sustain its market position. Considering that Netflix is an...
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...Netflix strategy has no brick and mortar stores, big stores with a large variety of movies in stock. Netflix relies on the internet for customers’ orders and mail system for the delivery. The company does not have late fees, fluctuating monthly fees, predetermined rental periods, instead has a flat fee. Netflix, allows its customers to view unlimited streaming of movies and TV shows for a monthly fee, and has also developed platforms to deliver its titles for Nintendo Wii, Xbox 360, PlayStation 3, and TiVo. Netflix also supports decks from Panasonic, Insignia, and Seagate, and a number of Android and Apple mobile devices including the iPad. Though Netflix has faced some challenges in previous years because of changes it made to its pricing strategy. Netflix has a strategy that would sustain its competitive advantage for many years to come. Netflix does not have to do or perhaps little marketing to rise to the top of the online marketing. A few well-placed ads will do the trick. Simplicity is the idea, so customers do not feel the pressure. Although, the numerous choices overall, makes Netflix an outstanding company to stay to watch the customer’s preference. During the company's rebranding strategy, there was much confusion with the customers. Some of the customers felt betrayed by Netflix and switched to other services such as, Hulu and Blockbuster. This being said, most of their customers stayed and went along with it. Though they lost some customers during this time, it...
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...Netflix in Action The Netflix rise had many factors but the greatest was that the CEO Reed Hastings decided to invest in his streaming technology and did not want to follow the same business strategy that others used. It was this kind of innovative thinking that has made Netflix the conglomerate giant that it is today. This story is a great example of Management in action because like all businesses Netflix was a tiny company with very small revenues and within 5 years had a tremendous amount of growth, now it dominates the online streaming market. Blockbuster was very successful for many years and a firm control over the market. With over 25,000 employees and over 8,000 stores and valued at $8 billion dollars in 2005 it dominated its industry. Since 2000 when only a few Americans had broadband, Hastings knew that cassettes would be a thing of the past. His mailing DVD system was good but he knew what the future would bring. He knew that he needed something universal and that would be user friendly. He had originally designed a box but it required 16 hours of download time and knew this would not be as popular and later abandoned that project. Once broadband became faster Hastings knew this was the perfect time to favor his online streaming creation. Blockbuster who was aware of this upcoming threat, decided to focus on sales and expanded its stores to sell other merchandise as well. Hastings took a different approach and wanted to save operating costs and decided no retail...
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...Closing of Blockbuster Alimatu Asumah Organizational Behavior Southern New Hampshire University I. Introduction a. Closing of Blockbuster b. Challenges faced by Block c. Filling for bankruptcy II. Dish Takeover and Tactics a. Dish Purchase and Layoffs at Blockbuster b. Exploring new channels c. Blockbuster need for innovation III. Employment and Morale a. Compensation and Quality of work b. Morale and Job Satisfaction c. Corporation Image IV. Conclusion I. Introduction Founded by David Cook and Wayne Huizenga in the mid 1980’s, in the late 1980's and early 1990’s, Blockbuster Inc. was the leading in the video rental industry. Which grew quickly maintaining interest in the entertainment industry, including retailing music. Also growing nationwide, many American families were turning all over to movie rentals as a form of in-home entertainment. I propose that an organizational behavior theory that leads to a company’s success includes a rational system perspective and the most important things within these theories are formalization and specific it y of goals. Organizational behavior becomes standardize. Through formalization, organizational behavior becomes standardize making training of new employees easier for both management and the employee. Goal specification allows procedures for specific tasks to be performed along with a structured way for resources to be allotted (Kreitner 2012). When companies have a rational structure, expectations...
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...1.Netflix está tratando de encontrar maneras de convertirse en los consumidores la opción número uno, cuando se trata de "online stremming". Ellos están tratando de encontrar maneras para fortalecer las áreas débiles, obtener mas consumidores , y otras formas que les dará la ventaja en el mercado. Si una parte de la empresa es significativamente más débil que el resto, entonces tienen que encontrar una manera para que sea igual o superior que las otras partes de la empresa. Si, el CEO Reed Hasting dice que el futuro de la compañía está en los "stremming", entonces, yo supongo que, van a poner más tiempo, esfuerzo y dinero en la fabricación de la parte de la compañía de su sección más fuerte. 2. Netflix, en mi opinión, es el más fácil, la empresa más barata, más eficiente para ver películas. Algunas de sus ventajas son: Es más barato que la mayoría de los competidores, tiene una enorme variedad de películas y programas de T.V., y se puede acceder a él desde el lujo de su casa, oficina, teléfono/ tablets y entre otros, a diferencia de Redbox. Los recursos que tienen a su disposición sin duda les dan la ventaja. Redbox sería la solución más barata próxima a conseguir una película rápida, pero tienen una variedad muy limitada para elegir, también, tiene que levantarse y salir de la comodidad de su casa para conseguir la película. En un entorno poco saludable, como Estados Unidos, que ya perdió un porcentaje significativo de los clientes porque son perezosos y no quieren tener que...
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...Netflix Iva Flores Excelsior College Business Finance What is Netflix? Is it worth it to gamble your money on this stock? One may wonder should I invest in this company or just walk away. You would have to analyze the company's financial background and ensure they are financial health to invest in this company. To find information on Netflix you would have to search online and look at the stock market websites like NASDAQ, AMEX, and NYSE to review their past financial statements. Netflix is one of the largest leading internet television network company in the world today with over 50 million members in more than 40 countries. Reed Hastings and Marc Randolph started Netflix in 1997. In 2002, Netflix makes its initial public offering of 5,000,000 shares at $15.00 per share on NASDAQ under the tickler “NFLX”. (pr.netflix.com) They started streaming service in 2007 and made it easier for people to watch and enjoy TV shows and movies anywhere, any place, and anytime as long as they have internet connection, TV, computers, and mobile devices. This type of market is very competitive especially with all the changes that are going on in the future. There are many competitors that Netflix has to compete with like Redbox, Hulu, and other companies. Netflix core strategy is to grow their streaming subscription business domestically and internationally. Also, their goal is to expand streaming content, focus on programing an overall mix of context to satisfy customers...
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...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...
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...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. Therefore this force is also weak as potential new entrants will be highly unlikely to be able to sustain themselves....
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...We were on the “Oh, yeah, I forgot I was subscribing to that” plan. With the “Honey, we’ve had this National Geographic documentary DVD for two months — are we really going to watch it, or should we just send it back?” option. Then, in July, Netflix /quotes/zigman/87598 NFLX -7.37% tried to jack up the price of our subscription. Bad move. Why? Because it meant we noticed our subscription. Click to Play Has Netflix lost critical momentum? There were more woes for Netflix on Friday, as its shares fell another 5% and analysts continued to hammer on the drop management forecast in its U.S. subscriber base. Has Netflix lost critical momentum? Rex Crum reports. And so we cut it. It was only a few bucks. But there gets to be a point where you just get fed up leaking money at every pore. We already have two set-top boxes — from Apple and Roku — that allow us to stream videos on demand from a variety of different sources, including Amazon /quotes/zigman/63011 AMZN +1.00% , Apple /quotes/zigman/68270/quotes/nls/aapl AAPL -0.35% and Hulu, as well as Netflix. If I wanted to pay extra, I could get more of the same from Comcast /quotes/zigman/89307 CMCSA -0.35% as well. Apparently we weren’t alone in cutting our Netflix sub. The DVD rental and streaming company warned that the move was going to cost it a million subscribers. As recently as July 25, the company was expecting to have 25 million customers by the end of this month. Now it expects 24 million. That will actually...
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...Netflix Anthony Farias Strategic Planning for Organizations MGT450 Professor: Vivian Scott December 8, 2011 Abstract Founded in 1997, Reed Hastings observed; noticed and assessed that there was a growing demand for motion picture rentals. Netflix began with an offer for their ever-growing customer base in which competitors like Blockbuster and Hollywood Video had not brainstormed with the idea that would allow customers to select and purchase movie rentals right from the privacy of their own home. No need to wait in line in a retail store anymore for a secondary movie pick because their primary selection was ‘sold-out’; Netflix posed its strategic move against all other competitors and thus came into existence. In 2011 the conditions that all the home entertainment companies must implement to meet or exceed current standards is now more than ever needed with a lagging economy of more than three years. At the same time, consumers are striving to save money, time, and gas as all three of these conditions effect the movie rental industry. This research paper will address a brief history of Netflix, the competitive industry in which they compete, potential breakdowns, and finally an offer of speculation for how to address forecasted future breakdowns in a way that will turn them into positive possibilities. Netflix The vision of Netflix is simplistic: “Our vision is to change the way people access and view the movies that they love.” (Netflix.com...
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...INTRODUCTION Netflix is an Internet based organisation that provides online streaming and DVD rentals to customers all over the world. Founded in 1997 by Marc Rondolph and reed Hustings Netflix reached 27 million subscribers at the end of January 2013.In the beginning when DVDs first came out to the market the CEO and one of the founder OF Netflix Reed Hustlings take this as an opportunity, The plastic disc small size and light weight make it cheap to send it through mail. Netflix takes advantage of the US postal services and send rental DVDs to customers through mail and accept returns the same way. With time Netflix has evolved into a company with reputation of low charge, unlimited movies without a due date, no late fees shipping or handling fees. Netflix then makes it more easier for costumers by introducing the online streaming options to watch movies at their on time when ever they are free. The online streaming allows subscribers to browse by many different categories, such as moods, qualities, story line, release dates, music, and cultures. Netflix search features are highly comprehensive making finding a film very relaxed and fun. If someone wants to watch a specific show but does not seems to remember the name of show it can be easily lookup by the starring actor. After selecting a title the online database of Netflix shows a DVD case and details about all the actors and actresses staring in the film/show. Environmental scan of Netflix. Internal Analysis Netflix vision...
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...for consumers who wanted the movie viewing experience without making a purchase. The growth of the movie rental industry via an online presence I feel will continue to grow as more and more people become accustomed to the idea of owning or viewing things through a purely digital means. With a growth in any industry comes the inevitable competitiveness that we see between Netflix and Blockbuster. I would not be surprised to see Redbox throw their hat into the ring with online offerings in the future. 5) What is Netflix’s strategy? Which of the five generic competitive strategies discussed in Chapter 5 most closely fit the competitive approaches that Netflix is taking? What type of competitive advantage is Netflix trying to achieve? Netflix’s strategy was a “six-pronged” one: 1. Providing comprehensive selection of movie DVDs 2. Providing an easy way to choose movies 3. Providing a fast delivery of selections 4. Having no due dates for return 5. A convenient drop-it-in-the-mail return procedure 6. Aggressive marketing to attract subscribers and build widespread awareness of the Netflix brand and service. Of the five generic comparative strategies...
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...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 number of competitors is increasing. In addition, the...
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