Case Study Of The Blockbuster Model Cracks?

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.

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?

Blockbuster could make advertising deals with the movie studios where they would advertise upcoming movies in all of their stores. Advertising is very expensive and it is getting harder than ever to find advertising that can find their target market. Because of all the different means available of getting information potential audiences are spread out over a vast area. Advertising within Blockbuster stores would provide the movie studios with an advertising option that they know is going to find people that like to watch movies. This would also help create a buzz about their upcoming movies because of all the people that have a chance to see previews or ads promoting these movies well before their release dates. Many people that rent movies would go to the theatre instead if there was for upcoming movies by movie type. This means that they would be able to put ads for each type of movie in the related section of the video store to further focus on their targeted markets.

In 2011 Dish Network announced its acquisition of Blockbuster. This was a significant change in company strategy. The hope was with that highly recognized brand with more than fifteen hundred would help Dish to compete in video entertainment industry. Unfortunately these plans never materialized and Dish showed operational loss. In 2012 Dish started to close Blockbuster stores and had to lay off their employees focusing more on digital offering. But even this attempt was not successful and customers’ preferences stayed with Amazon and Netflix services instead. The reason of this failure was that it’s not enough to just implement changes. The process of transformation and vision of the goals are just as important.

“Never be without a movie”, a slogan that used to be successful for many years. Blockbuster was the definition of “entertainment” itself at this time: Not only the company offered to rent or purchase movies but also it completed the customer experience with horizontal diversification: food, beverages, games etc. It followed the strategy of several business models: Brick and mortar shops, cross merchandising, and also rent rather than buy. Its value creation came from several partnerships with movie / video producers, and supplier of foods supplies. The initial strategy standard was to pay a minimum wage to employees, in order to reduce expenses, but also focus on advertising, promoting the company, developing the store locations etc. The main

Blockbuster Out of Business In order to maintain a thriving business, the company must be able to meet all the requirements needed in order to be successful. There are many different factors that contribute to company's shutting down and becoming bankrupt, one of the main reasons why companies go out of business is because either the customer service was questionable, the establishment wasn’t properly ran, and or they were taken out by other newer more competitive counterparts. One business in particular that used to be the go to place to pick up the hottest and latest movies was Blockbuster. Blockbuster shortly went out of business after their 29 year long reign of being at the top.

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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

Option 3: This option could have been an interesting route for Blockbuster as it could have given them a fresh start to expand their assets beyond the traditional brick and mortar store and keep their company legacy alive by adapting to new mediums. One downside of this option is that it does seem like Blockbuster is simply imitating their competition rather than developing new distribution channels to maintain its industry leader status. Despite these hindrances, Blockbuster could still rely on these recent developments and identify areas to obtain an advantage over their competitors. For instance, Redbox originally inked a deal with select movie studios such as Disney or Universal for day-of movie releases for recent films, while other studios

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

Blockbuster was once the video rental goliath back in the 1980’s into the early 2000’s. The rise and fall of blockbuster is a pattern that many organizations can learn from to thwart the same vulnerabilities in the future. This behemoth is now a memory for the billions of video rental customers teaching the lesson that no action is an action itself that may lead to bankruptcy by accepting all risks that were presented. Their business model became outdated which leads to antediluvian companies and technology. The competition presented original, groundbreaking ideas that changed the media industry forever. Evaluation of risk management and making high and low risk decisions have a counterbalance

It appeared that in Blockbuster’s hankering for growth, a strong and strategic organizational infrastructure was lacking. Blockbuster did not have a stable in structure of leadership and management to sustain itself. This is most likely the reason that there

Blockbuster LLC first came into existence in 1985 as Blockbuster Video in Dallas, Texas. Its founder, David Cook was a computer programmer whose experience was helpful in inventory activities and in determining which genres of films were the most saleable and rentable. Soon shares in the firm were purchased by a firm called Waste Management, which then initiated the company’s expansion, believing in the on-product model of the firm which then had mass appeal (Hyatt, 2003). Waste Management then purchased the firm and its franchises. After an almost-merger with Viacom, as the company’s share prices fell, Blockbuster was then purchased by Viacom in 1994 (Sheridan, 1994). In 2004, after a number of acquisitions, Blockbuster then separated from Viacom, and continued with its sales of DVDs and other video products. Eventually in 2010, its external auditors, Price-Waterhouse Cooper provided an opinion that there were doubts about the firm’s being a going concern, with the firm’s inability to pay off all its bondholders. Blockbuster was then purchased by the Dish Network, which then went on to downsize the firm, closing a substantial number of stores around the world.

External environment is very important for managers to make decision about the company’s direction and strategy. In order to gain a deep understanding of Blockbuster’s industry and competitive environment, the following seven questions need to be answered. Q1: What are the industry’s dominant economic features?