The Influence Of Family Video

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.

Numerous failures in planning and monitoring market changes negatively affected profits and decreased customer loyalty. Blockbuster sought utilization of section 11 bankruptcy to significantly decrease the businesses debt. The bankruptcy and acquisition by Dish network provided the opportunity to invigorate a better business solution for moving forward. Blockbuster’s

Fritz, Ben. (April-2011). "Dish Network wins bidding for assets of bankrupt Blockbuster." In the Los Angeles Times. Retrieved March-17, from the website;

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).

If researched you find that the internal political struggles within the Blockbuster organization ultimately lead to its downfall. Power struggles that stemmed from the change in ownership as David Cook sold controlling his share of Blockbuster to Wayne Huizenga, John Melk, and

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.

Earlier today, Dish Network made an announcement stating that they would be permanantly closing three hundred Blockbuster locations around the country. They say that as many as three thousand people could lose their jobs as a result; which would total roughly around ten percent of Dish Network’s total workforce. The closings come at a time when Dish Network’s stocks are down 2% and the company had an overall loss of 158.5 million dollars. While the store closings will not be effective immediately, they said that the stores will close as each location finishes up their lease.

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

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

Blockbuster was too confident in their brand and their reach that failed to see the threat from the online rental business, meanwhile Netflix took advantage of their slow entrance to build a market and leverage on growing technology (DVD) that took off really quickly.

Before the advent of movie rental stores, to watch a new movie, people had to go to theatres or cinemas spending a lot of money. Video rental was the answer to the new needs. Since the 90s, video rental industry has become a very big business; in those years, rental prices rose as more and more people began renting movies. At the same time, new players entered the market creating strong competition inside the industry. In the last years, the field of home entertainment has changed dramatically because of the presence of Internet and new technologies (Recorded DVD & Video in the United States, 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.

Video-on-demand or VOD, a service that allows users to select and watch videos over the internet, will be one of the greatest innovation as stated in the Netflix case study. It will be a great opportunity for Netflix, but it will also be a challenge to integrate or do away with its current business model. Its current business model is one that relies on the internet and the post service to deliver DVDs to its subscribers. Netflix should carefully enter the VOD market without doing away with its current model. This will allow it to maintain its growing position as a giant in this media industry. In order to better understand Netflix and the problems it faces, we must first identify its strengths. What does Netflix offer its customers that its competitors do not? What differentiates it from its competitors?

Netflix was founded by Reed Hastings and Marc Randolph in 1997 and was originally based out of Scotts Valley California. The business model that they were working towards was to create a company that would offer online movie rental service made available by streaming media as well as DVD’s that could be ordered online and delivered to the customers’ homes. (Wheelen, Case 12). Netflix had a strategic plan to undercut the competition in an effort to stress the market and force weaker competition out of the field. This was a very successful plan and over a period of years it was able to force the closings of most of its competing market to include the mega giant Blockbuster video. Using a business