Blockbuster LLC was founded by David Cook on October 19, 1985 and opened its first store in Dallas, Texas. Blockbuster was known for providing home movies and video game rental services through their stores, along with movie refreshments. The company was a success from the start, Cook designed each store to coordinate with its neighborhood by keeping its products geared specifically to demographic profiles along with new popular movie releases. Blockbuster expanded rapidly and became one of the world’s largest providers of in-home rental movies and games. In 2004, Blockbuster employed 60,000 employees in over 9,000 stores. The company’s inventory consisted of more than 8,000 Video Home System (VHS) tapes in more than 6,500 titles. Blockbuster …show more content…
As such, it is important to evaluate Blockbuster’s hard and soft infrastructures during their early days of growth through their darker days preceding their collapse. As expected, Blockbuster utilized a very tall hierarchical structure with several layers of management between frontline employees. Although, Block buster had strong structure, the issue lied with their decision making strategies being poorly executed. Decision making is the defined as the thought process of selecting a logical choice from the available options. When trying to make a good decision, a person must weigh the positive and negatives of each option, and consider all possible alternatives. For effective decision making, a person must be able to forecast the outcome of each option as well. In their early days, Blockbuster controlled the video rental industry with their large inventories and a monopoly on access to newly released movies. In the driver’s seat, they were able to set aggressive daily rental pricing models and apply steep penalties when movies were returned late. According to Dunx, over the years, Blockbuster management has always appeared to use a “heads down” management approach. With this style of management, the business focuses on the delivery of their current services, makes decisions within a vacuum and fails to integrate innovation into their daily management …show more content…
He was working toward TV and movies streaming. Netflix wanted to work with Block buster and wanted to assist Blockbuster and want to work as its digital extension. According to Ken Auletta Blockbuster denied to invest in new technology and they thought it was unnecessary to invest in a maybe business. According to Baskin company s’ top management was very narrow minded and they couldn’t see broader picture. They completely ignore changes that were taking place in the external environment the technological changes like online streaming. According to him it’s not always tech company s’ job to take credit for all changes in the world. In any market company who wants to succeed and want to stay on the top they need to take
3. Gander, Stephen. (2013). Titled: Reasons Blockbuster Failed at Failing. TIME.com. N.p., Oct. Wide-Web. 10-Dec.
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?
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.
Blockbuster implemented a new strategy for customers to access their rentals in “five channels of distribution: in-store, by mail, through vending machines and kiosks, online, and at home (direct to the TV)” (DATAMONITOR, 2009). However, this strategy was a reactive approach to the problem produced ten years behind schedule. Wooldridge et al., (2007) stated that Blockbuster should select and adapt their strategy to respond to the fast changing market and maintain a competitive position. This was an obvious failure for Blockbuster. The changes in the market produced a decline in profit at a faster pace than the strategies that Blockbuster implemented to combat these losses.
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
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 first failure of Blockbuster’s strategies, which lead it to bankruptcy, was the negative relationship with their consumers. While Netflix’s chief executive, Reed Hastings, recognized the technology had been grown rapidly and would change the transmission of movie rental industry, Blockbuster’s CEO, James Keyes, believed that consumers would still prefer to the brick-and-mortar rental structure. Thus, Keyes planned to focus on expanding Blockbuster’s stores into various departments
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.
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).
The movie studios want customers to be able to get their movies and entertainment as easily as possible. The easier it is for people to acquire their products the more likely it is that they will. By offering many different options for customers to obtain movies and entertainment, Blockbuster has a strategic advantage over its competitors. The convenience that Blockbuster can offer in their ability to distribute the movie studios products is a definite advantage. Another advantage
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.
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
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).