Blockbuster Vs. Netflex

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For so many years, Blockbuster dominated the market of video rentals. When the company started opening stores around the country, there was hardly any competition. The company had the tools and the financial backing to expand rapidly into cities and towns. Blockbuster offered its customer a large selection of recently released movies and old ones too. The company developed an automated system to track the status of movies such as how many copies of each movie is available, who rented each copy, and the date and time it is rented. The company employed the latest technologies at the time to make the transactions as efficient as possible. The company implemented its own rules regarding the rental agreement. Customers were allowed to rent the movie for only two days. When the customer did not return the movie before midnight on the second day, he or she got charged late fees. The next time the customer came in to rent another movie, the fees got automatically added to his total. If the customer declined to pay, he got denied the opportunity to rent a new movie until the late fees are paid. Blockbuster had a lot of leverage when assessing these fees. The competition was very weak and it did not offer the same selection of new movies as Blockbuster. Blockbuster had its way of making the rules and customer did not have a better alternative. Since Blockbuster had strong ties with production studios, it almost had a monopoly on the video rental business, especially for newly released movies. In the beginning this model was very successful. It was so successful that Blockbuster opened thousand of stores worldwide. “In the 20 years since its founding in 1985, Blockbuster Inc. has opened 9,100 stores in 25 countries” says Janet Rae-Dupree of CIO insight. Blockbuster made a lot of money from late fees. Late fees amounted to the same fees paid for the two day rental. What made

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