During the 80s and 90s, Blockbuster dominated the US home video rental market. However, the emergence of Netflix in 1997 with its ‘rental by mail’ model challenged Blockbuster’s business model (and...

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During the 80s and 90s, Blockbuster dominated the US home video rental market. However, the emergence of Netflix in 1997 with its ‘rental by mail’ model challenged Blockbuster’s business model (and market dominance). Blockbuster’s market position was further weakened when Netflix began to stream video content directly to consumers’ computers. In this case study, you are required to prepare a 3000-word report that examines how “Netflix beat Blockbuster Video”. This assessment focuses on Strategic Choice and Strategy in Action. You should specifically address the role of technological diffusion, first movers and followers, and innovation. In addition, please consider whether Netflix will continue to remain as the dominant online streaming provider in the US? Your report must be structured as follows:1.Introduction (5 marks)2.Institutional Background (5 marks)2.1. A brief history of Blockbuster2.2. A brief history of Netflix3.How Netflix beat Blockbuster (20 marks)3.1. Changing technology3.2. Retail outlets versus operating online3.3. Pricing strategies3.4. Netflix’s innovations4.Will Netflix remain the dominant provider of online video streaming? (15 marks)4.1. Netflix stumbles: The demise of Qwikster4.2. Netflix rebuilds: The rise of original content4.3. The future of Netflix
Answered Same DayApr 19, 2020MNG93002Southern Cross University


Sundeep answered on Apr 30 2020
51 Votes
Netflix V/S Blockbuster! - A battle which changed the movie watching experience 16
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Table of contents
Introduction -----------------------------------------------------------------------------------------------3
ief history of Blockbuster--------------------------------------------------------------------------4
ief history of Netflix--------------------------------------------------------------------------------6
How Netflix beat Blockbuster with Changing technology-----------------------------------------8
Retail outlets versus operating online-----------------------------------------------------------------9
Pricing strategies----------------------------------------------------------------------------------------11
Netflix’s innovations-----------------------------------------------------------------------------------12
Will Netflix remain the dominant provider of online video streaming? ------------------------13
Netflix stumbles: The demise of Qwikster----------------------------------------------------------13
Netflix rebuilds: The rise of original content-------------------------------------------------------14
Conclusion and the future of Netflix-----------------------------------------------------------------15
Strategy is a plan of action that is devised and created in order to achieve a long term goal. Strategy is a fully created plan of action that is either to create a new thing in the market or to destroy the old thing already available in the market. In today’s dynamic market, it is a question of competitive survival and sustainability by competitive advantage. It is a pressure on each and every frim in the sector to innovate, offer better products, improve quality and speed, this has led the managers to incentivise and use the strategy tools such as QTM, reverse engineering and benchmarking. The tools have taken the place of strategy in the organisation and nowadays the hy
id model of implementing the use of tools with the help of a planned strategy is into action. There are always risks and uncertainties in an assignment strategy which leads to the development of a strong support lying on the side of the positives of the strategy. A strategy is devised by Mintzberg are the 5P’s which are identified with the term strategy. The 5 P’s are: Plan, Ploy, Pattern, Position, and Perspective. In the cu
ent scenario where Netflix overthrew the reign of Blockbuster, the strategies and the methodologies and the mind-set behind the great pull over the technological change and overthrow of the older mind-set is explained. The growth of Netflix with the change in the technology and adapting a future technology to change the way the organisation works is understood.
Blockbuster Inc was the biggest video rental chain in the world which provided the service of video renting, movie renting and also game entertainment. Blockbuster had a large chain which supported 9000 video stores and in total they could service to 3 million customers in the United States, its te
itories and 24 other nations everyday! Blockbuster was an organisation which was founded in the year 1980’s and was efficient enough to grow into a global chain which served the video cassets, DVD’s and the video games in stores and as well as through online subscription programme. Viacom had some stake in the functioning of the Blockbuster but it sold of majority of its stake in the year 1999 and sold off the remaining shares in the year 2004. The company appeared in lawsuits due to the failure of the technique of no late fees policy and the lost income due to extended viewing fees by the customers. An attempt was made to merge with the Hollywood Entertainment Cooperation, which failed.
Huizenga was the dominating voice in the cabins of Blockbuster in the mid years of 1980 and he was the one who would determine the future of blockbuster. By the end of June 1987, Blockbuster had the ownership of 15 stores and the franchise of 20 other stores. With the strength by his side, Huizenga was all set to make Blockbuster the leader in the world video renting department. Blockbuster was all set for an aggressive expansion policy which took into consideration the policies such as the store would be open from 10am till midnight and the rental plan included a period of 3 days, this encouraged the customers to rent more than 1 DVD per day. The DVD video system was majorly dependent on the hits of the movie, but approximately 70% of the revenue and profits of Blockbuster came from the non hit movies due to them being available at a cheaper rate from the distributor. (Gandel, S., 2010)The management at the blockbuster decided to eschew the revenue and profits from the X rated adult films opting, instead of the family environment business. Blockbuster also established its 6 regional offices which included a distribution centre at Dallas, Texas that prepared the tapes that were to be used at stores. The expansion programme of Blockbuster continued and in the year 1988, Blockbuster purchased the Video Li
ary Inc for a price of $6.4 Million plus stock, also blockbuster made a fantastic deal with the United Cable Television Cooperation to open up approximately 100 franchise stores over the next 2.5 years with an exchange of 5% of blockbuster’s shares which was worth $12.5 Million. By the end of November, the stake had risen to 20%. With the count of 200 stores, Blcokbuster had become the largest video rental chain in the country. With the end of the year the total number of stores with the name Blockbuster had reached a count of 415.( Gandel, S., 2010)
In April 1989, despite the attempts to buy other video rental chains, the stocks of Blockbuster suffered a setback when an analyst at a large stock
okerage firm let out a report which aimed at the...

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