Blockbuster and Netflix: A Case Study Analysis

Running Head: Blockbuster and Netflix 1
Case Study Analysis

Blockbuster and Netflix 2
Contents
Introduction.................................................................................................................................................3
Institutional Background..............................................................................................................................4
2.1. A brief history of Blockbuster...........................................................................................................4
Netflix beat Blockbuster..............................................................................................................................4
3.1. Changing technology........................................................................................................................4
3.2. Retail outlets versus operating online..............................................................................................4
3.3. Pricing strategies...............................................................................................................................4
3.4. Netflix’s innovations.........................................................................................................................4
Will Netflix remain the dominant provider of online video streaming?.......................................................4
4.1. Netflix stumbles: The demise of Qwikster........................................................................................4
4.2. Netflix rebuilds: The rise of original content....................................................................................4
4.3. The future of Netflix.........................................................................................................................4
Conclusion...................................................................................................................................................5
References...................................................................................................................................................6

Blockbuster and Netflix 3
Introduction
Entertainment is significant as it brings people jointly and is a good way for the complete family
to bond. It deflects people's attention from their challenging lives and entertains them
in their spare time. The report is based on the case study in which the Blockbuster and Netflix
are emphasized to make a better understanding of the entire concept of the case study. Netflix
has a strong business model to beat its competitor Blockbuster (Adhikari, et. al., 2012). The
depth information will be elaborated under this report to evaluate that how Netflix beat
blockbuster in which the discussion will be made on the changing technology, Retail outlets
versus operating online, pricing strategies and the Netflix’s innovations. It is vital for the
company to adopt the latest strategy to beat competitors and in such case; Netflix has adopted
them to fight against its competitors and got succeeded. The future of Netflix will be described in
this report by analyzing the current situation of the company. At last, the conclusion will be
drawn in a significant manner to define what has been done in the report and to give a brief
summary of the entire concept of the report.

Blockbuster and Netflix 4
Institutional Background
The Institutional background of both company are defined below which will be helpful to create
better understanding about the process of both company.
2.1. A brief history of Blockbuster
The early beginning of Blockbuster can be outlined back to another company like Cook Data
Services. This company was founded in 1978 and the primary aim of the company was to
provide software services to the gas and oil industries right through Texas. This goal was not
very successful and David switched in the video business. The first blockbuster store was
initiated in 1985 in Texas, with a list of 8,000 VHS and 2,000 Beta tapes. The experience of
Cook regarding managing the databases proved useful in driving innovation within the industry.
After that, Blockbuster builds around$6-million warehouse in Garland, Texas, to sustain in
future growth that permitted new stores to initiate in quick manner (Davis and Higgins, 2013). In
1998, DEJ Production has been created by Blockbuster which was able to acquire 225 films
primarily to give exclusive content to the stores of Blockbuster. Along with that the company
had bought Irish Video rental store “Xtra Vision”. Carl Icahn was billionaire and in 2004, the
first investment is done by him in Blockbuster, purchasing 5.8% of the Class A share of the
company for $83.8 million (Mitchelldyer, 2011). The company had to face huge loss due to
entrance of strong competitors with latest technology. It has been found from 2003 to 2005,
company lost around 75% of its market value as competition amplifies from the likes of Redbox
and Netflix.
2.2. A brief history of Netflix