THE DEMISE OF
BLOCKBUSTER

BLOCKBUSTER
 Blockbuster LLC often known to the market as Blockbuster, was a Home movie & Video
game rental service provider through video rental shops. It had gained fame during the
time span of 1980’s to mid-2000s; at its peak in 2004, the company had 60,000 employees
hired and over 8,000 stores all across United States of America. However, as a result of
various factors, blockbuster lost momentous revenue in the later 2000s and early 2010’s
thus resulting in the consequences of company filing for bankruptcy protection in 2010
and in 2011. Thus the company had to sell its stores where 1,700 stores were bought by
satellite television provider Dish Network. While Blockbuster brand has mostly been
retired, Dish still maintains some of its franchise agreements keeping stores in some of the
markets.

NETFLIX
 Netflix, Inc. is an American entertainment company specializing in and provides streaming
media and VOD online and in DVD via mail. It initiated in 1997 and soon became a known
brand to the market. After gaining popularity, in 2013, Netflix expanded in to film and
television production along with the online distribution. As of 2017 the company has its HQ in
California. Initially Netflix sold and rented DVDs for a fine period of time by focusing on DVD
rental by mail business. In 2007, Netflix stretched its business with the innovation of online
media streaming, while retaining the DVD and Blu-ray rental service. The company expanded
on international basis by making its services available in Canada in 2010 and kept of growing
internationally more and more thus resulting in operating in above 190 countries by January
2016.In 2013, Netflix debuted its first series, House of Cards, which turned out to be a huge
success. This success resulted in initiating its “Netflix Original” content through its online
library of films and television. They released 126 original series and films in 2016, more than
any other network or cable channel. Currently according to reports 93 million subscribers are
connected to Netflix at the moment which includes approximately 49 million from United
States.

REDBOX
 Redbox is a DVD, Blue-ray and video games rental specializing company which works
via automated retail Kiosks machines. The kiosks feature the company’s signature red
color and its logo and is distributed all across US at convenience stores, grocery stores,
mass retailers, fast foods and pharmacies. The concept of Redbox originated in 2002
within McDonalds venture LLC, which was working to identify new ways to drive added
convenience and relevance to customers. The first kiosk was launched in 2004 in Denver.
Coinstar inc, initially purchased 47% of the company in 2005 for $32 million while
purchased the remaining company in 2009 from McDonalds and other shareholders for
approximately $176 million. As of the end of November 2012, Redbox had kiosks over
42000 in number at more than 34,000 areas. According to reports in 2013, Redbox had
48% share of the physical rental market

SWOT ANALYSIS
NETFLIX
BLOCKBUSTER

REDBOX

Alternative Courses of Action for Blockbuster
 Merger
Blockbuster lacks the forwardness of Netflix and Redbox in terms of adapting to disruptive technologies and
changing its business model accordingly. Since the business lacks information, practices and capabilities of taking
their operations from brick and mortar to online, it would serve them well to merge with a business that is tech
savvy and has the personnel and infrastructure to alleviate Blockbusters lag in the field. Blockbusters decade's
worth of brand equity can prove valuable for a newer company looking to break into the entertainment
distribution business.
 Reinvention
Blockbuster can also relaunch itself under a completely new brand. A local example of such a case was the
famous confectioners and bakers Rahat relaunching themselves as Tehzeeb. If done correctly, this allows a
company to leave behind any associated negative connotations and breathes new life into the business.
Blockbuster can shatter their image of an outdated business that people remember only nostalgically into a
modern, sleek, fast and 'hip' brand that has known for decades how to provide entertainment to its customers, only
now it can do so much more customer facing way.

Alternative Courses of Action for
Blockbuster
 Build an effective supply chain
Blockbusters initial demise was primarily due to its stubbornness in moving to a more swift
and customer facing supply process. Both Netflix and Redbox took their products TO the
consumer instead of the consumer coming to THEM. With blockbusters focus on retail stores,
compared to Netflix's exclusively mail order service, it's evident that efficient means of
getting the product to the consumer in a timely and seamless manner is of utmost importance.
This means blockbusters needs to develop storage and warehousing, fast and effective
distributors and inventory mechanism like Just In Time and Kanban principles to minimize
costs and maximize speed to consumer end. Amazons supply chain is an excellent example of
a business that excels at virtual order and purchase systems backed by a seamless supply
chain that relies on suppliers to minimize inventory and an efficient distribution network to
minimize shipping costs and delivery times.

Plan of Action for Blockbuster
 Go organic:
Organic organizations are best classified as flexible, transformative and accepting of change. Working in an
industry that is seeing rapid change (from movies to TV shows, from DVD's to VOD, HBO HULU and Netflix
producing their own shows) it is imperative that Blockbuster understand that this industry demands a company to
become a learning organizations. This can be done by:
Renewing strategy: Blockbusters strategic focus should change to not only reacting but prospecting changes in
its external environment and adapting to them readily.
Integrating technology into their strategy: Blockbuster must set up a pay per view or subscription based online
viewing system for its content. A website on the pattern of VOD (video on demand) is essential to stay relevant.
They will for this purpose, need to develop, augment and constantly update an online database. A very important
aspect is also developing a social media presence. Having active twitter handles and facebook pages that promote,
position and expand the business are important if Blockbuster is to become a reinvented learning organization,
Social media outlets also help companies still in real time touch with how consumers are responding to the
services at large and how well new features are doing with consumers.

Plan of Action for Blockbuster
 2. Partner with production houses or create its own:
In an online webscape where streaming any form of media is a click away, exclusivity of content is key. To develop a competitive edge,
Blockbuster must have on its platform (may it be online or offline) content that is exclusive to its consumers. Netflix's original series and
documentaries, HBO's own TV shows are examples of content that is exclusive to these competitors of Blockbuster. If the company finds
that creating its own content is unfeasible given it financial state, it can pursue partnerships with old clients like Disney who once stocked
exclusively at Blockbuster. If such a partnership can be managed, it will allow Blockbuster to provide a service to its consumers not found
elsewhere.
 3. Shift focus of operations to the consumer end:
The industry that Blockbuster is in has shifted from being product based to service based. Understanding this, blockbuster needs to focus its
capabilities on creating satisfied consumers. This can be done by:
Acknowledging that there is fierce competition now and if dissatisfied, the consumer as many options to change to. Switching costs
being negligible, Blockbuster can no longer afford to have tactics such as 'late fees'. It should instead offer incentives to consumers such as
free trial periods, free movies each month for viewing a certain number of videos, reward points per view and so on.
Create an efficient customer services department that tends to and records consumer needs, data from which can be used to forecast
changing needs and adapt accordingly so as to avoid another demise (since the first on came about mainly because Blockbuster failed to
acknowledge the changing needs of its customer i.e convenience and ease of purchase over variety.

Recommendations
 It is recommended that Blockbuster re-launch itself, with the same brand
name and brand image but take the entirety of its operations online. Brick
and mortar stores are a thing of the past in the entertainment industry, as is
evident by the fall in number of video stores, record stores and the rise of
businesses like Spotify, Sound cloud and VOD. Blockbuster should also
shift focus from movies to Television series as that segment is generating
mss viewership. Initially, since high budget productions will be unfeasible,
Blockbuster can work on low cost short web series that are creating cult
followings on websites like YouTube.

Potential Problems
 It could very well get lost in the competition. Although there is never
enough content to view online, Netflix for example has created for itself a
global market, an excessively large database of very old movies and
current TV shows and is providing all these services for fiercely
competitive prices.
 II. It may as well be seen by consumers as still outdated and too late and
entrant into the digital entertainment world. It services may be viewed as
tardy and outdated in comparison to its competitors who have amassed
loyal consumers.

Learning Objectives
 The greatest lesson to be learned from
Blockbuster is the disruptive innovation can and
does change entire industries and lag in
accepting and changing with respect to
innovation can bring down entire businesses,
may it be Kodak in the camera market or Nokia
in the mobile industry. Technology is changing
the way services and products are provided to
customers and has become an integral feature in
the external environment of any business. To
flourish, all business must internalize change
and innovation.