Mr. Huizinga adopted a target market saturation strategy and opened Blockbuster stores throughout the nation reaching a majority of the U.S. television market. In the late 1990’s, Blockbuster experienced increased competition from cable’s pay-per-view services and video-on-demand systems and the company’s growth began to decline in the 2000’s. In addition to this, major studios began selling movies directly to stores such as Wal-Mart. Blockbuster also began to see competition from internet and mail rental companies
I. Introduction The dominant form of entertainment media in the U.S. for decades was cable television. However, now as technological innovations have revolutionized all aspects of consumer lifestyle, so too has it changed the way people seek entertainment. This has resulted in an entirely new industry altogether, video streaming. This is largely beneficial to consumers because it gives them control over their own preferences and time constraints that the cable TV industry just can not compete with.
In addition, this paper will develop a change strategy that could have been implemented to prevent the business from failing. Failed Business - Blockbuster Objectives, Vision, Mission When Blockbuster was in existence as a chain store its mission according to About.com (2014) was "to provide its customers with the most convenient access to entertainment, including movie and game entertainment delivered through multiple distribution channels such as our stores, my mail, vending and kiosks, online and at home." The company believed they offered customers an entertainment experience at value prices. Indicators of Failure Back in 1985 Blockbuster was the biggest thing on the market. Everyone was going to the video store for the new releases of all movies.
The reason for the increased control is that DVD sales are declining on the average, meaning that the main form of delivery that consumers are taking advantage of is online-streaming. If suppliers are dependent upon the online rental industry to maintain profits, they will become dependent upon the price that they
Netflix’s success became the main contributor to the downfall of Blockbuster. Since 2000, new electronics and technologies have multiplied consumer opportunities to download and view movies. In 2011, Blockbuster began trying to regain its competitive advantage when Netflix took a misstep and decided to increase its prices for DVD subscribers. Now, Blockbuster, along with Amazon and Redbox, are fighting against Netflix, to remain dominant in the movie rental industry. Hypothesize the basic short-run and long-run behaviors of the model in the industry you have chosen in a “market economy.” Netflix became an instant hit when it opened its virtual doors in 1999, offering a wider variety of movies.
This legislation leads then to tense negociations every year between Cable distributors and Broadcasters. In fact, it used to be 100% margin revenue for TV stations. But, according to SNL Kagan, broadcasters’ retransmission revenue skyrocketted to $1.757 billions in 2012 (which represent an increase of 717% since 2006). This money goes to programming, to put high quality programs. Sinclair Broadcast plays on its big audience to put pressure on cable TV.
Why do people go to the movies? People go to the movies for the “experience.” Moviegoers describe the attraction of going to the theater as an experience based on the gigantic screen and that theatrical surround sound system, an opportunity to get out of the house for the purpose of entertainment, as a location for a date and not having to wait till a particular movie come out on Home Video before they have a chance to see it. The “movie going” experience has changed tremendously over the last few years with the rise of many substitutes in the home video viewing options from premium cable channels like HBO, Showtime, Starz and Encore to online streaming services like Netflix, Amazon Video-On-Demand as well as other alternatives like Google’s Play movie store and YouTube to Apple’s own movie store, embedded in its iTunes. Customers are experiencing an entertainment overload and can easily access these mediums on the Smartphones, internet connected laptops, tablets, game consoles and even on their televisions. And because most of these devices are readily available and at a reasonable price, customers, across all economic standing, are easily converting their living rooms to a mini-theater with the addition of a reasonable priced surround sound audio system and a large screen television and from the comfort of their homes, they can duplicate the experience with their preferred brand of soda and popcorn and also have the ability to pause in-between scenes, something that they are not able to do in a theater.
While one can’t neglect the threat from new entry, the competitive rivalry mainly comes from traditional films (alliance exits at the same time), from high supplier and customer bargaining power and from substitutes such as internet, DVD, sports events and big screen Televisions. IMAX practiced a focused differentiation strategy by targeting the niche market of large format film segments originally and later expanded its targeted segments. Overall, it has been focusing on the “blue ocean” in the film in-dustry by building its unique resources and consolidating its competitive advantage. IMAX’s financial performance was not satisfactory. For two consecutive fiscal years 2006 and 2007, IMAX recorded nearly $17 million and $27 million in net income loss respectively and the same $160 million in debt for both years.
We must first start off with GameStop as the most obvious. According to Reuters.com “GameStop has gone from having about $1.2 billion in debt after it bought Electronics Boutique in 2005 to generating an estimated $500 million in free cash..”(Reuters, 2012) This type of bank account offers GameStop a wide range of efforts to build into their existing storefront structure and expand to build other stores and increase development into their digital delivery service as mentioned before. CanGo has 164 million in working capital that is definitely strength in the financial aspects of venturing into the online gaming market. GameStop is in a booming game market; however its weakness is that it has the obstacles of intense competition and piracy concerns. We move on to Xbox that has an overwhelming advantage for being in the online gaming business since 2002.
This conversation was very successful for me and left me with very many ideas, I started thinking about my other passion which was video games and the growing scene of which it has come to. Video games are at an all time high in the industry and this allows for all types of new jobs. New platforms that stream video games that have pulled record breaking numbers of viewers. For those of you who might not understand what the streaming of competitive video games is, let me break it down. The top players of a video game enter tournaments that are broadcasted over the internet for the whole world to see, these are the top .01% of players.