The Strategy and Case Analysis of Blockbuster and Netflix
Added on 2020-05-28
16 Pages4285 Words170 Views
Running head: STRATEGY AND CASE ANALYSIS Executive Summary:The report is a discussion on the strategy and case analysis of Blockbuster and Netflix. Thereport commences with an overview of each of the companies. This is followed by discussionon how Netflix moves ahead of Blockbuster based on its changing technology, strategy forpricing and innovation and retail versus online operation. There is also discussion about howlong will Netflix remain as the dominant provider of videos. The report also puts forward,Netflix decision on pulling the shutters on Qwikster and its rebuilding after major stumble. Avivid description on the future growth of Netflix discussed as a part of the report.
1STRATEGY AND CASE ANALYSISTable of Contents1. Introduction................................................................................................................22. Institutional Background............................................................................................22.1 A Brief History of Blockbuster............................................................................22.2 A Brief History of Netflix....................................................................................43. How Netflix Beat Blockbuster...................................................................................53.1 Changing Technology..........................................................................................53.2 Retail Outlets versus Operating Online................................................................63.3 Pricing Strategies.................................................................................................63.4 Netflix’s Innovations............................................................................................74. Will Netflix Remain the Dominate 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................................................................................................................11
2STRATEGY AND CASE ANALYSIS1. IntroductionThe report is a strategy and case analysis of Blockbuster and Netflix.The reportprovides an institutional background on both the companies. Blockbuster has been a providerof rental services for video game and home movie based on America (Blockbuster.com2018). The services undertaken by the company provided through rental shops, DVD via mailand on demand video. The company rose to international acclaim in the year 1990s. Duringthe year, 2004, Blockbuster employed a large number of people from United States and othercountries for an approximate 9000 stores. On the other hand, Netflix was an Americanentertainment company found in the year 1997 and located on the Scotts Valley of California.The company led by Reed Hastings and Marc Randolph specialized on providing streamingmedia and online video on demand as well as DVD via the system of mailing. However, bythe year 2013, the company also expanded on television and film production in addition to itsonline distribution. There is also discussion how Netflix beats Blockbuster based on thechanging technology, retail outlets versus online operation, strategy for pricing andinnovations. The report also discusses about Netflix being the dominant provider of onlinestreaming of videos (Netflix.com 2018). To explain the position of Netflix there is discussionon demise of Qwikster and rebuilding of Netflix and the rise of original content. The reportalso provides a vivid description on the future growth of Netflix.2. Institutional Background2.1 A Brief History of BlockbusterBlockbuster Inc. is one of the largest rental chains for providing videos around theworld. The company provides game and movie entertainment on a rental basis. The company
3STRATEGY AND CASE ANALYSISaround 9100 video stores around United States , its 24 nations and territories that helps inserving around three million customers every day(Gershon2013). The initiation of thecompany was around the middle of 1980s as an alternative to the small and local operationsthat had a limited selection of video rental. The company transformed into a global chain inno time thereby offering DVDs, video games and videos either through its stores or throughits online subscription program. The history of Blockbuster traced to Cook Data Services Inc found in the year 1982by David Cook for supplying services related to computer software in the Texas oil and gasindustry. After Cook Data Services Inc went in a state of bust, the owner sought other meansof revenue generation by entering into a business that dealt with video rental. After several months of research into the industry of video rental, David Cook soldthe software business related to gas and oil and entered into the business of movie rental. Itwas in the year 1985 in the month of October that Blockbuster was able to open its first outletin the city of Dallas (Abraham2013). Around 8000 tapes covered around 6500 titles alongwith a huge inventory stock sufficient to give the nearest competitor a run for their money.The stores allowed the customers to choose before finally renting out. The first store ofBlockbuster became an immediate hit that enabled Cook to expand his business byintroducing three additional stores. The company however appeared to be in a flux during the year 2005 because of thelitigation surrounding its policy of no late fees. Problems also cropped up because of the lossof income due to extension in the viewing fees, failed attempt to merge with HollywoodEntertainment Corporation and the efforts of Carl Icahn's in ousting John Antioco, the CEO.
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