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MNG932002 Case Analysis Of Blockbusters And Netflix Assignment

Added on - 28 May 2020

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Running head: NETFLIX AND BLOCKBUSTERNetflix and BlockbusterName of the StudentName of the UniversityAuthor’s note
1NETFLIX AND BLOCKBUSTERTable of Contents1. Introduction..................................................................................................................................22. Institutional Background.............................................................................................................32.1 A brief history of Blockbuster...................................................................................................32.2 A brief history of Netflix...........................................................................................................33. How Netflix beat Blockbuster.....................................................................................................43.1 Changing technology.................................................................................................................43.2 Retail outlet versus operating online.........................................................................................53.3 Pricing strategies........................................................................................................................63.4 Innovations of Netflix................................................................................................................74. Will Netflix remain the dominant provider of online video streaming.......................................84.1 Netflix stumbles: the demise of Qwikster.................................................................................84.2 Netflix rebuilds: The rise of original content............................................................................94.3 The future of Netflix................................................................................................................105. Conclusion.................................................................................................................................11References......................................................................................................................................12
2NETFLIX AND BLOCKBUSTER1. IntroductionThe market of video rentals is replaced by online streaming. Internet streaming isconsidered to be the fastest way of accessing internet-based contents. Streaming is a process thatenables the viewers to use online contents before the file has been downloaded. The online dataget automatically deleted after it has been viewed. Fast data connection is the main requirementfor online streaming of video (Adhikari et al. 2012). Streaming of video cannot be easily copiedand this helps in piracy protection. Companies can reach a wide range of audiences by videostreaming. Netflix is an online streaming service that is based in U.S. Netflix had started itsbusiness with DVD-by-mail service in 1997 (Amatriain 2013). Later on in the year 2007, Netflixlaunched its video streaming services that led to the decline of physical video rental stores andservices. Netflix has become the leader in the market of video streaming and is focusing onoriginal content production.This report describes how Netflix beat Blockbuster. It discusses the history of Netflix andBlockbuster in brief. The following report shows the role played by the changing technology inthe video rental and video streaming market. It compares the characteristics of online operationswith the retail outlets and shows how online operations have helped Netflix to achieve success.This report outlines the pricing strategies and the innovations of Netflix. It also predicts whetherNetflix will remain the dominant player of video streaming. The following report discusses thereasons behind the demise of Qwikster. It shows how Netflix regained its position by providingoriginal content. This report also shows the future scope of Netflix.
3NETFLIX AND BLOCKBUSTER2. Institutional Background2.1 A brief history of BlockbusterBlockbuster was founded by David Cook in the year 1985 after Cook Data Services hadstopped supplying software to the oil and gas industry of Texas. The first retail store ofBlockbuster was opened in Dallas, Texas, U.S.A (Freedman 2012). Blockbuster became thelargest video rentals in the world. In the year 1987, Blockbuster was sold to three investors. Inthe year 1992, Blockbuster had more than 2800 stores across the world. In the year 2004,Blockbuster had gained market share with around 9000 retail stores around the world. In 2004,10 percent of its revenue was from the late fees that customers had paid because they wereunable to return the rented movies. In the year 2010, Blockbuster had filed for bankruptcyprotection against a debt of $1 billion. With the advanced technological growth and businessstrategy of Netflix, Blockbuster was facing problem in the video market. The old or traditionalbusiness model and strategy of Blockbuster had allowed its competitors to take most of themarket share (Davis and Higgins 2013). Dish Network had bought the retail stores and otherassets of the company in 2011. In the year 2013, Dish Network had announced to close all theretail stores in U.S.A. Blockbuster has been able to operate at least 10 stores across U.S.A.2.2 A brief history of NetflixNetflix was founded in the year 1997 when Internet retailing was gaining importanceover traditional retail stores. Netflix had offered the delivery of DVDs to the customers via mails(Cook 2014). Initially, Netflix had concentrated on the early-technology adopters with amarketing strategy of developing cross-promotional programs with the sellers and manufacturersof DVD players. Netflix had charged $4 for each movie along with $2 handling and shippingcharges. Netflix had a cash-induced strategy. Customer complaints regarding high price and slow
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