Blockbuster vs Netflix

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Blockbuster vs. Netflix

Introduction
Blockbuster opened in 1985 and in its “first 20 years of business, the movie rental giant opened 9.100 stores in 25 countries” (Laudon, 2007, p. 121). Netflix launched in 1998 using a new business model and became Blockbusters biggest threat. The paradigm shift in the rental industry from having to travel to a store and rent a movie to being able to have a movie delivered to your mailbox changed the way people think about media entertainment. The next shift will be having the technology to download movies and shows directly to a television.

Analysis
Blockbuster and Netflix are using two different information system strategies. Blockbuster, which is a traditional retail store with a physical
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122).
A few factors are working in Blockbuster’s favor as far as consumer draw. One is name recognition and another is eliminating late fees in the store. While the late fees were a substantial amount of Blockbuster’s overall profit margin (getting money without having to do any work if someone was late in returning a DVD), the hassle it caused once Netflix established a no late fee policy was turning many people away.

Alternatives
One of the biggest information technology hurdles that Blockbuster has to overcome is the two separate systems dividing the online service and the physical stores. While not as convenient as being able to order a movie from the comfort of your home and having it upload on the TV, if Blockbuster integrates the two systems it will be an advantage to the overall strategy.
“Microsoft and Netflix have unveiled a partnership under which Netflix will stream movies directly to consumers through Microsoft's Internet-based Xbox Live service” (McDougall, 2008). This strategy goes along with Netflix’s original agenda: to increase customer convenience. Anyone who is a Netflix subscriber and has an Xbox will be able to stream movies in the company library. This service should launch in the autumn of 2008.

Closing
While Blockbuster is trying to remain true to its origins and keep its core

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