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    The Demise of Blockbuster

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    Blockbuster was a movie and game rental service provider that peaked in the late 1980s and early 1990s with over 3,400 stores. However, it filed for bankruptcy in 2010 due to competition from Netflix and Redbox. Netflix shifted to a subscription-based model in 1999 that allowed customers to rent many titles for a low monthly fee. Redbox launched in 2002 and offered inexpensive $1 per night rentals through its network of over 23,000 kiosks by 2010. Both competitors achieved better strategic fit than Blockbuster by offering more convenient, low-cost options through new digital distribution models and infrastructure.

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    The Demise of Blockbuster

    Uploaded by

    Anonymous
    458 views10 pages
    Blockbuster was a movie and game rental service provider that peaked in the late 1980s and early 1990s with over 3,400 stores. However, it filed for bankruptcy in 2010 due to competition from Netflix and Redbox. Netflix shifted to a subscription-based model in 1999 that allowed customers to rent many titles for a low monthly fee. Redbox launched in 2002 and offered inexpensive $1 per night rentals through its network of over 23,000 kiosks by 2010. Both competitors achieved better strategic fit than Blockbuster by offering more convenient, low-cost options through new digital distribution models and infrastructure.

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    Blockbuster was a movie and game rental service provider that peaked in the late 1980s and early 1990s with over 3,400 stores. However, it filed for bankruptcy in 2010 due to competition from Netflix and Redbox. Netflix shifted to a subscription-based model in 1999 that allowed customers to rent many titles for a low monthly fee. Redbox launched in 2002 and offered inexpensive $1 per night rentals through its network of over 23,000 kiosks by 2010. Both competitors achieved better strategic fit than Blockbuster by offering more convenient, low-cost options through new digital distribution models and infrastructure.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    458 views10 pages

    The Demise of Blockbuster

    Uploaded by

    Anonymous
    Blockbuster was a movie and game rental service provider that peaked in the late 1980s and early 1990s with over 3,400 stores. However, it filed for bankruptcy in 2010 due to competition from Netflix and Redbox. Netflix shifted to a subscription-based model in 1999 that allowed customers to rent many titles for a low monthly fee. Redbox launched in 2002 and offered inexpensive $1 per night rentals through its network of over 23,000 kiosks by 2010. Both competitors achieved better strategic fit than Blockbuster by offering more convenient, low-cost options through new digital distribution models and infrastructure.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 10

    THE DEMISE OF

    BLOCKBUSTER
    Case Study Analysis

    By
    Lakshmi Niharika Addepalli
    INTRODUCTION
     Movie & game rental service provider.
     Founded in 1985 by James Cook and was at its peak between 1987-1993
    (led by Wayne Huizenga).
     8000 tapes with over 6500 titles.
     Opened stores at a rate of about one for every 24 hours.
     3400 stores by 1993 throughout Americas, Europe, Asia & Australia.
     In 2004, it had 84,300 employees worldwide.
     Filed bankruptcy in 2010 under CEO James Keyes.
     Key competitors are Netflix & Redbox.

    Supply Chain Management BUS 528 3/25/20 2


     Founded by Reed Hasting, 1997 as a pay per rental
    mail order video rental company.
     Experimented both pay per rental and subscription and
    settled on subscription-based strategy in 1999.
     By 2010, Netflix is the world’s largest subscription
    service.
     Users paid only $8.99/month for over 100,000 DVD
    titles delivered to their homes most of which were old
    releases.
     60 regional distribution centers.

    Supply Chain Management BUS 528 3/25/20 3


     Concept was originated in 2002 within McDonald’s
    Ventures LLC.
     Launched in 2004.

     Purchased by Coinstar, Inc. in 2009.

     By 2010, Redbox had approx. 23,000 kiosks


    nationwide.
     Customers paid $1/night movie rental.

     Each kiosk had 630 discs of which 200 would be new


    movies.

    Supply Chain Management BUS 528 3/25/20 4


    FINANCIAL SUMMARY

    Supply Chain Management BUS 528 3/25/20 5


    1. IN WHAT WAYS DID
    BLOCKBUSTER ACHIEVE BETTER
    STRATEGIC FIT THAN LOCAL
    STORES?
     Greater Presence
    Large brick and mortar stores in high traffic
    neighborhoods.
     Broad & Deep inventory

    Large stores allowed Blockbuster to carry more


    inventory (8000 tapes & 6500 titles).
    Ability to meet market demand.
     Technology

    Streamlined computerized system for inventory control


    & checkout.
     Customization

    Merchandize selection customized at store level.

    Supply Chain Management BUS 528 3/25/20 6


    2. HOW MUCH IMPLIED CERTAINTY DO
    NETFLIX & REDBOX FACE?
    WHAT LEVERS DO THEY USE TO DEAL WITH
    UNCERTAINTY?
    High Uncertainty

    Levers used:
     Information

     Inventory

     Time

     Capacity

    Supply Chain Management BUS 528 3/25/20 7


    HOW MUCH IMPLIED CERTAINTY DO NETFLIX & REDBOX
    FACE?
    WHAT LEVERS DO THEY USE TO DEAL WITH
    UNCERTAINTY?
    High Uncertainty

    Levers Used:
     Price
    Time

    Supply Chain Management BUS 528 3/25/20 8


    3. HOW DID NETFLIX & REDBOX ACHIEVE BETTER STRATEGIC FIT THAN
    BLOCKBUSTER?

     Netflix offered subscription-based  Low cost , budget conscious


    model. customers.
     Saved costs by purchasing only  Controlled inventories (Even has
    limited new movies & wide options to buy disk for $7 to focus
    variety of old releases. on keeping new movies).
     Recommendation software  Convenience factor (multiple kiosks
    (movies in stock were & can be returned at any kiosk).
    recommended)
     kiosks in high traffic centers.
     Automated distribution centers
    for rapid processing and locating
    distribution centers close to USPS.
    Supply Chain Management BUS 528 3/25/20 9
    THANK
    YOU
    10
    Supply Chain Management BUS 528 3/25/20

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