Blockbuster vs. Netflix
1. Mission/External Analysis
2. Industrial Analysis
3. Internal Analysis
4. Financial Analysis
6. Alternative Analysis
For years Blockbuster dominated the movie rental scene crushing the local competition with its wide selection, huge inventories and longer rental periods. Over the years though, Blockbuster has lost it strangle hold over the competition and filed for Chapter 11 bankruptcy protection in September 2010. Blockbuster competition won because they evolved to meet the demands of the current customer. The biggest rival that Blockbuster competed with was Netflix, which was started in 1997 and established its subscription service in 1999.
The competitive forces in the movie rental marketplace expanded in the early 90’s with the creation of the DVD movies. Like pervious attempts to move away from VHS tapes, DVDs players were very costly at first. As time went on, DVD’s players became cheaper to produce and many of them where incorporated with home theater systems due to the demand of people who wanted to watch movies on their own big screen. With this boom in DVDs’ it created a demand in the movie rental marketplace. Since Blockbuster was apart of Viacom, which was a multimedia conglomerate, they were able to provide them with supplier power and buyer power. Blockbuster was able to outspend the competition, which in turn created Barriers to Entry for Rival video stores. All of these forces pushed away Substitutes to Blockbuster like Hollywood Video or Family Video. These smaller video rental chains did not create enough of a rivalry to really hurt Blockbuster until Netflix came along.
Blockbuster had loss in the millions and into the billions towards the end of the 90’s and into the beginning of the 2000’s. Its mind boggling that the losses can be so staggering due to the fact that people began...