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Netflix Compared To The Future Of Blockbuster

200 Words1 Pages
First of all, I would describe Netflix’s unique selling proposition as simply “the future and convenience at your fingertips.” The tweet that I have chosen depicts the growth of Netflix compared to the past of Blockbuster. What this simple chart shows is that when opportunity presents itself, seize the initiative. At the same time in the late 90’s that Blockbuster provided movie rentals, Netflix was at the same providing movies by mail. Having the opportunity to own the Netflix franchise, Blockbuster declined and in turn collapsed from a multi billion dollar company to bankruptcy. Over a six-year span Netflix rose and Blockbuster fell. It is what most important points in the history of Netflix that in the DVD era Netflix seized the initiative
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The availability of movie rentals has taken a huge leap after blockbuster went bankrupt in 2010 (Satell, 2014, p.1). The novelty “Netflix” became a hit after Blockbuster went under. But the huge hit that sparked the consumer’s attention was the creation of “Redbox” in 2002 when McDonalds added Redbox to their LLC to improve the convenience of their customers. The concept of convenience has taken a huge leap in the past decade because of the huge developments in technology. The advancements in technology has also made brick and mortar stores either start to go bankrupt, like blockbuster, or has made the company create an online branch to their business.

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Over the years Redbox has had many ups and downs. Most of them were due to the company's competitors. When they first started the company they were making companies like Blockbuster fade out. Redbox was much easier and cheaper to rent than a Blockbuster video.

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The utilization of debt to fund mass licensing packages necessary or acquisition of content from other providers is not feasible as it exposes Netflix to credit risks and furthers its demand for loans. This can be contained by exclusive production of original content. Physical media delivery service, which was once the primary business of Netflix, has recorded massive losses in the recent past (Harris, 2010). Netflix should explore an alternative way of providing customers with the DVDs or contemplate doing away with the service entirely. Netflix risks suffering from discrimination by Internet service providers (ISPs).

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In 2002 a new innovation was spreading and it its wake was the death of every Blockbuster movie rental store (Spangler, 2016). Redbox machines first popped up at McDonald's locations with a lot of foot traffic (Pomerantz, 2009). Many people could not ignore the striking red and the new innovative, the convenience of the product that Redbox provided. The generation of children of today may not get the Blockbuster experience but for them but the joy of watching the movies are still the same Redbox in the simplest terms is a vending machine for movies. You pick, pay, watch and then return.

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Netflix now has less users and is making less money, and would thusly have to increase the price of their subscriptions to compensate for this. Overall this translates to disastrous costs for consumers and the transformation of everyday online services into expensive

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Hastings then began thinking of establishing a DVD-rental company to facilitate the process of renting movies where customers could easily create a list of movies and TV shows online, and then exchanging DVDs by mail. The flood of affordable DVD players into the consumer electronics market makes it very promising idea for Hastings. Indeed, a company that delivers lightweight DVDs to the customers by mail, could be the best alternative to the video store and its strict return

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But when Netflix updates its selection of movies or shows, they can be pulled off when the creators don't want the streaming service platform to show it anymore. If the show becomes very unpopular and very little people still watch the show, this can also happen. Basically someone can only watch movies in a movie theater three or four times a month when movies come out, not acknowledging the if the person wants to watch the movie(s) that come out this month. With a streaming service you can watch a different movie that you would like almost everyday. Everybody knows at the movie theater you can't watch tv or your favorite show.

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As years progress, distributors at the annual Sundance Film Festival become more aggressive. The 2016 festivities were no exception, as studios engaged in bidding wars for high demand films. Netflix and Amazon’s presence at the 2016 Sundance Film Festival has specifically redefined distribution and competition. Netflix exhibited its dominance prior to the festival by bidding on Sian Heder’s film Tallalulah starting Ellen Page. Eight days before the official start of the Sundance Festival, Netflix conquered worldwide streaming rights for Tallulah for $5 million.

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But then there were many changes in video rental market from which the biggest change was from store based rental to online video rental which was started by a California based company Netflix in 1999, blockbuster management ignored the competition and continued selling DVD rental in store and charging late fees for rental. Blockbuster decided to come into online DVD rental service in august 2004 by the time Netflix had already taken over the market in the past 7 years because online DVD rental was easy to access and return and on top of that Netflix did not charged customers late fees, because of which customers got attracted to Netflix then to blockbuster. Starting as early as 1990, Blockbuster should have started closing down its stores that were underperforming and should have set up kiosks in grocery stores and other public places which would have increased their profit margins. External Environment External environment is a set of conditions outside the firm that affect the firm’s performance(R, Duane, pg 6). The

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In this case, the company Blockbuster, which was known as the leading distributor for movies, became irrelevant due to the impacts. Instead the company Netflix had become the replacement and is taking full advantage of the disruptive

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In addition, lower ticket costs for movies after a certain time period from release date to combat DVD competition also an opportunity to this industry. There will be more movie options and less selling out of blockbusters as its show a certain film on multiple screens at the same time, lower tickets costs could attract consumer to purchase those tickets. Moreover, introduce Customer Loyalty Programs also an opportunity to promote this industry. For instance, promote different programming such as sports, plays, musicals and more to different watchers. 3.4

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Blockbuster was bought by Viacom in 1992 for $8.4 billion. Back in 2000, Netflix was just an emerging company, and offered to be sold to Blockbuster for only $50 million while Blockbuster’s worth then was $3.5 billion, but Blockbusters declined the offer to buy Netflix more than once then it reached its peak of power in 2004 with almost 9,000 global stores and 60,000 employees in the United States. By then Netflix started to grow enormously and blockbuster realized how successful Netflix is decided that Blockbuster wanted to buy Netflix now, on a conference call with Reed Hastings, Netflix CEO had mentioned Blockbuster more than 20 times, and also admitted that Blockbuster is stealing their costumers and they had not formed a plan to stop tem and also said " Blockbuster had thrown everything at us but the kitchen sink". Blockbuster responded by sending a large box the next day that contained a used kitchen sink at Hasting's office with a note from Nick shepherd , blockbuster's COO that says " Here’s your sink”. In 2008 Blockbusters launched their own by mail DVD service that Netflix has already dominating that market after that blockbusters started launching new products that were already launched before and not that attractive to costumers

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