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Blockbuster

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Blockbuster Video’s Lost Competitive Advantage Analysis In its prime, Blockbuster Video held a considerable advantage in the video rental industry. The company’s large presence within the industry allowed for the company to build a competitive advantage through its ability to reach a much larger consumer base through multiple channels as well as hold the majority of shares within the market (Harress, 2013). Unfortunately, the company was not able to sustain this advantage long term for a multitude of reasons. Blockbuster’s fall from grace was not a sudden occurrence. There were many components that led to the mass rental chain’s downfall, such as: the Viacom merger, loss of trust with consumers, missed acquisitions, and failures to act in …show more content…

Under the new leadership of John Antioco, Blockbuster refocused on strengthen its video rental business which led to a brief increase in profits (Davis & Higgins, 2013). However, it was during Antioco’s leadership that Blockbuster would receive crushing blows to its reputation amongst the minds of consumers. At this time, Blockbuster’s current business model relied heavily on gaining revenue from charging consumers late fees (Satell, 2014). Late fees alone amounted to up to $300 million of the company’s operating income (Davis & Higgins, 2013). The company had been earning a large profit from the penalizing of its customers. This at one point was an understood risk, however in the midst of rebranding, Blockbuster introduced the “No Late Fees” campaign. The ambiguity surrounding the newest campaign to offset Blockbuster’s competition led to multiple lawsuits against the company that would later be settled with Blockbuster assuming responsibility (Almeida, 2011). It is during this period that many of Blockbuster’s patrons began to distrust the video rental chain which led to a decline in customer satisfaction as well as a switch in consumer …show more content…

While Netflix was only one of Blockbuster’s many competitors, the company’s success forced Blockbuster to alter its business model. Netflix was able to match Blockbuster’s inventory offerings because the company was able to save by eliminating cost associated with maintaining store fronts (Satell, 2014). In response, Blockbuster began a rental-by–mail and streaming service belatedly. The company, however, failed to use the late start into the new industry environment to create a stronger and compelling introduction to the online segment (O’Neill, 2011). This failure would be the first in many of Blockbuster’s missed attempts. Blockbuster would eventually lose the majority of its market shares to Netflix and

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