Netflix's Strategies to Beat Blockbuster in the Video Streaming Industry

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STRATEGY AND CASE ANALYSIS
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Introduction
An organization is expected to implement a strategy that will assist in acquiring a
sustainable competitive edge in the market. Proper evaluation of the external business
environment provides the management with the needed information to formulate a successful
strategy. An organization that uses technology and innovation in the production process is
possible to increase the market share of the business. New companies are supposed to evaluate
the competitiveness of the industry in developing plans that will increase the market share in that
particular industry. The products and services are supposed to appear unique to the consumers in
ensuring that there is a successful market entry. Staff training and development is necessary for
making them have a proper understanding of the implementation of the strategies. The strategies
of a business are developed by the top management of an organization with an aim of
accomplishing long-term goals of production. Skillful staffs assist the business to increase
customer service that is vital in attaining the long-term objectives of production. Blockbuster and
Netflix are entertainment companies that have specialized in video streaming. The report
evaluates the strategies implemented by Netflix making it possible to replace Blockbuster in the
video streaming industry. Netflix strategies assisted the business to enter the US entertainment
industry and acquire a competitive advantage in the industry.
2. Institutional Background
2.1. A brief history of Blockbuster
Blockbuster is a company that focuses on movie and video streaming to the public. The
company offers different options for individuals to stream the movies with an aim of increasing
market share in the entertainment industry. Blockbuster was founded in 1985 by David Cook and

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was later sold to Viacom in 1994 (Forbes, 2011). The company developed plans for people to
purchases videos and movies at the various outlets in the United States. The company later was
listed for a public offering which was valued at $ 465 million in 1999 (Forbes, 2011). The public
offering was aimed at making the company acquire a sustainable competitive edge in the
entertainment industry through the increased capital from the investors. Blockbuster later became
a part of DISH Network in 2011 with an aim of handling the stiff competition from Netflix and
other entertainment companies in the US (Blockbuster, 2018). Blockbuster partnership with
DISH Network made it possible for consumers to access new movies and videos from home. The
partnership with DISH provided Blockbuster with the required broadcast satellite service to
reach out consumers in the comfort of their homes (Blockbuster, 2018). Blockbuster is a
company that is determined by offering family-friendly movies for an increase in the number of
people willing to use the products of the company.
2.2. A brief history of Netflix
Netflix is a company that is focused on offering online movies and TV show streaming to
the people all over the world. The entertainment company was founded in 1997 by Marc
Randolph and Reed Hastings (Castillo, 2017). Netflix has been able to acquire a sustainable
global competitive advantage in the entertainment industry through diversified products. The
differentiated services are aimed at being able to deal with the needs of people from all parts of
the world. It is possible for an individual to watch Netflix movies using a smart television,
laptop, personal computer, tablet, Mac mobiles and other electronic devices (Netflix, 2018). The
high number of people willing to use Netflix has assisted the company to have the required
revenue to expand to new market segments. In expanding operations the business used the initial
public offer where investors are allowed to purchase shares from the company. In the initial

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public offering Netflix was able to attract $95 million in 2002 and in 2011 it was valued over
$4.5 billion (Forbes, 2011). The increased value of the company is due to the ability to increase
the market share in the global entertainment industry. According to Bhunjun (2018), Netflix has
been able to acquire over 104 million subscribers globally due to streaming of the latest movies
to the public.
3. How Netflix beat Blockbuster
Netflix was able to acquire a competitive edge in the global entertainment industry
through the use of differentiated strategy. Blockbuster was the known company in the movie and
video industry before the establishment of Netflix. An organization is required to implement an
effective price that will increase the competitiveness of the market. Blockbuster competitiveness
issues started when Netflix was founded and Blockbuster refused to reduce the prices charged to
watch movies. Blockbusters used DVDs and cassettes to offer services to the consumers in the
entertainment market. Netflix implemented a reduced price that made Blockbuster lose over 75%
of market share from 2003 to 2005 (Netflix, 2018). Netflix was determined to continue acquiring
the competitive edge in the entertainment industry through the offering quality services to the
consumers at affordable prices. Castillo (2017), states that Netflix developed CD by mail service
that was aimed to compete with Blockbuster’s service DVD by mail. The service was widely
accepted due to the quick delivery to the consumers making movie lovers to prefer Netflix to
Blockbuster. It is essential to focus on consumer satisfaction in order to acquire the desired
competitive advantage in the market (Saeidi et al. 2015). Netflix focused on developing a proper
reputation in the entertainment market through quality services to the consumers.
3.1. Changing technology