Blockbuster Llc

On the horizon, Blockbusters number of competitors should steadily increase from new emerging technologies. If Blockbuster extends into the realm of VOD, Legal Movie Downloads, or Digital Video Recorders (DVR), it must realize there are existing and powerful players in these markets already. This new technology is shaping the market for many deals or partnerships. They will face fierce competition, but in the future, Blockbuster must not find it self on the outside looking in.

The movie rental industry is a living industry; there are constant changes with advances in technology, rights management, and the slow, but steady, move away from physical Media. Companies such as Netflix, Hulu, RedBox, and Blockbuster are being forced to look at new business models and try to keep up with these changes.

Blockbuster revolutionized the video rental industry. Founded in 1985, by David Cook, the company became the leader of the video chain industry by 1988 (Wooldridge, B. R., Matulich, E., & Riddick Jr., J. C. 2007; “First Blockbuster,” 2012). However, by September 2010, Blockbuster filed for section 11 bankruptcy (Ahmed, 2011). The external changes in the market forced Blockbuster to reassess its business model and ultimately lead to the bankruptcy decision. An analysis of Blockbuster’s organizational challenges identifies failure in risk response and planning, thereby impacting performance, process, growth, and personnel prior to implementing new business strategies.

3. Gander, Stephen. (2013). Titled: Reasons Blockbuster Failed at Failing. TIME.com. N.p., Oct. Wide-Web. 10-Dec.

Blockbuster was “the largest movie rental chain” in the Movies industry around the world (Biesada a). According to Rourke, Rothburd and Stansell (2006), Blockbuster mainly focused on “providing in-home rental, retail movie, and game entertainment”. It created 9,100 video stores and provided services to almost three million of customers in America and 24 other countries (p. 74). In 2010, the company filed for bankruptcy since it failed to adapt new technology in their strategies, and “was sold to satellite TV service provider DISH Network in 2011” (Biesada b).

Blockbuster Entertainment, Inc. was once a highly successful and profitable brick and mortar home movie and video game rental store. At its peak in 2004, Blockbuster had up to 60,000 employees and more than 9,000 stores. The idea behind Netflix came from an unsatisfied, embarrassed customer of Blockbuster, Mr. Reed Hastings, now CEO of Netflix, paid a $40 late fee because he returned the movie Apollo 13 six weeks later (Zarafshar, 2013). He began to contemplate ingeniously about a notion to change the movie-leasing pattern into a more pioneering industry. In 1997 Netflix was started as a DVD rental-by-mail business without subscriptions. In 1999, taking a stride additional in the direction of evolving the industry, Hastings began the subscription-based business mode based on renting DVDs by mail with plans reliant on the quantity of titles taken at a time. Netflix put forward 120,000 titles for limitless monthly DVD rental with free shipping no late and per title fees. Since that time Netflix has become one of the most popular subscription services in the world, and is now valued at over $28 billion and steadily increasing. What factors contributed to the success and failure of these two companies?

The success of Netflix forced Blockbuster to see the growing popularity of rent-by-mail formats. In 2003 Blockbuster launched a rental subscription program, which would allow subscribers to rent an unlimited number of movies during the subscription period like Netflix, but with Blockbuster there was no waiting for movies to arrive. Blockbuster also fine-tuned its rental program and introduced a no-late-fee policy to compete against the growing number of subscribers to online rental companies. In 2004 Blockbuster

Blockbuster is the largest movie rental retailer. With its opening in 1985, Blockbuster has pursued an ambiguous program of growth and expansion. Currently, Blockbuster owns and operates over 9,000 stores both domestically and internationally. In addition, Blockbuster franchises about a quarter of its stores. It is important to note that Blockbuster is undergoing a managerial struggle at the present time. The current CEO, John Antioco, and a major shareholder, Carl Icahn, are disputing Blockbuster’s strategy. Mr. Antioco has threatened to resign if Mr. Icahn succeeds at attaining a position on the Board of Directors1. Mr. Antioco believes that Blockbuster needs to develop new strategy to respond to the current market

Blockbuster’s restructuring of the company under its new owners shows how they were open to organizational change. The text describes organizational change as the movement of an organization from one state of affairs to another. Blockbuster completely changed their strategy and technology in order to compete with the new technology based companies that put them in this position in the first place. Simply put, no one visited the stores to rent movies when they could just turn on their television to order on-demand showings for the exact same price without leaving their home or grab a couple movies for a dollar apiece while grocery shopping. If they did not change they were sure to fail as a business and the company would disappear into the long list of companies that failed in the economic recession. The change was forced by other companies’ utilization of technology that caused a drastic change in the market conditions. This shift enabled the cheaper, more convenient home entertainment to steal a huge chunk of market share from Blockbuster’s traditionally structured company. Blockbuster enjoyed a long period on top of the movie rental/ home entertainment industry and this could possibly be what caused the success of these newer

The video rental industry began with brick and mortar store that rented VSH tape. Enhanced internet commerce and the advent of the DVD provided a opportunity for a new avenue for securing movie rentals. In 1998 Netflix headquartered in Los Gatos California began operations as a regional online movie rental company. While the firm demonstrated that a market for online rentals existed, it was not financially successfully. Netflix lost over $11 million in 1998 and as a result significantly changed the business model in 2000. The new strategy included focusing on becoming a nationally based subscription model and focusing on enhancing the subscribers experience on their website. The change in

untouchable and we were all doomed to a lifetime of late fees and limited movie

The presence of Netflix and Blockbuster in the movie rental industry has assisted me in developing this analysis of each corporation’s strength, weaknesses, opportunities, and threats as followed:

Netflix‘s business model and strategy compare closely to its key rivals. Although, Netflix won a patent that covered much of its business model and could be used to help stifle competition in the future (Thompson C-33) . Netflix has a team of executives that manage only the on-line DVD rental enterprise. They are well established and use a very sophisticated software program thereby making movie selection easy and fun. In my analysis, Blockbuster has many retail stores to contend with and many other facets of a business enterprise, thereby not having a unique team of individuals solely dedicated to the on-line DVD rental business. Wal-Mart would be Netflix’s greatest fear due to the enormous capital available and expertise that could be employed, yet Wal-Mart continues to lag behind Netflix. Wal-Mart’s online software needs a lot of debugging, whereas Netflix had already spent several years debugging its software (Thompson C-37).

Financial data shows that the company has recorded revenues of $ 788 million in the second quarter of 2010, with a reduction of $194 million if we consider the revenues of the same period the year before. Blockbuster have finally filed for Chapter 11 Bankruptcy carrying $900 million in debt. (Blockbuster Inc – Company profile, 2009).

Currently, there are only a few stores in existence; “it continues to operate in Alaska and Texas for those last of the hardcore video renters”. Blockbuster will soon be extinct.