Blockbuster Entertainment, Inc.

The short version of the story is this: Blockbuster had the opportunity to buy Netflix and didn’t. Blockbuster has since gone under and Netflix, well… you know how they turned out.

1. Netflix’s original marketing strategy offered several flat-rate monthly subscription options; in which, members could stream movies and shows via the Internet or have disks sent to their homes in a pre-paid and pre-addressed envelope. Free from the despair of due dates and late fees, members could keep, up to, eight movies at a time. Upon the return of a disk, Netflix would automatically mail out the next movie from the customer’s video queue. Members were able to change and update their queues as frequently as they liked. The sheer innovation of Netflix’s strategy encouraged several competitors to enter the market to compete directly,

In 2011 Dish Network announced its acquisition of Blockbuster. This was a significant change in company strategy. The hope was with that highly recognized brand with more than fifteen hundred would help Dish to compete in video entertainment industry. Unfortunately these plans never materialized and Dish showed operational loss. In 2012 Dish started to close Blockbuster stores and had to lay off their employees focusing more on digital offering. But even this attempt was not successful and customers’ preferences stayed with Amazon and Netflix services instead. The reason of this failure was that it’s not enough to just implement changes. The process of transformation and vision of the goals are just as important.

On the horizon, Blockbusters number of competitors should steadily increase from new emerging technologies. If Blockbuster extends into the realm of VOD, Legal Movie Downloads, or Digital Video Recorders (DVR), it must realize there are existing and powerful players in these markets already. This new technology is shaping the market for many deals or partnerships. They will face fierce competition, but in the future, Blockbuster must not find it self on the outside looking in.

Numerous failures in planning and monitoring market changes negatively affected profits and decreased customer loyalty. Blockbuster sought utilization of section 11 bankruptcy to significantly decrease the businesses debt. The bankruptcy and acquisition by Dish network provided the opportunity to invigorate a better business solution for moving forward. Blockbuster’s

The first failure of Blockbuster’s strategies, which lead it to bankruptcy, was the negative relationship with their consumers. While Netflix’s chief executive, Reed Hastings, recognized the technology had been grown rapidly and would change the transmission of movie rental industry, Blockbuster’s CEO, James Keyes, believed that consumers would still prefer to the brick-and-mortar rental structure. Thus, Keyes planned to focus on expanding Blockbuster’s stores into various departments

Philips (2011) believes that success or failure of any great company depends on “Events, internal and external” (p. 3). Blockbuster also appears to be a victim of certain events at internal as well as external level. Based in McKinney, Texas, Blockbuster and founded in 1985 (Blockbuster Corporate, 2012) and it ushered in a new era as far as video rental retail industry was concerned. The company gave birth to video rental places that had significant amount of movies under one roof (the first store had 8,000 movies) and were not associated with bad movies or bad neighborhoods (Greenberg, 2008).

The drastic increase of competition in the past decade and economic state of the United States from 2008 to its closing placed Blockbuster in a financial bind where many difficult decisions were made. In an effort to save the company, they decreased expenses by $333 million, closed unprofitable stores, refinanced two different times from 2009 to extend their debt maturities (Davis & Higgins, 2013). The final nail in the coffin happened when a $400 million lien expired with their lenders (Poggi, 2010). This lack of liquid financial management put Blockbuster in a very bad situation where they could not pay their debts. In 2010, Blockbuster is forced to file bankruptcy for the amount of $1 billion of

An amazing store where you can buy or rent movies and video games, established October 19, 1985 in Dallas, Texas, Blockbuster. Blockbuster had over 60,000 stores nationwide with a total of 9,000 employees. In 1987, two years after it opened, Blockbuster won a court case fighting for them to rent out video games against Nintendo of America, Inc. In the year 2000, the founder of Netflix, Reed Hastings, proposed an opportunity to do a partnership with Blockbuster for $50 million. Unfortunately, Blockbuster turned down the partnership and let go a deal that could have been life changing for them. Years go by after the deal was portrayed, then in 2010 Blockbuster went

“Never be without a movie”, a slogan that used to be successful for many years. Blockbuster was the definition of “entertainment” itself at this time: Not only the company offered to rent or purchase movies but also it completed the customer experience with horizontal diversification: food, beverages, games etc. It followed the strategy of several business models: Brick and mortar shops, cross merchandising, and also rent rather than buy. Its value creation came from several partnerships with movie / video producers, and supplier of foods supplies. The initial strategy standard was to pay a minimum wage to employees, in order to reduce expenses, but also focus on advertising, promoting the company, developing the store locations etc. The main

Blockbuster Out of Business In order to maintain a thriving business, the company must be able to meet all the requirements needed in order to be successful. There are many different factors that contribute to company's shutting down and becoming bankrupt, one of the main reasons why companies go out of business is because either the customer service was questionable, the establishment wasn’t properly ran, and or they were taken out by other newer more competitive counterparts. One business in particular that used to be the go to place to pick up the hottest and latest movies was Blockbuster. Blockbuster shortly went out of business after their 29 year long reign of being at the top.

Unfortunately, Blockbuster was not able to avoid bankruptcy and resulting in them not being able to service. Before blockbuster had all of their troubles, they were very successful with many stores, online components and even many franchises. Technology was the biggest enemy of Blockbuster, and companies like Netflix got the best out of the technology. I remember when I used to go to Blockbuster and I can honestly say that I loved it, they had great customer service, great selections of movies, games and overall great experience that motivated me to keep going back. But Blockbuster did not adapt to the new technology fast enough and Netflix was able to take advantage. Netflix was able to attract all of the customers by proving a cheap and convenience

What role has Netflix played in the development of Blockbuster’s strategic planning? How important is Netflix to Blockbuster’s future strategic plans?

Blockbuster is the largest movie rental retailer. With its opening in 1985, Blockbuster has pursued an ambiguous program of growth and expansion. Currently, Blockbuster owns and operates over 9,000 stores both domestically and internationally. In addition, Blockbuster franchises about a quarter of its stores. It is important to note that Blockbuster is undergoing a managerial struggle at the present time. The current CEO, John Antioco, and a major shareholder, Carl Icahn, are disputing Blockbuster’s strategy. Mr. Antioco has threatened to resign if Mr. Icahn succeeds at attaining a position on the Board of Directors1. Mr. Antioco believes that Blockbuster needs to develop new strategy to respond to the current market

At the beginning of 2010, Blockbuster started to cease its operations in many countries; nevertheless it seems that Canada, UK, Chile and Australia have remained financially stable.