netflix vs blockbuster case study summary

Netflix vs Blockbuster – 3 Key Takeaways

It’s the ultimate example of technology disrupting a marketplace…

Or is it really the story of a leadership shakeup that toppled an empire?

Or is it a story about the extreme hatred people have for late fees?

The Netflix vs. Blockbuster saga has been told a dozen different ways, with a dozen different lenses applied.

And what I’ve come to realize (and this likely won’t come as a huge surprise)is that there’s no single explanation for why Netflix succeeded where Blockbuster failed.

As is the case with most things in life, it was a nuanced situation. There was a perfect storm of poor decisions and technological advances and other contributing factors that led to Netflix’s staggering growth…and Blockbuster’s equally staggering decline (when Blockbuster filed for bankruptcy in 2010, Netflix’s annual net income was $161 million .)

My goal with this post is to distill everything I’ve learned about these two companies down into a few actionable takeaways for marketers – sort of like this post on Zoom’s success story .

But first, for those who aren’t familiar with how the Blockbuster vs. Netflix story unfolded, here’s a short summary:

The Rise of Netflix (and the Fall of Blockbuster)

When Netflix launched in 1997, Blockbuster was the undisputed champion of the video rental industry.

Between 1985 and 1992, the brick-and-mortar rental chain grew from its first location (in Dallas, Texas) to more than 2,800 locations around the world.

Two years later, Viacom paid $8.4 billion to acquire Blockbuster .

netflix vs blockbuster case study summary

So by the time Netflix showed up on the scene with its video rental-by-mail service, it appeared to be a classic case of David vs. Goliath.

In fact, in the year 2000 –perhaps realizing that it’d be easier to fight alongside Blockbuster than against them – Netflix co-founder and CEO Reed Hastings approached Blockbuster’s then CEO, John Antioco, with a merger proposal:

Hastings wanted $50 million for Netflix. And as part of the deal, the Netflix team would run Blockbuster’s online brand.

Of course, that deal never materialized. Partly because Blockbuster laughed in Netflix’s face when they met to discuss the deal.

“It was tiny, involuntary, and vanished almost immediately. But as soon as I saw it, I knew what was happening: John Antioco was struggling not to laugh,” Netflix’s Marc Randolph remembers of the encounter.

At the time, Antioco considered Netflix to be small potatoes, and would come to realize only too late that having an online platform would be the way of the future.

In 1999, Netflix received backing from Groupe Arnault, giving them a $30 million cash injection that helped launch its subscription-based service.

In 2004, Blockbuster did launch a Netflix-like online DVD rental platform , and even abandoned their unpopular (but lucrative) late fees for overdue rentals.

By 2006, subscribers for Blockbuster’s online services had grown to more than 2 million. (Meanwhile, in that same year, the number of Netflix subscribers reached 6.3 million.)

Then in 2007, Antioco left Blockbuster, late fees were reinstated, and Blockbuster’s online efforts were put on the back burner.

In 2008, Netflix signed a deal with Starz to stream around 1,000 blockbuster movies and shows on its service.

Blockbuster’s fate was all but sealed.

In 2010, Netflix was signing deals with names like Sony, Paramount, Lionsgate, and Disney to help them grab a 20% market share of North American viewing traffic. On July 1st of the same year, Blockbuster was de-listed from the New York Stock Exchange and filed for bankruptcy having incurred nearly $1 billion in losses.

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Netflix’s valuation at the time?

$24 million.

For comparison, today, Netflix is valued at around $203 billion – a 4,060% increase from its valuation back in 2000.

3 Takeaways from the Netflix vs. Blockbuster Battle

1. never forget what you’re really selling..

For years, Blockbuster dominated the video rental space. But at some point, they lost sight of what business they were really in.

Instead of focusing on delivering incredible (and affordable) entertainment to their customers – something Netflix definitely has down – Blockbuster put more stock in the model they were comfortable using.

And hey, who can blame them? Back before the internet became integrated into nearly every facet of our lives, it was hard to imagine brick-and-mortar Blockbuster stores disappearing.

Blockbuster initially succeeded because they did one core job better than anyone else: delivering entertainment to people’s homes.

But as we all know, technologies change. And instead of investing all of their efforts into finding a new way to deliver on their true purpose (more on that in the next section), Blockbuster’s innovation stagnated. That reality hit Netflix founder Marc Randolph when the business was pivoting from a Mail-order DVD service to online streaming.

He wrote in his book, That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea :

“We’d finally figured out a way to make our original idea of DVDs by mail work, and here we were, looking ahead to a future without either DVDs or mail.”

The way Netflix overcame its challenges? Keep reading 👇

2. You need to be willing to adapt. (And half measures won’t cut it.)

1997 era Netflix–before the company embraced streaming

When you dig into the Netflix vs. Blockbuster story, it becomes clear that Blockbuster did (eventually) realize that the Netflix model was the future. And they did make changes to address it.

But in the end, it was too little, too late.

Blockbuster could never fully evolve into the modern business it needed to be in order to compete with Netflix. Once owning 9,000 stores in the US, Blockbuster now has a single brick-and-mortar presence – a lone store in Bend, Oregon .

Sandi Harding, the owner of the single remaining Blockbuster store in the world. Source .

As Forbes reported:

“The irony is that Blockbuster failed because its leadership had built a well-oiled operational machine. It was a very tight network that could execute with extreme efficiency, but poorly suited to let in new information.”

Technologies improve. Industries change. In order to grow, you need to keep a pulse on the ever-evolving needs and preferences of your customers so you can make changes to your model accordingly.

London-based Video Producer Andy Ash says this was Blockbuster’s downfall. The company was too busy making money in their video stores to imagine a time when people would no longer want or need them.

“In a bid to rescue their business, their answer at the time was to fight fire with fire. At one point they even opened up rental kiosks, a little bit like a vending machine, but all of these attempts were based on either outdated technology or outdated business models, whereas Netflix at the time, they did the opposite; they streamlined, they were able to see the future of video rentals and then innovate for that future.”

This applies to products and services as well as to marketing strategies. Believe it or not, marketing channels have a shelf life.

So even if you learn how to dominate a specific channel , you need to remember that all channels, no matter how popular they are today, could someday fade into oblivion…just like brick-and-mortar Blockbuster locations did.

The key to surviving, and thriving?

Embrace change.

Blockbuster didn’t. Even in 2008, the company’s CEO, Jim Keyes , was perplexed by (or refused to accept) Netflix’s appeal to customers:

“I’ve been frankly confused by this fascination that everybody has with Netflix…Netflix doesn’t really have or do anything that we can’t or don’t already do ourselves.”

As Square2Marketing’s Mike Lieberman explains :

“Blockbuster didn’t believe a month-to-month subscription service would ever actually work. And it certainly wasn’t planning on going digital. Even when the company was offered a buyout deal early on, it declined, believing that its previous business revenue model would work just as well in the new wave of movie watching as it had in the past.”

3. The customer-driven approach always wins.

Customer-driven sales & marketing from drift.

As we’ve already established, there were several factors that contributed to the company’s downfall, including not understanding what business they were really in – entertainment, not retail – and not being flexible enough to adapt.

But another key piece of the puzzle was Blockbuster’s unwillingness to put their customers first. The company’s revenue relied (massively) on charging late fees. As David Reiss explains:

“Blockbuster’s profit had to be sufficient to sustain their worldwide stores and staffing levels. As well as their pricing structure reflecting this, their profit also relied on something their customers hated – late fees. A significant portion of the revenue that Blockbuster needed to stay in business was a revenue stream that Netflix didn’t even charge for, as you could keep their movies as long as you wanted. Whereas Netflix developed a business model that simplified the video-renting process, making it more enjoyable for customers, Blockbuster only thought about maximizing their own returns.”

Forbes described Blockbuster’s reliance on penalizing its patrons in the form of a late fee as the company’s “Achilles heel.” When Blockbuster did finally address the issue, the cost of dropping late fees from their model amounted to a loss of $200 million.

“Any time you can get rid of the No. 1 customer dissatisfaction factor and in the process generate higher customer traffic, for me, as a retailer, that spells a good answer,” CEO John Antioco said of the move at the time.

Narrator: it didn’t work.

At the same time, the company cut its late-fee revenue stream, it was building out its online platform cost another $200 million. If you add up these two costs, Blockbuster paid $400 million in an effort to modernize and remain competitive with Netflix.

We’ll never know if this plan would have succeeded. Shortly after this modernization effort, Antioco was ousted by the board after the changes were made.

Blockbuster then returned to their company-driven ways…and went bankrupt a few years later.

Final Thought: Change Is Inevitable

When I was a kid, getting to pick my own movie at Blockbuster was a rite of passage.

Every weekend, my siblings and I would pile into my dad’s car and make two stops. First, we marched into Blockbuster. Then it was over to the supermarket next door for snacks, soda, and frozen pizza. It was our little ritual.

But these days, the idea of going to a brick-and-mortar store to rent a video seems kind of crazy.

With the rise of Netflix, home entertainment became just a few clicks away. It’s become its own kind of ritual – for over 182 million paying members .

So the next time you think to yourself, “The way we do things now will never change,” remember the Netflix vs. Blockbuster saga and how an entire industry can become upended in just a few years.

Editor’s Note: This article was published in July 2017 and has been updated to reflect new information.

Want to drive Netflix-level growth for your business? Start here .

Winning the Customer Journey Battle: Netflix vs Blockbuster Case Study

By Stratability Academy

Published: April 25, 2019

Last Update: May 4, 2020

TOPICS: Gameplans & Roadmaps , Operating Model , Service Design , Transformation

We know a brand has established a strong position in customers’ mind when its name becomes a verb, like Google, Uber, Skype. And one such brand that cannot be ignored in this digital age is Netflix. Netflix has come a long way, starting from an online DVD rental service to the world leader in the streaming industry. The company completely changed how people watched movies and, consequently, destroyed the throne of Blockbuster, once the giant brick and mortar video rental store in the U.S. Interestingly, in 2000, Blockbuster turned down the $50M offer to purchase Netflix, just to find itself decease under the reign of Netflix 10 years later. How did Netflix flip the table and nail the customer journey as of today? How did it master the art and science of digital transformation on its strategy journey?

Let’s explore what happened based on the pains and gains in the customer journey.

Blockbuster’s Customer J ourney

Before Netflix, the age of Blockbuster…

Back to the late 20th century, when Netflix was just a small start-up, Blockbuster dominated the video rental industry with over 9,000 stores around the globe. With the emergence of DVDs as the new video medium, Blockbuster managed to get exclusive deals with big Hollywood studios to rent new DVD releases after cinema showings ended. At that time, almost every household had a videocassette recorder (VCR) for the purpose of video watching, and Blockbuster rental stores were people’s frequent destination for movie selections.

Then, at one point, people realized they went to Blockbuster stores not because they enjoyed the experience but just because it was the only choice for them to watch new movie releases. With that being said, Blockbuster store visits were far from convenience. Imagine one Sunday afternoon, your kids were home and you wanted to watch a movie with them. Then you would probably spend the next few hours driving them to a nearby Blockbuster store, going through hundreds, if not thousands, of DVDs on the shelves without a catalog or any recommendations from store attendants, except for the new releases which were charged out at a premium, getting eyestrain from reading the titles, and arguing with your kids what to watch. By the time you got home, you realized you had not cleaned up the VCR machine’s video head after the last watch, so you do that first, before sitting down on the couch to play the DVD you brought home earlier. How much enjoyment was left then? But it was not the whole story. After some days of watching the movie, you were too caught up in your work and forgot to return the DVD on time, thus you had to pay the store an exceptionally high late fee. In fact, late fees comprised of a large pie of Blockbuster profits. It was an unpleasant experience that actually drove people away from the business.

Netflix’s Digital Transformation Customer Journey

Then Came Netflix – a Market Disruptor

As a former Blockbuster customer, Netflix CEO Reed Hastings thoroughly understood the issues with that customer journey, and he initially started Netflix as a mail-order DVD subscription service to eliminate the lengthy in-store visits and annoying late fees. To make up for the lack of physical customer interaction, Netflix offered lower prices (monthly subscription fees for unlimited rentals) and implemented efficient order-processing computer systems. After just a few years, from a small business, Netflix steadily grew its revenues and got Blockbuster on guard.

Nevertheless, it was when Netflix launched its video streaming service that saw the end of Blockbuster. Netflix, again, took a deep dive into the consumer journey and foresaw the future demands for instant-access entertainment at the convenience of Internet devices. With the new streaming service, Netflix customers could browse a detailed digital movie catalog and press play in a second with no need for a physical DVD. The streaming service of Netflix is so successful that it accounts for one-third of downstream Internet traffic during peak hours in the U.S.

In 2013, upon discovering the potential hype of binge-watching, Netflix started to produce in-house content, known at Netflix Originals, and released all the episodes at one time. Its first original series House of Cards still remains one of the best dramas on Netflix. Besides, Netflix took on customers’ desire for personalization and came up with the smart content recommendation system which was backed by machine learning. Each customer now has a customized experience on Netflix based on their personal habits and preferences. This is where Netflix built up its sticky service to get customers addicted and keep them coming back for more.

Netflix’s popularity can be exposed by impressive numbers: circa. 150M users, almost double the runner-up Amazon Prime; two-thirds of Netflix users share their accounts with others, increasing the actual viewers by 2.5 times; 10 hours spent on Netflix weekly by average U.S. users; 23 languages used and 57% of international users; etc… Considering the recent increase in the share of users outside the U.S., Netflix is drastically growing its international content in the library.

And it gets that the customer journey doesn’t stop changing either. Netflix has been extending the customer journey via cross-platform partnerships. It has teamed with telecommunications and media companies like Vodafone, BT, and Sky in the UK, who all offer Netflix as part of their mobile or cell phone packages, or TV packages, and you can now control your Netflix accounts with voice-activated home automation IoT apps like Amazon Alexa, and Google Home. All of these customer journey extensions are there to save customers time and to provide convenience, and continue to provide better customer experiences.

Hasting could not have applied all of these digital transformation changes to the Netflix business model so successfully without closely following and predicting the customer journey and even testing with customers via co-creation. For a service company like Netflix, customer experience is king, thus the importance of the customer journey mapping process when it comes to lifting a business or an organization to another level, and changing the ‘game’.

Digital Transformation success through the customer journey

Netflix’s success results from the continuous effort of understanding the customer journey and delivering value driven; customer co-created; and network connected services; three digital transformation approaches introduced in THE STRATEGY JOURNEY Framework . The customer journey mapping process and digital transformation approaches, go hand in hand with each other, which explains the failure of Blockbuster to digitally transform due to its customer experience blind spot.

So when it comes to innovation and defining any new service, don’t forget to ‘map the customer journey ‘ as Reed Hastings and Netflix did.

Stratability Academy

About the author

Stratability Academy is a provider of strategic management, innovation and digital transformation learning materials based on the THE STRATEGY JOURNEY Framework , and is the publisher of THE STRATEGY JOURNEY book (2019) by Julie Choo and Graham Christison.

The Impact of Co Creation in Modern Business

Culture & Careers , Data & AI , Gameplans & Roadmaps , Operating Model , Service Design , Transformation

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9 Steps to your Winning Customer Journey Strategy

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In early 2000, Netflix founders Reed Hastings and Marc Randolph offered to sell the company to Blockbuster for $50 million. Blockbuster turned them down. Eventually, Netflix triumphed over Blockbuster, popularized streaming, and forced the entertainment industry to adapt. Hastings credits much of this success to the company’s internal culture. For Hastings’ interview with “Marketplace’s” Kai Ryssdal, click here . The following is an excerpt from a new book Hastings co-wrote called “ No Rules Rules: Netflix and the Culture of Reinvention. ”

Reed Hastings: “Blockbuster is a thousand times our size,” I whispered to Marc Randolph as we stepped into a cavernous meeting room on the twenty-seventh floor of the Renaissance Tower in Dallas, Texas, early in 2000. These were the headquarters of Blockbuster, then a $6 billion giant that dominated the home entertainment business with almost nine thousand rental stores around the world.

The CEO of Blockbuster, John Antioco, who was reputed to be a skilled strategist aware that a ubiquitous, super-fast internet would upend the in- dustry, welcomed us graciously. Sporting a salt-and-pepper goatee and an expensive suit, he seemed completely relaxed.

By contrast, I was a nervous wreck. Marc and I had cofounded and now ran a tiny two-year-old start-up, which let people order DVDs on a website and receive them through the US Postal Service. We had one hundred employees and a mere three hundred thousand subscribers and were off to a rocky start. That year alone, our losses would total $57 million. Eager to make a deal, we’d worked for months just to get Antioco to respond to our calls.

We all sat down around a massive glass table, and after a few minutes of small talk, Marc and I made our pitch. We suggested that Blockbuster purchase Netflix, and then we would develop and run Blockbuster.com as their online video rental arm. Antioco listened carefully, nodded his head frequently, and then asked, “How much would Blockbuster need to pay for Netflix?” When he heard our response—$50 million—he flatly declined. Marc and I left, crestfallen.

That night, when I got into bed and closed my eyes, I had this image of all sixty thousand Blockbuster employees erupting in laughter at the ridiculousness of our proposal. Of course, Antioco wasn’t interested. Why would a powerhouse like Blockbuster, with millions of customers, massive revenues, a talented CEO, and a brand synonymous with home movies, be interested in a flailing wannabe like Netflix? What did we possibly have to offer that they couldn’t do more effectively themselves?

But, little by little, the world changed and our business stayed on its feet and grew. In 2002, two years after that meeting, we took Netflix public. De- spite our growth, Blockbuster was still a hundred times larger than we were ($5 billion versus $50 million). Moreover, Blockbuster was owned by Viacom, which at that time was the most valuable media company in the world. Yet, by 2010, Blockbuster had declared bankruptcy. By 2019, only a single Blockbuster video store remained, in Bend, Oregon. Blockbuster had been unable to adapt from DVD rental to streaming.

The year 2019 was also noteworthy for Netflix. Our film Roma was nominated for best picture and won three Oscars, a great achievement for the director Alfonso Cuarón, which underscored the transformation of Netflix into a full-fledged entertainment company. Long ago, we had pivoted from our DVD-by-mail business to become not just an internet streaming service, with over 167 million subscribers in 190 countries, but a major producer of our own TV shows and movies around the world. We had the privilege of working with some of the world’s most talented creators, including Shonda Rhimes, Joel and Ethan Coen, and Martin Scorsese. We had introduced a new way for people to watch and enjoy great stories, which, in its best moments, broke down barriers and enriched lives.

I am often asked, “How did this happen? Why could Netflix repeatedly adapt but Blockbuster could not?” That day we went to Dallas, Blockbuster held all the aces. They had the brand, the power, the resources, and the vi- sion. Blockbuster had us beat hands down.

It was not obvious at the time, even to me, but we had one thing that Blockbuster did not: a culture that valued people over process, emphasized innovation over efficiency, and had very few controls. Our culture, which focused on achieving top performance with talent density and leading employees with context, not control, has allowed us to continually grow and change as the world, and our members’ needs, have likewise morphed around us.

Netflix is different. We have a culture where No Rules Rules.

Excerpted from “No Rules Rules: Netflix and the Culture of Reinvention” by Reed Hastings and Erin Meyer, reprinted courtesy of Penguin Press.

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Netflix vs Blockbuster – A Comparative Analysis of Streaming Giants’ Success and Failures

Netflix vs blockbuster: the rise and fall of two entertainment giants.

When it comes to home entertainment, the names Netflix and Blockbuster are inseparable from the collective memory of millions of people worldwide. However, while Netflix has ascended to the pinnacle of the streaming industry, Blockbuster met its demise. In this blog post, we will delve into the intriguing story of these two giants and examine the factors that led to their contrasting destinies.

Rise of Netflix

Netflix’s Early Beginnings as a DVD Rental Service

Netflix initially emerged on the scene as a DVD rental-by-mail service in 1997, offering customers the convenience of renting movies without setting foot outside their homes. This innovative approach quickly gained traction, enabling the company to capture a significant share of the video rental market.

Transformation into a Streaming Service

Recognizing the growing potential of digital media, Netflix made a bold move in 2007 by introducing streaming as an alternative to physical DVD rentals. This shift marked a turning point for the company, setting the stage for its future dominance in the entertainment industry.

Successful Strategy Shifts and Innovations

Netflix’s success can be attributed to several strategic decisions and innovations that have kept it ahead of its competition.

Introduction of Original Content

One of the factors that contributed significantly to Netflix’s rise was its decision to produce original content. With popular shows like “House of Cards” and “Stranger Things,” the streaming giant assured its subscribers that it could deliver exclusive and high-quality content that couldn’t be found anywhere else.

Expansion into Global Markets

Netflix’s appetite for growth wasn’t confined to the domestic market. The company realized the immense potential in expanding internationally and successfully launched its streaming services in various countries, leveraging its already considerable brand recognition.

Embracing the Subscription Model

Building upon its rental-by-mail foundation, Netflix embraced a subscription model that allowed users to enjoy unlimited access to its vast collection of movies and TV shows for a monthly fee. This approach offered both convenience and affordability, forging a strong bond between the company and its subscribers.

User-friendly Interface and Personalization

Netflix revolutionized the user experience by developing a user-friendly interface that showcased personalized recommendations based on individual preferences and viewing history. By tailoring content suggestions to each user, Netflix succeeded in keeping viewers engaged and coming back for more.

Downfall of Blockbuster

Blockbuster’s Dominance in the Rental Market

Before the advent of digital media, Blockbuster was the undisputed king of the rental market. With its chain of physical stores spread across the nation, Blockbuster boasted a vast selection of movies and games that kept customers coming back.

Failure to Adapt to Changing Consumer Preferences

Underestimating the shift to digital media

Blockbuster’s greatest downfall was its inability to foresee the rapid adoption of digital media and streaming. As customers increasingly turned to Netflix and other streaming services, Blockbuster clung to its brick-and-mortar stores, failing to recognize the impending revolution that would reshape the industry.

Slow response to the emergence of streaming services

Even after digital media started gaining momentum, Blockbuster was slow to respond. Instead of developing or partnering with a streaming service, Blockbuster focused on its in-store experience, which eventually became a liability.

Missed Opportunities and Strategic Errors

Ignoring the Importance of Technology

Blockbuster’s reluctance to embrace technology was a significant factor in its downfall. While Netflix invested heavily in developing streaming technology and expanding its digital infrastructure, Blockbuster failed to recognize the potential of this new era and instead stuck to its traditional model.

Poor Decision-making Regarding Partnerships

Blockbuster also made critical missteps in its choice of partnerships. For example, it passed up on an opportunity to acquire Netflix in its early days, a decision that would come back to haunt the company as Netflix rose to prominence.

Comparison of Success Factors

Differentiation through Content Offerings

Netflix’s success can be partially attributed to its ability to offer exclusive original content, giving subscribers a unique and compelling reason to choose Netflix over other streaming services. Blockbuster, on the other hand, relied primarily on licensing existing content, failing to capture the attention and loyalty of its audience.

User Experience and Convenience

Netflix’s user-friendly interface and personalized recommendations provided a superior viewing experience, eliminating the hassle of browsing through physical copies and improving customer satisfaction. Blockbuster’s reliance on physical stores and limited browsing options paled in comparison and failed to address changing consumer expectations.

Pricing and Subscription Models

Netflix’s subscription model offered tremendous value for money, allowing customers to access unlimited content at a fixed monthly fee. In contrast, Blockbuster’s pay-per-transaction model became less appealing as streaming emerged as a more convenient and cost-effective solution.

Expansion into International Markets

While Netflix expanded its services to various countries, Blockbuster’s physical store presence limited its ability to penetrate global markets effectively. This international expansion allowed Netflix to tap into new audiences and diversify its revenue streams.

In the battle between Netflix and Blockbuster, it is evident that the former’s rise to success and the latter’s downfall hinged on factors such as adaptability, embracing technological advancements, and understanding consumer behavior. The story of these two entertainment giants serves as a valuable lesson for industry competitors, illustrating the importance of staying ahead of the curve and constantly evolving to meet the changing needs and preferences of consumers.

The future of streaming services remains promising, but not without its challenges. As the industry becomes increasingly competitive, companies will need to continue innovating and delivering exceptional content and experiences to stay relevant. Only by learning from past mistakes and understanding the evolving landscape can streaming services hope to thrive in an ever-evolving entertainment ecosystem.

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Decision-Making Processes and Failures: Netflix vs Blockbuster

Back in the year 2000, Reed Hastings, founder of Netflix, flew to Dallas to meet with the Blockbuster CEO, John Antico (Tyler, 2017). Interestingly, Reed Hastings chartered a private jet to Dallas because no commercial flights were available on short notice (Randolph, 2019). Reed and the Netflix team presented their business to Blockbuster (who was turning $6 billion in revenue) for a mere $50 million. Antico and Blockbuster turned them down, with a lot of arguments showing that Blockbuster did not believe that the Internet craze was a serious threat, so Netflix resolved to bury Blockbuster (Randolph, 2019). In 2010, Blockbuster declared bankruptcy (Satell, 2014).

The idea of Aikido is to turn someone’s strength into their weakness. In a model for business strategy , Aikido is when a company offers a product that is “diametrically opposed” to the image and mindset of the competition (BMI Lab, n.d.). Unlike most other terms discussed here, Aikido is a strategy, not a forecasting or goal-setting technique. It is most similar to STAR in that it is an approach to a problem.

In the case of Blockbuster, who excelled in brick-and-mortar video rentals with late fees and was very profitable with a $6 billion revenue, there was so much momentum in their way of doing things. Blockbuster had the market and had established the level of service for video rental. Netflix, in true Aikido fashion, entered the market with the exact opposite of what Blockbuster offered. Instead of a brick-and-mortar presence, Netflix allowed customers to rent movies online. Instead of late fees, Netflix allowed customers to return without late fees. Netflix was able to offer the market an opposite solution which was enough to trip Blockbuster and make it die under its own weight.

S.M.A.R.T. goals are specific, measurable, achievable, relevant, and time bound. SMART is a goal-setting method from Peter Druckers’s Management by Objectives which is used to make objectives clear and achievable (Mindtools: SMART Goals , n.d.). SMART goals are often used to make a goal meaningful and motivating, and the tool is usable by most people and organizations. Netflix, as well as most dot-com companies, users key performance indicators (KPIs) heavily, which are based off of SMART goals (Marino, 2019). KPIs measure the “measurable” part of goals. Sara Marino indicates that Blockbuster’s lack of appropriate SMART goals and KPIs for the dot-com era were a factor in their demise (Marino, 2019).

Since Blockbuster’s online strategy was non-existent and their business model was faulty and unable to compete with nimble competitors like Netflix, setting goals around launching a Netflix-like project never occurred to Blockbuster. They never set a goal around it because they did not see Netflix as a threat.

DELPHI Analysis

Unlike SMART, which is for goal-setting, DELPHI Analysis is about forecasting. Abhishek Syal, from MIT Sloan and Senior Analyst for Dell/EMC, performed a Delphi Method example on Blockbuster and Netflix, showing that it could be forecasted that the market would follow the dot-com trend (Syal, 2018). The Delphi Method, developed by RAND Corporation in the 1950s to analyze technology and warfare, has become a statistical forecasting tool to come to a consensus about a future prediction (RAND Corporation, n.d.). Abhishek Syal’s Delphi Method example shows a clear handoff of market from Blockbuster to Netflix (Syal, 2018).

SWOT Analysis

SWOT analysis is a planning tool that stands for the terms strengths, weaknesses, opportunities, and strengths. It is a tool that analyses a business’s internal abilities and hinderances as well as external factors that affect the business (Parsons, 2018). With investment of time and energy, team involvement, and open collaboration using the tool, a team can honestly assess where it needs to improve, defend, or grow.

In the SWOT analysis performed by Adam on Free SWOT Analysis , Blockbuster has several strengths as well as weaknesses. Strengths ( internal ) include their large market control and low prices, while weaknesses ( internal ) include lack of planning in global markets and expensive shipping arrangements. Opportunities (ex ternal ) include quality improvement and online product development, while threats ( external ) include problems with movie failures, piracy, and the amount of competition (Adam, 2011).

STAR stands for situation, task, action, and result, and is used for dealing with a situation. STAR is commonly used in behavioral interviews to provide a comprehensive response to a problem (Doyle, 2020). It is often used to build an answer to a question in a way that is comprehensive. STAR, like Aikido, is a strategy rather than forecasting like Delphi or planning like SMART.

Reading the story of Netflix’s meeting at the Blockbuster headquarters in Dallas, the Netflix team did a great job of answering the questions asked of them in a STAR way, although the meeting was largely unsuccessful.

Much like SMART, GROW is a planning tool, although it is commonly used in coaching. GROW is made up of goal, current reality, options, and will to commit (Mindtools: GROW , n.d.) GROW is meant to determine the tactical path from current state, through evaluating options, to reaching the goal through a way forward.

Blockbuster, during their demise, had opportunities to acquire or develop business in the online space, rather than firmly holding onto their anchor business model. Re-evaluation of their goals, a new SWOT analysis, and building a new tactical path through GROW would have helped them plan their way out of failure. The concept of Aikido, which is a mindset or strategy, allowed Netflix to go up against Blockbuster, seizing the market, by offering exactly the opposite approach to Blockbuster. Stubbornness, lack of planning, lack of adaptability, and poor decision making led to their failure, rather than seeking out the right solution for their brand and their corporation.

Adam. (2011). SWOT Analysis of Blockbuster. Retrieved from https://www.freeswotanalysis.com/entertainment/245-swot-analysis-of-blockbuster.html

BMI Lab. (n.d.). Aikido . Retrieved from https://businessmodelnavigator.com/pattern?id=3

Doyle, Alison. (2020). How to Use the STAR Interview Response Method. Retrieved from https://www.thebalancecareers.com/what-is-the-star-interview-response-technique-2061629

Marino, Sara. (2019). KPIs and Netflix. Retrieved from https://medium.com/@saramarino_31225/kpis-and-netflix-155e8189469b

Mindtools. (n.d.). SMART Goals: How to Make Your Goals Achievable . Retrieved from https://www.mindtools.com/pages/article/smart-goals.htm

Mindtools. (n.d.). The GROW Model of Coaching and Mentoring . Retrieved from https://www.mindtools.com/pages/article/newLDR_89.htm

Parsons, Noah. (2018). What is a SWOT Analysis, and How to Do It Right (with examples) . Retrieved from https://www.liveplan.com/blog/what-is-a-swot-analysis-and-how-to-do-it-right-with-examples/

RAND Corporation. (n.d.). Delphi Method. Retrieved from https://www.rand.org/topics/delphi-method.html

Randolph, Marc. (2019). He “Was Struggling Not to Laugh”: Inside Neflix’s Crazy, Doomed Meeting with Blockbuster . Retrieved from https://www.vanityfair.com/news/2019/09/netflixs-crazy-doomed-meeting-with-blockbuster

Netflix & Blockbuster – Case Study Of Disruptive Innovation

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It’s rare for a week without me tuning into Netflix to watch something or at least browse its offerings to find my next binge-worthy series. I know I’m not alone in this habit; countless others probably engage in the same routine.

That’s why examining the Netflix and Blockbuster case study is so enlightening. It offers a riveting look at how disruptive innovation can permanently alter the digital landscape. One company survived and flourished, while the other faded into business irrelevance. As we delve into key learnings from this case study, we also discuss what contemporary companies can do to avoid meeting the same fate as Blockbuster.

Understanding disruptive innovation, netflix’s early challenges, low-end footholds, new market footholds, blockbuster’s missed opportunities, the importance of transformation in business, 1. adapt or perish, 2. recognize low-end footholds, 3. embrace technology early, 4. customer-centric approach, 5. stay ahead through innovation, 6. use data intelligently, 7. anticipate future trends, 8. understand market signals, 9. transformation is continuous, listen to our podcast about streaming wars chronicles: the netflix & blockbuster case study of disruptive innovation below or by clicking here., 5 questions to ask when considering a solid wood furniture manufacturer, what is solid wood vs. engineered wood, hardwood solids furniture, what does the term mean, netflix & blockbuster: a case study in disruptive innovation.

One of the most compelling case studies in disruptive innovation is the saga of Netflix and Blockbuster. This story provides valuable insights into how Netflix managed to upend the industry, positioning itself as a dominant force in today’s digital landscape.

Continue reading as we delve deeper into the disruptive journey of Netflix and Blockbuster.

Digital disruption has been a game-changer in entrepreneurial strategies since the late 20th Century. Contrary to popular belief, disruptive innovation is not the same as mere creativity.

While creating a fuel-efficient engine might draw a new consumer base, the minor variations from standard engines do not categorize it as disruptive. True disruption focuses on targeting sectors that established companies overlook or revolutionizing an existing system.

This case study delves into how Netflix applied disruptive innovation to dethrone Blockbuster in the home entertainment industry.

Brief History Of Netflix

Understanding its history is crucial to grasp the scale of Netflix’s disruption fully. Netflix was founded in 1998 by Reed Hastings and Marc Randolph in Scott’s Valley, California, with an initial investment of $2.5 million from Hastings.

Opting to distribute DVDs rather than bulky and fragile VHS tapes, Netflix started with 30 employees and 925 available titles. Over time, the company introduced a monthly subscription model, eliminating the single rental system. It positioned itself as a consumer-friendly alternative to Blockbuster’s model, often including late fees and hidden charges.

Netflix wasn’t always the giant we know today. In 2000, the company even offered to sell itself to Blockbuster for $50 million—an offer that Blockbuster refused.

Following the dot-com bubble burst and the 9/11 attacks, Netflix was forced to lay off two-thirds of its staff. However, the proliferation of affordable DVD players and an IPO in 2002 helped the company regain its footing.

Disruptive Strategies Used By Netflix

Netflix employed various disruptive approaches to outmaneuver Blockbuster in the market. Continue reading to uncover two of these critical, innovative strategies.

Netflix initially targeted lower-end markets that Blockbuster ignored. It presented itself as a hassle-free alternative to Blockbuster by eliminating late fees. This allowed Netflix to grow its customer base steadily.

The company focused on improving service speed and video quality, gradually becoming a preferred choice over Blockbuster for many consumers.

Netflix further disrupted the industry by introducing DVDs and streaming services. Their easy-to-use online interface and innovative recommendation algorithm provided an experience Blockbuster couldn’t match.

They also invested in creating original content, widening their market appeal, and keeping audiences engaged.

Blockbuster’s business model worked well for a time, but their complacency in innovation left them vulnerable to disruption. They continued to rely on an aging model that included late fees and did not adapt quickly enough to new technologies.

When they finally attempted to catch up, it was too late, and they were already in decline.

While disruptive innovation is crucial for capturing market share, continual transformation is essential. Netflix’s willingness to adapt allowed it to evolve from a DVD rental service to a streaming giant.

Conversely, Blockbuster’s resistance to change led to its downfall. The case of Netflix vs. Blockbuster is a compelling example of how disruptive innovation can reshape industries and why companies must adapt to survive.

Lessons From The Netflix & Blockbuster Case Study On Disruptive Innovation

The evolution of Netflix and the decline of Blockbuster serve as an epic tale of disruptive innovation in the business landscape. This case study provides insights into strategic decision-making and offers lessons on how to deal with market transformation.

Here are ten key lessons companies can learn from this saga.

The inability of Blockbuster to adapt to emerging technologies and new consumer preferences, especially around the convenience of movie rentals, was a critical downfall. Companies must be agile and willing to adapt their business models to remain relevant.

Netflix capitalized on the aspects of the market that Blockbuster ignored, primarily around consumer annoyance with late fees. Companies should be cautious not to ignore market segments that might seem less profitable or secondary, as they may become entry points for disruptive competitors.

Netflix took a risk by betting on DVDs and online streaming. Companies should look towards emerging technologies as opportunities for future growth and be willing to invest early, even if the technology hasn’t yet reached mass adoption.

Netflix’s recommendation algorithm, easy-to-use interface, and concern for customer experience made them a consumer favorite. Companies should place the customer at the center of their business model and continually strive to improve the user experience.

Netflix invested in original content to differentiate itself further from Blockbuster and new competitors. Companies must continuously innovate and expand their offerings to keep customers engaged and deter potential entrants.

Netflix has been a pioneer in utilizing big data to understand customer behavior and preferences. Companies should leverage data analytics to make more informed decisions and to tailor their services/products to individual customer needs.

While Blockbuster remained committed to physical stores, Netflix anticipated the shift toward digital consumption. Forecasting and acting upon trends can differentiate between leading the market or becoming obsolete.

Blockbuster missed the signals when Netflix offered to sell itself for $50 million, and consumers began to show dissatisfaction with late fees. Recognizing and acting upon market signals, even subtle ones, can impact a company’s trajectory.

Even after establishing itself as a leader in streaming, Netflix continues to evolve and adapt. Understanding that transformation is an ongoing process rather than a one-time event is crucial for long-term success.

10. Learn From Failures

Both Netflix and Blockbuster had their share of mistakes. However, Netflix has shown an ability to learn from its failures, pivot, and recover. Companies should not only celebrate successes but also see failures as learning opportunities.

The tale of Netflix and Blockbuster is a masterclass in understanding disruptive innovation and market transformation mechanics. By recognizing early signs of disruption, staying adaptable, and being committed to continuous improvement and innovation, companies can remain competitive and relevant in their respective markets.

Find out more about how Mondoro can help you create, develop, and manufacture excellent home decor and home furniture products – don’t hesitate to contact me , Anita . Check out my email by clicking here , or become a part of our community and join our newsletter by clicking here .

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Netflix Inc.: The Disruptor Faces Disruption

By: Chris F. Kemerer, Brian Kimball Dunn

Netflix Inc. (Netflix) had surpassed Blockbuster, the previous movie rental leader, before making the successful transition to digital delivery of video content. But despite Netflix's success, in…

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Netflix Inc. (Netflix) had surpassed Blockbuster, the previous movie rental leader, before making the successful transition to digital delivery of video content. But despite Netflix's success, in 2017, numerous competitors, including both established, mainstream content producers and digital upstarts, were making it difficult for Netflix to recreate its earlier dominance. Critics pointed to Netflix's slowing acquisition of subscribers and accelerating debt levels. Netflix's chief executive officer was confronted with disruption from a variety of digital rivals. How should he respond? Should Netflix continue to try to be a content producer, competing with Hollywood's industry leaders? Should it form a partnership with other media companies to align everyone's incentives? Perhaps it could move into other media content areas outside of traditional entertainment. Further, there remained the question of how to treat its legacy DVD-by-mail business. As the incumbent firm, Netflix needed to respond to competitors and avoid a fate similar to that of Blockbuster.

Chris Kemerer is affiliated with University of Pittsburgh.

Learning Objectives

This case was written for undergraduate and post-graduate courses in information systems and technology strategy. It offers a vehicle for students to thoroughly explore Clayton Christensen's disruptive innovation concept. In particular, it offers the opportunity to see two disruption examples in one case. Through the case, students will understand both demand-side and supply-side disruption; analyze multi-objective management of a portfolio of both mature, cash-cow lines of business and emerging, less certain business delivery innovations; understand the economics of digital goods and platform businesses, including high-fixed-cost and low-marginal-cost production functions and the cross-side network effects inherent in platforms; and discuss new technology risk management, particularly with respect to rapidly changing and uncertain information technologies.

Nov 27, 2017

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Information Technology

Ivey Publishing

W17722-PDF-ENG

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Blockbuster vs. Netflix: A Case of Technology-Driven Strategy

For a few years now, I’ve been doing a riff on Blockbuster and Netflix in some of my speaking engagements. It’s been a useful case for sharing many of my insights about strategic management and the role of technology in strategy (disclaimer: neither of these firms has been a client of mine, and my impressions have been formed only from publicly-available information).

The essence of the riff is this: Blockbuster built a very successful business model and then had its lunch eaten by Netflix. The key lessons we can learn from this case are:

Don’t underestimate the power of technology to change your competitive environment.
Constantly be looking for ways to challenge and reinvent your value proposition, or your competitors will do it for you.
Recognize and overcome the forces that will resist change in your own organization.

Let’s look at the history. Blockbuster opened its first store in Dallas in 1985. It grew rapidly through franchising, company-owned stores, and acquisition and consolidation of the thousands of independent “mom and pop” video rental retailers around the country. The value proposition was easy to see: convenient, economical, and reliable rental access to video and game entertainment, in a clean and family-safe (with no X-rated movies) environment. Viacom acquired Blockbuster in 1994 for $8.4 billion.

But Blockbuster’s fortunes have been on a long decline. Viacom floated shares in Blockbuster with plans for a full divestiture. The separation was completed in 2004, with Viacom taking a $1.3 billion charge for its trouble. Blockbuster stock, which traded above $29 a share in 2002, has recently been trading below $1.00 per share. Blockbuster’s market capitalization is less than $150 million , and trading was halted briefly in March 2009 on rumors of bankruptcy.

Billions of dollars in shareholder value lost. What happened? Netflix happened (although other, less significant forces contributed). Netflix was established in 1997 and has its headquarters in Los Gatos, California. Although it started with a conventional pay-per-rental model, it introduced its monthly subscription concept in 1999, and dropped pay-per rental soon after. Capitalizing on the shift from tape to disk media for video, Netflix’s business model exists entirely without a bricks and mortar retail presence.

The basic value proposition of Netflix has been to capture its customers’ DVD choices on its website (heavily driven by customized recommendations), and ship the chosen DVD to and from customers via U.S. Mail. Compared with bricks and mortar video rental stores, Netflix offers the convenience of website ordering and door to door service at the sacrifice of same-day service. In most cases, DVDs arrive in the mail the day after an order is initiated (either by request on the website or returning a previously rented DVD). Netflix’s success has certainly been due in part to reliable execution of its order capture and delivery processes. Netflix went public in 2002 selling over 5 million shares at a (split-adjusted) $7.50. After having incurred losses for a few years, it posted its first profit of $6.5 million on $272 million in revenue in 2003. Netflix recently traded around $40 per share, and has a market capitalization over $2.2 billion .

Don’t underestimate the power of technology to change your competitive environment

Netflix’s business strategy was entirely built on the basis of then-available technology. Environmental changes, such as higher penetration of internet access and broad availability of DVD players changed the landscape, and created opportunity. Of course, the technology was available to Blockbuster, which was certainly aware of environmental change. But Blockbuster was slow to respond.

Compared with Blockbuster’s retail video rental model, Netflix offered the value proposition of convenience, choice, essentially unlimited inventory, and of course low cost; all because the consumer interacts with Netflix using her computer, rather than having to physically visit a Blockbuster. Think about the layout of a typical Blockbuster store; nearly all the space is occupied by air. This air creates aisles that allows consumers to walk and see (often with some difficulty) the cover art and titles of perspective DVD rentals. The actual space necessary to store the DVDs is a small fraction of the space needed for an effective browsing environment. So Blockbuster incurs a huge overhead in real estate, as well as the relatively modest salaries of the clerks and store manager who probably aren’t offering you a lot of advice about what movie to see.

Although Blockbuster finally entered the online market in 2004, it hasn’t enjoyed the same success as Netflix. It was sued by Netflix in 2006 for patent infringement on the design of its online rental program (the case was settled with undisclosed terms). Recent measures of online traffic show that Netflix.com outdraws Blockbuster.com by a factor of about 5 to 1.

Constantly be looking for ways to challenge and reinvent your value proposition, or your competitors will do it for you

Despite competition from self-service rental kiosks from such firms as Redbox , Netflix seems unlikely to be overtaken soon by a competitor. Despite its current success, Netflix is in the process of reinventing itself. Netflix has added a “Watch Instantly” feature to its web site. At no additional cost, eligible subscribers are able to stream near-DVD quality movies and recorded television shows instantly over the internet. While the number of titles available now is limited, the inventory of Watch Instantly titles is growing rapidly. Netflix is now forming partnerships with electronics manufacturers to instantly stream movies directly to their devices. In May 2008 they released a set-top-box to stream Netflix’s Watch Instantly movies. While Blockbuster may have been competing with Netflix, Netflix today seems to be gearing up to compete with cable and satellite video distributors, as well as such studio-sponsored streaming sites as Hulu .

Recognize and overcome the forces that will resist change in your own organization

Without insider knowledge, we can only imagine what kinds of leadership meetings took place at Blockbuster when rentals began to decline in favor of Netflix and other competitors. What seems clear is that Blockbuster was unable to muster the courage and the tenacity to reinvent itself in the face of technology and environmental change. Netflix seems to be embracing the inevitability of change in its future.

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Case Study: Netflix vs. Blockbuster

There are many relevant, and certainly constructive, case studies that shed light on the challenges faced in digital transformation and the pitfalls in underestimating its importance to how we do business and engage customers. One of the more famous stories of digital disruption and the battle for market leadership involves Netflix and Blockbuster. It was a classic battle of old versus new technology, of flexibility versus rigidity of business models, and, ultimately, of corporate culture. Blockbuster, once the largest video rental company in the US with a hefty international presence and worldwide revenues of $6 billion, lost big and a major reason was due to Netflix’s visionary digital strategy.

Founded in 1997, Netflix began operations by offering DVD rentals and sales. At the time, DVDs were a new format. Rather than establishing brick and mortar retail locations with VHS tapes, Netflix delivered movies by mail, which was both a disrupting idea and well-suited to the new, sturdy and slim DVD format. To deliver its DVDs into the hands of its customers, Netflix invested in warehousing and distribution. By early 2000, Netflix’s traditional pay-per-rent business model, the same model used by rival Blockbuster, was replaced by a monthly subscription-based revenue model where you placed movie titles in a queue, receiving unlimited DVDs throughout the month with the sole limit on the number of DVDs you could borrow at any one time. Netflix allowed you to keep the discs for as long as you wanted. Their revolutionary idea was that customers received new movies when the old ones were returned – with no due dates or late fees. This further cemented Netflix’s reputation as an industry disrupter, breaking with the industry’s way of doing business on a pay-per-rental basis, effectively taking on the home video sales and rental industry. In one fell swoop, by eliminating due dates and late fees, Netflix found a way to give customers what they truly longed for, setting the stage for future growth and dominance of the entire industry.

In 2000, the founder of Netflix flew to meet Blockbuster’s CEO and team. During the meeting, Netflix proposed that it be acquired by Blockbuster for $50 million [1] , recommending the companies join forces. Netflix would manage Blockbuster’s online brand and Blockbuster would promote Netflix in stores. At the time, Blockbuster was at the top of the video rental industry and the company balked at the idea of partnering with an upstart. They refused to move away from physical retail stores (in the years that followed they doubled down on their retail store strategy) and they rejected the idea of eliminating their late fees. Perhaps more tellingly, they rebuffed the idea of moving toward a digital platform. The company hadn’t yet understood how vital the digital platform would be to its survival. [2]

Just a few years later in 2004, Blockbuster’s CEO at the time, John Antioco, finally recognized that Netflix and others had altered the movie rental landscape and decided to invest heavily in the digital platform, planning to spend $200 million to launch Blockbuster Online. Under Antioco, Blockbuster likewise planned to eliminate late fees, at another $200 million investment. [3] Up until this point in time, even though late fees were a major customer irritant, Blockbuster, with its thousands of retail locations, millions of customers and massive marketing budget, had until then relied on these fees as a key source of revenue. It’s easy to see how these planned investments would have negatively impacted Blockbuster’s bottom line in the short term. The company’s board moved against Antioco. He lost their confidence and left the company by July 2007. The new CEO reversed Antioco’s changes, in an unsuccessful attempt to increase profitability, but Blockbuster, the once unbeatable company, declared bankruptcy in 2010.

Netflix, in contrast, continued to invest in digital technology, eventually moving to video on demand via the internet, betting big on broadband adoption and customer appetite for streaming digital content. Netflix’s streaming business was such a success that it rebranded itself around video on demand. Today, Netflix, worth $71B in market cap [4] , is “the world’s leading internet television network with over 100 million members in over 190 countries enjoying more than 125 million hours of TV shows and movies per day… Members can watch as much as they want, anytime, anywhere, on nearly any internet-connected screen.” [5]

Lessons Learned

Much has been written on Blockbuster’s demise and there are certainly several important lessons to be learned. We see Blockbuster’s biggest failure to be its initial refusal to see how digital transformation would impact its future. That, coupled with the company’s failure to identify and provide what its customers truly wanted (a better experience with no late fees), paved the way for its nimble opponent, Netflix to disrupt the industry and become the market leader. Digital transformation of an entire industry can happen quickly, and Blockbuster’s misreading of the trend for video rentals to go digital was fatal. Once Blockbuster missed the mark, it was unable to recover.

It’s easy to understand how Blockbuster was overly entrenched in its traditional business model to see that the future was not in a strong store network, but rather in bypassing the retail store experience and in delivering movies to its customers directly in their homes. With its market leadership and billions in revenues sourced from a soon-to-be obsolete strategy, Blockbuster was unable to assess correctly the new opportunities and threats that Netflix presented. As a globally successful brand and video rental incumbent, Blockbuster additionally overestimated its ability to compete with Netflix once it did decide to go digital. Having a strong brand does not ensure that your company will be able to compete effectively against digital transformers, no matter what their size – and yours. [6]

So, create a roadmap for your company’s future survival. Changes are swift and unforgiving in the digital age. Be aware how changing technology can meet your customers’ needs better and faster and plan accordingly. Know that some of today’s niche opportunities might become vastly more attractive, even disruptive. In this information age, new ideas can go viral before you have time to react. Be a visionary. Revisit your brand’s strategy regularly. And, don’t let current success blind your ability to assess market opportunities and threats posed by new entrants.

[1] http://www.businessinsider.com/blockbuster-ceo-passed-up-chance-to-buy-netflix-for-50-million-2015-7?IR=T

[2] https://www.forbes.com/sites/gregsatell/2014/09/05/a-look-back-at-why-blockbuster-really-failed-and-why-it-didnt-have-to/#71157d61d64a

[3] https://hbr.org/2011/04/how-i-did-it-blockbusters-former-ceo-on-sparring-with-an-activist-shareholder

[4] As of June 5, 2017. https://www.bloomberg.com/quote/NFLX:US

[5] https://media.netflix.com/en/about-netflix

[6] https://digit.hbs.org/submission/blockbuster-its-failure-and-lessons-to-digital-transformers/

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Home » Management Case Studies » Case Study: How Netflix Took Down Blockbuster

Case Study: How Netflix Took Down Blockbuster

Blockbuster and Netflix are two big business within the domestic videocassette rent payment market place that skilled very much distinctive products. Netflix extremely multiplied its firm estimate even as Blockbuster dropped its leading market position and fallen into bankruptcy. Back to the late 20th century, whilst Netflix was just a small newly established business, Blockbuster ruled the video cassette rental business with over 9,000 shops all around the world. With the emergence of DVDs as the brand new video medium, Blockbuster be able to get special deals with massive Hollywood studios to rent new DVD releases after cinema showings ended. At that point in time, nearly every family had a videocassette recorder (VCR) for the reason of video watching, and Blockbuster rental shops were people’s familiar starting point for film selections. Technology and innovation performed a significant task inside the improvement of the apprehensive business. Today’s dynamic domain is completely centered on progression of technology and every area requires to carry out new intervention of technology to obtain success . The on-line video package providers companies are those who design a new to look at preferred programs. The business idea of Blockbuster change into related to serving the DVDs on a rental basis. Netflix become also using the equal idea however after a period of time, it changed to the online streaming video. This advertising approach of Netflix offers with the phases that Netflix used to promote its commercial enterprise businesses.

History of Blockbuster

Blockbuster turned into one in every of the biggest video companies all over in the globe. Blockbuster became the primary organization, which commenced to offer DVDs on condominium basis. David Cook set up the company in the year 1985. David in Dallas based the primary store of Blockbuster. The primary video market of Blockbuster turned into an extensive success on global horizontal. The retailer became opened with 8000 tapes which consist of 6500 titles. Afterward they had been opened three more but, the company face challenges 3.2 million dollars in 1986. Therefore Cook sold 1/3rd share beginning of 1987. The business was managing 133 stores in 1987. Within 1919, the full number of shops reached as much as 1000. During 2000, the Blockbuster is the pinnacle DVD carrier company. But, within the year 2006, Blockbuster disconnected from Viacom.

History of Netflix

In 1997 Netflix turned into established in California, founded by Reed Hasting. At the preliminary level of this blockbuster advertising method the videos were offered on a hire charge base by the organization. But, in 1999, the business changed into commencing the delivery of obtained videos via postal facility of the United State. After a few year of its setting up order, in 2009, the business had a large and improved database system. In 2009, business was began delivering DVD such as distinctive titles. It can be referred that the business nearly contained a focus of 4.5 million customers. Within the same year, company had completed an affiliation with a digital company named as consumer electronics. This partnership made easy to get entry to the internet on specific appliances. In 2010, Blockbuster business turned into bankrupt. As in line with the facts collected, after this affiliation, people can easily get entry to internet over iPad, computer, mobile phone, laptop, and exclusive net devices. But, currently the company has 23 million contributors from different international location those make use of Netflix subscription.

How Netflix beat Blockbuster

A year after establish in 1998 Netflix gain control the marketplace of video industry through advertising and marketing strategy as well as their special offers attract more consumer than any other video industry. As a result it impact other entertainment business without doubt. In case that there is to some extent obstruct during the delivery sort out of DVD throughout mail or via post than the company do not charge for late fee and it became well turned-out change. On the other hand, before the setting up of this establishment, Blockbuster existed the growing enterprise in this business. Blockbuster company apply same “No late Fee” strategy as Netflix but unfortunately it did not work for this company and blockbuster challenged a massive forfeiture as well as the marketplace cost of its shares decline. Now Blockbuster Company is currently identified for instance bankrupt industry in the video business. Afterwards Netflix give emphasis to more on marketing strategy to go to next level and extended DVD business. There are several brands of competitors from another province who contested with Netflix. Aside from, Netflix has its distinctive line of attack to attain achievement and advance in the industry. The simple technique used by the organization for the fulfilment of organization objectives. The maximum critical part is associated with the market place expansion idea of DVD products. Aside from that customer relationship is the major strength and strategy for this organization to achieve their mission and vision. Every organization has two aspects of success, one is present commercial enterprise and another is organization consumer. The essential aspects is that company always selects current business. Aside from that, in the time of Antioco’s stage, Blockbuster made double revenue by implementing of low cost strategy “reducing late charges”. But this footstep draws attention lots of consumers to finance further in the Blockbuster Business. After the Examination, it turn into clear-cut that the forfeiture from reducing changed into 200 million dollars while; on-line campaign motion total yet again 200 million dollars. After this action, 5 years later Blockbuster Business was announced bankrupt. Netflix uses following strategy where Blockbuster never think of changes. These are;

Technological Advances

Ever since 2000, the initiating of latest technology and computer electronics commodities has unexpectedly elevated customer possibilities to view cinemas. Now days it is fairly well-known to watch movies on airplanes, in cars, hotel rooms, in homes or almost every places through a laptop PC or smartphone appliance like an apple iPhone, iPad, or iPad touch. Most important in year 2012 it was clear-cut that the 134 million US families with excessive speed internet facility and internet related Blu-ray , video games, TVs, computers, tablets, or smartphones had been swiftly transferring from manual hiring DVDs to watching cinemas and TV programs streamed over the net. Customer can watch these films and Television programs via an extensive type of distribution networks and sources. The trend of the upcoming marketplace for hiring movies and TV contents is undisputable in streaming movie industry and Television programs to internet- associated televisions, PCs and smart phone devices. Streaming has the gain of accepting household adherents to reserve and instantaneously watch the movies and Television shows they desired to watch, hiring a streamed show possibly will be performed both by way using the service of Netflix, Blockbuster online, Amazon instant video, Apple’s iTunes and different streaming video vendors or through the usage if a television distant to assign arrangements with a cable satellite TV for pc, or fiber optics issuer to instantaneously look at a movie from a listing of numerous hundred choices. The numeral of families which have a DVD player or video recorder has become more intense, so they may simply make a recording TV shows and movies after which pay off them at their suitability. Netflix changed into expected that the DVD systems, at the side of excessive- clarity replacement designs one of these Blu-ray, will be the car for watching content material in the home-based for the expected future. Modern innovations in video-streaming technology have been swiftly enhancing the possibilities that video application would become the leading movie rental network in the next few years.

Low cost strategic is one of the most powerful strategic position for the movie rental industry. Blockbuster organization was making money by implement overdue price to its clients. The value of operational cost of this business movement is a smaller amount of cost that the price of market stores. Aside that the value of adjustments is likewise not as much of than the market things. For the fulfilment of achievement and advance Netflix advertising and marketing method, organization uses specific modern strategies and technologies. The business has start-off the idea of delivery the DVDs at the consumer’s location and subscription fee is comparatively subsequent the low-cost idea which was not carefully thought by Blockbuster. In USA everyday uses, on regular, almost 5 hours each day seeing video contents. And that may become pricey, rent out a movie can prevent a big expanse of cash while competed to actually go to a movie which can charge as extremely as $16 a ticket. When think about Netflix’s business standard, rate supports mail transport over in-store rental. Some plan via the mail cost $7.99/month limitless vs. the in-store $4/rental. Kiosk Rental acquisition market proportion with $1 nightly rental price. Video on call for is anticipated to maintain to lower in price as competition rises. When Netflix released its subscription version, it flashed significant attention between clients trying to find reasonably-priced movie rentals. A delivered bonus is that disc are brought directly to their doors ways, eliminating trips to a store and late fees. Netflix is the biggest on-line streaming video provider with over 23 million subscribers. Consumer pay a flat monthly fees of $7.99 for unrestricted log on to movies and Television indicate, presently ad- unrestricted. The provider is accessible on Nintendo Wii, Microsoft’s Xbox 360, Sony PS3 consoles, Blu-ray disc players, Internet-connected TVs, and many other Internet-supported video players.

Customer Relationship

Netflix advertising and marketing approach is associated to the subscription of the channel. This strategy of the organization is performed a crucial part within the improvement of the company. Concurrently, this strategy also consist of the delivery procedure of distribution DVDs via mail and streaming of videos. The subsequent crucial stage is connected to the method of consumer closeness . The phrase consumer intimacy allocates with the participation of consumers for business growth drive. This advertising idea primarily appreciated by the Netflix organization because it turned into aimed to get honest source consumer and right, way to applied most excellent sources for the success of organization objective and achieve the need of its clients. Aside, from this, the significance of these method is associated with offer the top facilities to the clients. The purpose in arrears the recognition of the Netflix organization is the advertising and marketing method of this business enterprise, the strategies put together the Netflix business finest on-line video issuer within the world. Further than, the importance is absolute to its clients. The principle goal of the Netflix business is to supply the high-quality customer service and respects in comparison to Blockbuster. The intention behind the leading quality of the Netflix business enterprise is an effective execution of these business strategies . But, these techniques might capable the Netflix business to stand marketplace opposition.

Netflix Innovation

The phrase innovation co-operated an essential function in the productive implementation of industry action. It is able be distinguished that innovation may be considered as a heart for the organization . The character of innovation utilized by the Netflix organization is disruptive . The Netflix business enterprise is operating this characteristics from its first environment. On the other hand, this organization brought the idea of undertaking the demand of DVD turning in thru the mail without a late fee. Other than this the handy of watching movies and TV programs at home-based at a low rate. The Netflix organization usually attempts to offer cost friendly deals to its clients. It be possibly will be identified to all that the Netflix Corporation is an entertaining network site. But, the dream of the Netflix organization is aimed to be the top supplier of entertaining movies all over the world. Aside that, the vision of the corporation is associated with the verdict of the global target market with the assist to the content inventors all over the globe. However, the Netflix business aimed to deliver the quality and high-priced DVDs to its clients by treating free of charge and rapid distribution method. There are distinctive models associated with the innovation of Netflix. The current monthly subscription of Netflix is 12.99 dollar per month. As peer the sources it have turn into clear-cut that Netflix is famous in their live programs simply accessible to the subscribers or clients of the Netflix organization. One of the exceptional and maximum famous programs of Netflix is Black Mirror show. Form this examines of these sources; it turn into clear-cut that the Netflix company is one of the top organization that manage its business movement after thinking the needs of its clients.

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A few months ago, Blockbuster announced that it will close all of its remaining U.S. stores, about 300 of them. This has been a long time in the making, and there is still a lot you can learn from it.

Prior to Netflix, Blockbuster thrived on its use of “bad profits.” Bad profits, a term from Fred Reichheld’s book, The Ultimate Question , which introduced the concept of the Net Promoter Score (NPS) , are a highly disruptive source of negative word of mouth. Blockbuster’s bad profits were, of course, late fees. Everyone I know who was a Blockbuster customer, including me and my wife, hated late fees. You knew Blockbuster “got you,” and you felt that you only had yourself to blame because you were the one who was late returning the rental video. Sometimes, you would plead for mercy with the store associate. Late fees eventually became the primary source of Blockbuster’s profits.

“Thank goodness for Net Promoter.” —Brad Smith, CEO of Intuit

Anytime bad profits are your primary source of profits, you are due for a hard knock. That knock came from Netflix. Their original ad campaign, “The end of late fees,” was pretty much all they needed to say. Their business model was designed very differently, leveraging the Internet and network economic effects—a nod to another favorite book, Net Gain by John Hagel III . When Netflix proclaimed the end of late fees, word of mouth took care of the rest.

This is why NPS has become so important to companies as a way to measure their most important external stakeholders—their customers. NPS is used by thousands of companies, including many Fortune 500 companies. Brad Smith, CEO of Intuit, said, “Thank goodness for Net Promoter. It provided a framework for thinking about—and managing—in this social media world … our teams call it the love metric.” Tony Hsieh, CEO of Zappos, said, “We use NPS every day to make sure we are wowing customers and employees.”

I wrote a four-part series on the Bazaarvoice blog about what could be learned from the Netflix versus Blockbuster battle. My goal for writing this was to move our industry, still a very nascent one today, to think hard about the power of word of mouth. This eventually led to our mission statement: “changing the world, one authentic conversation at a time.” We saw companies change the way they operate based on the customer data and insights that they were accumulating as a result of deploying Bazaarvoice.

There is a lot to be learned here, and there is no doubt that books like Clayton Christensen’s The Innovator’s Dilemma help all of us think about steering clear of bad profits, lest we be vulnerable to someone like Netflix coming along and disrupting our business model, in this case to Blockbuster’s ultimate extinction. Blockbuster used to have 8,500 stores located in 29 countries, and was worth $5 billion at one point. But the company was addicted to bad profits, and it was caught in the downward spiral that only The Innovator’s Dilemma can best explain. What could Blockbuster have done differently? A lot—and it is best explained in Christensen’s follow-up book, The Innovator’s Solution .

Have you or the company you worked for used bad profits before? What happened as a result? Did you or your employer have the courage to change in the gut-wrenching way that books like The Innovator’s Solution detail?

Tell me below in the comments section.

Editor’s note: For further background on Brett’s views on the Blockbuster decline, read his blog series:

Feb. 2006: Bad Profits and the Incredible Power of Word of Mouth

Dec. 2006: Netflix vs. Blockbuster: Round Two

Jan. 2007: Netflix vs. Blockbuster: Round Three

Mar. 2009: Netflix vs. Blockbuster: Round Four (Lights Out?)

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Case study Blockbuster: Why is it necessary to innovate?

Blockbuster was an American video store franchise, specializing in movie and video game rentals through physical stores , mail-order, and on-demand services, during the 1990s and early 2000s. It was very thriving and popular in the audiovisual industry and had very high profits. But one day, it made a bad decision when it had the chance to grow which resulted in bankruptcy.

<<< Case study Sega: When a competitor sweeps >>>

Once again we return to the case studies of very popular and profitable companies that, due to making bad decisions or being induced by very serious economic crises, ended up in bankruptcy. This time, we will talk about the Blockbuster case , its success story, a missed opportunity, and the disastrous consequences of letting it pass.

What was Blockbuster?

Blockbuster was founded in 1985 by David Cook , who ran a software company for oil companies in Texas. After a couple of years, and when that industry had run out of steam in the 1980s, his wife advised him to create a home theater rental franchise , which at the time, movie rentals were a highly profitable business.

To distinguish itself from the competition, its establishment adapted to the demand for a broader catalog of up to 6,500 references , longer rentals so that people could take more films, and greater inventory control through its automated system, with which detected consumer preferences. Quite a novelty for the time, which is why it was positioned as an avant-garde company in terms of video rentals.

From that moment on, its growth in two years was quite rapid , since it managed to open 20 stores and 20 franchises . By then, Blockbuster had become the benchmark for video stores, and as of 1990, it was already expanding into the international markets of Europe and Latin America.

In 1997 , the board of directors appointed John Antioco as CEO, who successfully ran the movie rental business, first on VHS and, later on, DVD for several years. A year later, Blockbuster still controlled 25% of the world market , due to important strategic alliances with renowned production companies.

Strategic alliances to annul the competition.

Starting in 1987 , Blockbuster dedicated itself to absorbing video store chains and ended up ousting the competition , overtaken by a larger catalog. The explanation for this enormous catalog was because, unlike the small video stores, which paid a high amount of money per film and recovered their investment thanks to rentals, Blockbuster reached direct agreements with the production companies , for which they obtained movies at a lower cost.

While it is true that most of the business was with major production companies, class B production companies also provided very good profits, since they represented 70% of rentals during the 1980s.

The offer of movies was similar to that of other video stores, so premieres had higher priority. Over time, the remaining copies and those withdrawn from circulation were put up for sale.

<<< Pan American World Airways: process analytics >>>

The Netflix proposal that Blockbuster rejected.

The popular Netflix , before becoming the most viewed platform worldwide, also operated as a movie rental store , only this one did it online , so, thinking about the future, Netflix was destined to succeed, unlike its rival Blockbuster. But it is time to tell you how the link between the two companies was born and the beginning of the end of Blockbuster.

In the early 2000s , Netflix was a small video rental company , but what set it apart from Blockbuster was that its business model accepted subscription payment and allowed users an unlimited number of movies and TV series . They could order online and there were no penalties for returning films late.

Instead, Blockbuster charged for DVD rentals and made their profits from the fines they collected for late DVD returns.

However, the beginnings of the relationship were not exactly cordial. It all started when the owner of Netflix, Reed Hastings, before creating the company, went to rent a movie from Blockbuster and took longer than indicated to return it , for which the rental store charged him a high surcharge that Hasting did not want to pay. So he decided to create a business , also a movie rental business, that didn't charge customers late fees for returning movies.

By the time Reed Hasting had already established his business, he thought that Blockbuster, being as important as it was, and Netflix should stop being rivals and create a strategic alliance to strengthen the market . But Antioco did not think it was a good deal and turned it down.

Netflix's strategy to establish that alliance was for Blockbuster to acquire it for 50 million . Then, the visionary project that Netflix aimed at was to offer its DVD rental service through email and via streaming. Although Blockbuster had the resources to do this business, it seemed more profitable to continue as it was. This is how Blockbuster lost the chance of a lifetime by resisting change .

A year after this offer, video rentals became obsolete in the United States and, later, in the rest of the world. In the following years, the company lost users due to the success of Netflix , and the streaming service it offered was much more interesting for Blockbuster customers, who preferred to switch to Netflix.

The bankruptcy and definitive closure of Blockbuster.

Since the mid-2000s, Blockbuster has not been able to face the obsolescence of the physical format in the face of new forms of consumption as disparate as cable television, self-service stores, video on demand, and even piracy, before which there was no planned strategy.

In some countries such as Spain and Ecuador, it was immediately withdrawn from the market, while in others such as Mexico and Argentina it had to be readapted.

As a last resort, in 2010 the group reinstated the late penalties it had eliminated five years earlier. However, o n September 23, 2010, Blockbuster declared bankruptcy. At that time, more than 3,000 stores were still open in the United States.

Despite several attempts to restructure its debt, in March 2011 the United States Department of Justice ruled that the company should be liquidated.

Blockbuster was taken over in April 2011 by Dish Network, the largest pay-TV provider in the United States, for $320 million. Its initial goal was to accomplish the gradual closure of the remaining 1,700 stores and retain the brand to launch a video-on-demand service to compete with Netflix.

However, the plans did not prosper and two years later the complete closure of all video stores was announced as of January 2014.

<<< Crisis in the environment: case study Daewoo>>>

The face of defeat.

Other very large companies, despite the bad decisions they made, were able to recover and re-enter the market, such as Nokia and Blackberry , but others weren't so lucky and ended up in bankruptcy, such as Pan American, Daewoo, and Blockbuster, among others.

With the Blockbuster case , we have learned how resistance to change can render a profitable business obsolete and bankrupt. Blockbuster had everything to stay: sufficient financial capital, a recognized brand that customers chose, but it did not see the end of an era, the era of movies on DVDs and Blu Ray and the advent of the digital age.

And it was at that moment when Netflix, its main competitor, the same one that could be an ally to conquer the movie market of digital platforms, took an unattainable advantage that meant its ruin, at least for now. If it comes back in the future to reinvent the brand with something newer than Netflix, only time will tell.

Drew's editorial team

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STRATEGY AND CASE ANALYSIS (BLOCKBUSTER VS NETFLIX) Name of student Institution Course Date

2020, P. Maina

This case analysis will examine the US home video retail market from the perspective of two companies, Blockbuster, and Netflix. The former collapsed in 2010 while Netflix is the dominant operator in the market. The study will provide insight into the strategies and application of theoretical concepts adopted by both companies. The report will compare the organizational culture of both companies to analyze the failure of one company and the success of the other. It will also explore the strategic positioning of Blockbuster and Netflix and the strategic choices that the companies pursued until the present. An examination of those choices will expose how Netflix gained a competitive advantage over a rival that was highly profitable and with a substantial physical footprint in the video rental market. The analysis provides insight into the right thing that Netflix did while at the same time, looking into its current challenges. The company's future relies on addressing its current challenges and co-opting emerging technologies, just as it did with Blockbuster. The stakes currently are higher because Netflix is competing with companies with proven innovation record.

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West Coast Eagles premiership player Daniel Kerr avoids jail over domestic violence charges

AFL premiership player, Daniel Kerr, has avoided more jail time for repeated domestic violence offences against his ex-partner over six years.

WARNING: This story contains details some readers may find distressing.

The hearing in a Perth court on Friday morning heard Kerr, 41, wielded physical, emotional and verbal abuse over the woman, destroyed her property and gained control of her finances and social media accounts.

The court was told the couple's relationship was marred by drug and alcohol abuse.

A man walks down a street surrounded by reporters

State prosecutor, Fiona Clare, said Kerr repeatedly assaulted the woman, whose name is suppressed, including punching her while he had keys in his hands and then licking the blood off them.

The court heard on other occasions, Kerr grabbed the woman by her hair, threw her against a wall, punched her while she was holding their child and twice put his hand around her neck and choked her.

Ms Clare said Kerr also exercised "coercive" and "financial" control over the woman and would blame her for not being able to see his children.

In mid-2020, the woman took out a violence restraining order against Kerr before Ms Clare said she "gathered the strength" to talk about what had happened and reported him to police.

Ms Clare paid tribute to what she called the victim's "bravery" saying she had showed tenacity of spirit in extremely difficult circumstances.

The court heard the woman said in a statement she was no longer scared of Kerr and had the best interests of everybody at heart, particularly his children.

Judge urged not to impose jail term

Kerr initially was going to defend the charges, but earlier this year pleaded guilty to one count of engaging in persistent family violence.

The plea followed Kerr's diagnosis of suffering from paranoid schizophrenia, which happened while he was in custody on remand on a charge of setting fire to a house owned by his parents in 2021.

His lawyer, Kate Turtley-Chappel, said Kerr's mental health issues and his drug use were the "driving" forces for the offending but now that he was properly medicated and receiving treatment, he had insight into what he had done.

Ms Turtely-Chappel said Kerr's mental health issues had existed for some time but for years, until his formal diagnosis, he denied being unwell.

References were provided to the court from family members, including his mother who said she had seen a marked improvement in his behaviour and had now returned to having "a wonderful relationship" with her son.

"The person he is now, is not the same person," his lawyer said.

She urged the Judge Wendy Gillan to impose a non-custodial sentence.

Jail term suspended

Judge Gillan imposed a suspended jail term of four years and six months with strict conditions that mean Kerr will be subject to supervision in the community, including possible urinalysis.

She stressed the sentence was not because Kerr was a former footballer but because of the steps he was taking to rehabilitate himself, particularly the treatment he was receiving for his mental illness.

She described his fall from grace as "considerable", saying his AFL popularity is both a blessing and a curse because it meant his life was played out in the glare of the public.

A man in a white jumper walks out of court with black sunglasses

Judge Gillan said while she was not satisfied Kerr was not a risk of reoffending, she maintained it was very much in the community's interest that Kerr continue with his rehabilitation.

"You have to be vigilant to keep on top of your mental health issues," she told Kerr.

Importantly, she said, Kerr had rebuilt his relationship with his family.

Judge Gillan noted it might have involved a lot of apologies, as Kerr nodded his head while he sat in the dock.

An order was then made declaring Kerr a "serial family violence offender" but because of his current compliance with treatment, Judge Gillan did not rule that he be subject to electronic monitoring.

Kerr is the brother of Australian soccer star Samantha Kerr and retired from the AFL in 2013 after playing 220 games for the West Coast Eagles.

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Benedict Cumberbatch’s Disturbing but Poignant ‘Eric’ Is About Much More Than a Missing Boy: TV Review

By Aramide Tinubu

Aramide Tinubu

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Rare Stock Picks In May 2024 - From 29 Discerning Analysts

Welcome to another installment of our monthly Rare Stock Picks series. Today, we're highlighting May 2024 investment picks you may have missed.
As you know, some Seeking Alpha analysts are more discerning by nature. Others are finding compelling ideas hard to come by in today's market environment.
The following new investment ideas were made by analysts who have NO OTHER Buy/Strong Buy recommendations in the past 3 months, making them rare selections.

The "buy the dip" crowd was vindicated given the sharp rebound from the lows at the end of April. With the S&P back near all-time highs, are there any compelling investment ideas out there that may have flown under your radar?

Below is a list of May Buy recommendations made by analysts who had no other bullish recommendations over the past 3 months.

For your directory assistance, we've classified the opportunities by sector.

ProPhase Labs, Inc. ( PRPH ) - Longtime analyst Barbell Alpha says PRPH is a diversified biotech with profitable existing product lines and its Project ZenQ-AI aims to use AI to identify potential antibody drug candidates for cancer therapeutics, with the potential for significant revenue growth. - ProPhase Labs: Hidden Gem With An AI Kicker

Evolus, Inc. ( EOLS ) - Longtime analyst Tarun Chandra, CFA highlights the strong revenue growth, expanding product line, and imminent profitability in this speculative small-cap that can potentially double. - Evolus: Chiseling Away At The Aesthetic Market

Ascendis Pharma A/S ( ASND ) - Biotech investor Sage Advisors says ASND is expected to achieve cash flow break even by the end of 2024, driven by its core franchise of medicines for rare endocrinology conditions - and each may have the potential to be a blockbuster with greater than $1B in annual sales. - An Update On Ascendis Pharma's Path To Profitability

T. Rowe Price Group, Inc. ( TROW ) - Longtime analyst David Alton Clark says TROW is a dividend aristocrat trading at a low valuation while the recent earnings indicate strong fundamental performance and potential for future growth. - T. Rowe Price: A Dividend Aristocrat With 25% Upside Potential

Communications

Telefônica Brasil S.A. ( VIV ) - Longtime analyst Dylan Waller says the sell-off is a buying opportunity given the attractive valuation, leading market share, favorable growth prospects, and catalysts. - Telefonica Brasil: Poised For A Strong 2024

Warner Bros. Discovery, Inc. ( WBD ) - Value investor Alejandro Cano says the market is pricing in the worst-case scenario (providing an asymmetric risk-reward given the expected re-rating of the stock) as WBD has valuable assets (including iconic franchises) and the valuation is compelling from a cash-generating perspective and on a relative basis. - Warner Bros. Discovery: The Stuff That Dreams Are Made Of

Netflix, Inc. ( NFLX ) - Growth investor Erick Mokaya, CFA says the focus on three key areas (live programming, ad-tier growth, and expansion into emerging markets) promises to revolutionize audience engagement, diversify revenue streams, and capture new global user bases. - Netflix's Triple Play: Ad-Tier Boom, Live Sports And Global Expansion Fuel Future Growth

Karooooo Ltd. ( KARO ) - Growth Stock Prospector , who focuses on the micro - midcap space, highlights this growth at a reasonable price idea with an implied forward P/E of ~18x, strong revenue growth, and high margins, and a long runway for growth. - Karooooo: High-Quality SaaS At A Reasonable Valuation

Dropbox, Inc. ( DBX ) - Value investor Jonquil Capital highlights the solid fundamentals and untapped potential and says the consistent recurring revenue and robust cash flow generation make it a great candidate for a private equity style take-out while the impressive user retention and "stickiness" factor gives it an edge over competitors. - Dropbox: Attractive Forward Returns With Upside

United Microelectronics Corporation ( UMC ) - Value investor Ryan Messick says UMC is trading at a cheaper price compared to other semiconductor companies, presenting an opportunity for value investors to gain artificial intelligence exposure at a reasonable price. - United Microelectronics: A Value Stock With AI Exposure

Fortinet, Inc. ( FTNT ) - Growth at a reasonable price investor Steven Bushong says the sell-off following earnings is a buying opportunity as it is a well-positioned, high-growth company, the core business is growing and the record cash flows and rising margins indicate strong business execution and potential for a quick rebound. - Fortinet: Market Overreaction Seems Unwarranted

Accenture plc ( ACN ) - Growth investor Beersheba Research says ACN is potentially attractive for long-term oriented investors, as its strong position in the AI technology race and loyal client base will benefit from the increasing demand for AI solutions, revenue growth has held up better than competitors, and its book-to-bill ratio remains strong, indicating future growth potential. - Accenture: The Pessimism May Be A Little Overdone

Oracle Corporation ( ORCL ) - Value investor HedgeMix says that ORCL is experiencing significant growth in its AI/Cloud business, the partnership with Palantir will create major synergies and improve their offering to enterprise clients, and the stock is trading at attractive multiples. - Oracle: A Perfect Stock For A Pure AI Play

Consumer Staples

Sendas Distribuidora S.A. ( ASAI ) - Mokapu Capital , who focuses on small-cap and emerging market stocks, says ASAI has significant growth potential (from aggressively increasing the store count and continued organic store growth) and while profitability has been impacted by investments in store conversions and store openings, it is expected to improve as the stores mature and SG&A costs decrease. - Sendas Distribuidora: The Costco Of Brazil

Celsius Holdings, Inc. ( CELH ) - Longtime analyst Integrator says that while a first look at the recent earnings report may have concluded the growth story was finally done, the underlying momentum remains strong and there are multiple catalysts (Pepsi increasing the number of locations where Celsius is available, international expansion and margin expansion). - Celsius: 5 Reasons I Remain Bullish

Coca-Cola FEMSA, S.A.B. de C.V. ( KOF ) - Gabriel Romano, CFA , who advises ultra-high net worth individuals on how to construct their long-term portfolios, says buying KOF gets you a predictable company trading below fair value in a defensive sector with a high-quality brand and management with a great track record. - Coca-Cola Femsa: A Great Brand At A Great Price

Consumer Discretionary

Fox Factory Holding Corp. ( FOXF ) - Value investor Pragmatic Value Investing says the current valuation gives a good opportunity to invest in a name with great brands, an amazing track record of growth and solid historical profitability. - Fox Factory: M&A And Cyclical Headwinds Providing An Interesting Opportunity

Ermenegildo Zegna N.V. ( ZGN ) - Paul Dutz , who focuses on value and growth at a reasonable price ideas, says the strategic initiatives and strong brand positioning suggest upside potential for long-term investors and notes the sound financial results and discounted valuation. - Ermenegildo Zegna: Rising Clouds Above The Luxury Oasis

Industrials

Hillman Solutions Corp. ( HLMN ) - Longtime analyst Chris Wallendal CFA says HLMN is undervalued despite solid execution and that a much-improved balance sheet has created the opportunity to pursue tuck-in acquisitions that fit its wide-moat strategy. - Hillman Solutions: Ready For Tuck-In Acquisitions

Deere & Company ( DE ) - Growth investor Best Anchor Stocks says Deere is undergoing a transformation from a good to a great business, and highlights multiple positive factors, including a significant growth opportunity, a strong moat and management team, and reasonable valuation. - The Deere Investment Thesis

AMG Critical Materials N.V. ( OTCPK:AMVMF ) - Longtime analyst Security Analysis says the stock decline since mid-2023 due to lower lithium prices is a buying opportunity, as it has a strong liquidity position and growth prospects, and it might be the best way to play a potential rebound of the lithium and vanadium market. - AMG Critical Materials: Stronger Than Ever In The Lithium Bear Market

Rio Tinto Group ( RIO ) - Subrato Roy , who invests in value and growth ideas, says the long-term outlook is positive for this leading producer of iron ore and copper, driven by the low-carbon transition, and it pays a decent dividend. - Rio Tinto: A Long-Term Dividend Play

CONSOL Energy Inc. ( CEIX ) - Longtime analyst Burt Rothberg says the opportunity exists due to temporary headwinds, the global coal industry is stable (and it is a low-cost producer), it is trading at dirt cheap valuations, and has strong FCF. - Consol Energy: Short-Term Problems, Long-Term Value

Kinder Morgan, Inc. ( KMI ) - Quality Dividend Growth , who focuses on dividend growth investing, says the 6% dividend looks safe and the stock is trading at an attractive valuation that provides a margin of safety. - Kinder Morgan: Attractive Dividend, Valuation And Outlook Make It A Strong Buy

Real Estate

Brandywine Realty Trust ( BDN ) - Beyond Saving , a professional in commercial real estate, says BDN is a distressed office REIT trading at a low valuation with development plans for two major projects that could lead to substantial upside and a return to growing FFO. - Brandywine Realty Trust: A Diamond In The Rough, +12% Yield

Income Investing and ETFs

AdvisorShares Pure US Cannabis ETF ( MSOS ) - Value investor Blake Downer says the industry stands to benefit as the federal government changes the laws around cannabis, and companies in the industry are expected to receive tax relief and become more profitable. - MSOS: The Dominos Are Falling

Tortoise Midstream Energy Fund ( NTG ) - Longtime analyst George Spritzer, CFA says energy MLPs and pipeline companies can be a valuable addition to a bond portfolio or a substitute for bonds and highlights the opportunity in NTG with a discount to NAV. - NTG: An MLP Closed-End Fund With Attractive Low-Cost Leverage

Fidelity MSCI Energy Index ETF ( FENY ) - Macro investor MTS Insights says this ETF is a way to play the bullish outlook for oil prices and the energy sector's relatively cheap valuation compared to its historical average and the broader market. - FENY: Still Cheap And Well Supported By Energy Commodity Prices

SPDR S&P Kensho New Economies Composite ETF ( KOMP ) - Six-Five Research , a value and contrarian investor, says KOMP is a unique opportunity to participate in the Fourth Industrial Revolution, focusing on themes such as alternative finance, digital health, and electric vehicles. - KOMP: Add This ETF For Technology Themed Exposure

Inclusion Criteria: The above ideas were objectively compiled based on the set criteria. Exclusions include new Seeking Alpha analysts, broad market calls, crypto ideas, leveraged ETFs, and stocks that were repeat recommendations by the analyst.

Thanks for reading.

This account ( SA Rare Stock Picks Monthly ) will publish future iterations of this report in the upcoming months. If you missed our Rare Stock Picks from April, you can find it here .

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

This article was written by

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COMMENTS

Netflix vs Blockbuster
The Rise of Netflix (and the Fall of Blockbuster) When Netflix launched in 1997, Blockbuster was the undisputed champion of the video rental industry. Between 1985 and 1992, the brick-and-mortar rental chain grew from its first location (in Dallas, Texas) to more than 2,800 locations around the world. Two years later, Viacom paid $8.4 billion ...
Netflix vs Blockbuster
The Rise of Netflix (and the Fall of Blockbuster) When Netflix launched in 1997, Blockbuster was the undisputed champion of the video rental industry. Between 1985 and 1992, the brick-and-mortar rental chain grew from its first location (in Dallas, Texas) to more than 2,800 locations around the world. Two years later, Viacom paid $8.4 billion ...
Winning the Customer Journey Battle: Netflix vs Blockbuster Case Study
As a former Blockbuster customer, Netflix CEO Reed Hastings thoroughly understood the issues with that customer journey, and he initially started Netflix as a mail-order DVD subscription service to eliminate the lengthy in-store visits and annoying late fees. To make up for the lack of physical customer interaction, Netflix offered lower prices ...
CEO Reed Hastings on how Netflix beat Blockbuster
Stitcher. RSS. In early 2000, Netflix founders Reed Hastings and Marc Randolph offered to sell the company to Blockbuster for $50 million. Blockbuster turned them down. Eventually, Netflix ...
Netflix vs Blockbuster
In contrast, Blockbuster's pay-per-transaction model became less appealing as streaming emerged as a more convenient and cost-effective solution. Expansion into International Markets. While Netflix expanded its services to various countries, Blockbuster's physical store presence limited its ability to penetrate global markets effectively.
Reed Hastings vs. Blockbuster: How Netflix Won the Movie Market
Final take. The clash between Reed Hastings' Netflix and Blockbuster is a case study in business strategy, innovation, and adaptability. Netflix's rise from a DVD-by-mail service to a global streaming giant symbolizes the transformative power of technology and visionary leadership. On the other hand, Blockbuster's fall serves as a ...
Decision-Making Processes and Failures: Netflix vs Blockbuster
In the case of Blockbuster, who excelled in brick-and-mortar video rentals with late fees and was very profitable with a $6 billion revenue, there was so much momentum in their way of doing things. ... The concept of Aikido, which is a mindset or strategy, allowed Netflix to go up against Blockbuster, seizing the market, by offering exactly the ...
Netflix & Blockbuster
The evolution of Netflix and the decline of Blockbuster serve as an epic tale of disruptive innovation in the business landscape. This case study provides insights into strategic decision-making and offers lessons on how to deal with market transformation. Here are ten key lessons companies can learn from this saga. 1.
How Netflix almost lost the movie rental wars to Blockbuster
First of all, Blockbuster turned down a golden opportunity to end its rivalry with Netflix early in the game when Randolph and Hastings offered to sell Netflix to the video rental giant in 2000 ...
Netflix Inc.: The Disruptor Faces Disruption
Netflix Inc. (Netflix) had surpassed Blockbuster, the previous movie rental leader, before making the successful transition to digital delivery of video content. But despite Netflix's success, in 2017, numerous competitors, including both established, mainstream content producers and digital upstarts, were making it difficult for Netflix to recreate its earlier dominance. Critics pointed to ...
Blockbuster vs Netflix: Innovate to survive
Apr 28, 2021. Before Netflix, Blockbuster used to lead the entertainment market by renting movies and games. In the beginning, Blockbuster rented the films with late fees. And Netflix was a rental ...
Netflix
Blockbuster, the nation's largest retail video rental firm, was initially slow to respond, but ultimately rolled out a hybrid retail/online response in the form of Blockbuster Online. Aggressive pricing pulled in subscribers, but at a price to both it and Netflix. ... "Netflix." Harvard Business School Case 607-138, May 2007. (Revised April ...
Why Big Companies "Fail" To Adopt Disruptive Technologies: The Netflix
This article will talk about why Blockbuster — a multi-billion dollar company with a whopping 9094 stores worldwide — failed to adopt the business structure of Netflix — it's nemesis.
Blockbuster vs. Netflix: A Case of Technology-Driven Strategy
But Blockbuster's fortunes have been on a long decline. Viacom floated shares in Blockbuster with plans for a full divestiture. The separation was completed in 2004, with Viacom taking a $1.3 billion charge for its trouble. Blockbuster stock, which traded above $29 a share in 2002, has recently been trading below $1.00 per share.
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Well, we have a great case study on this subject. Netflix, Inc., the provider of online video streaming and DVD by mail service seems to have misjudged the negative impact of price increase and other service changes they announced "unilaterally" this summer and as a result dissatisfied customers have leveraged social media tools to express ...
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The story of Netflix vs. Blockbuster is a fascinating case study that highlights the impact of technological innovation, market strategy, and adaptability in the competitive entertainment industry ...
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The presented paper will firstly examine and analyse the existing literature, including contributions, and points of view of several authors, in order to. achieve a comprehensive definition of ...
Case Study: Netflix vs. Blockbuster
Case Study: Netflix vs. Blockbuster. There are many relevant, and certainly constructive, case studies that shed light on the challenges faced in digital transformation and the pitfalls in underestimating its importance to how we do business and engage customers. One of the more famous stories of digital disruption and the battle for market ...
Case Study: How Netflix Took Down Blockbuster
Blockbuster and Netflix are two big business within the domestic videocassette rent payment market place that skilled very much distinctive products. Netflix extremely multiplied its firm estimate even as Blockbuster dropped its leading market position and fallen into bankruptcy. Back to the late 20th century, whilst Netflix was just a small ...
Lessons From a Blockbuster Failure
Late fees eventually became the primary source of Blockbuster's profits. "Thank goodness for Net Promoter." —Brad Smith, CEO of Intuit. Anytime bad profits are your primary source of profits, you are due for a hard knock. That knock came from Netflix. Their original ad campaign, "The end of late fees," was pretty much all they ...
1.7: Use Case Review: From Blockbuster to Netflix
A great example is the comparison of Blockbuster and Netflix. The Netflix versus Blockbuster story has been told many times as the story of innovation, disruption and creativity. In my mind though this is the best story about the power of agile. When Netflix launched in 1997 Blockbuster was the undisputed champion in the video rental industry.
Case study Blockbuster: Why is it necessary to innovate?
Blockbuster was an American video store franchise, specializing in movie and video game rentals through physical stores, mail-order, and on-demand services, during the 1990s and early 2000s. It was very thriving and popular in the audiovisual industry and had very high profits. But one day, it made a bad decision when it had the chance to grow ...
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(DOC) STRATEGY AND CASE ANALYSIS (BLOCKBUSTER VS NETFLIX) Name of
STRATEGY AND CASE ANALYSIS (BLOCKBUSTER VS NETFLIX) Name of student Institution Course Date Executive Summary This case analysis will examine the US home video retail market from the perspective of two companies, Blockbuster, and Netflix. The former collapsed in 2010 while Netflix is the dominant operator in the market.
Former West Coast Eagles premiership player Daniel Kerr avoids jail
Former AFL premiership player, Daniel Kerr, has avoided more jail time for repeated domestic violence offences against his ex-partner over six years.
'Eric' TV Series Review: Benedict Cumberbatch Stuns In Netflix Show
Benedict Cumberbatch's Disturbing but Poignant 'Eric' Is About Much More Than a Missing Boy: TV Review. In Netflix 's limited series "Eric," from screenwriter Abi Morgan ("Shame ...
Rare Stock Picks In May 2024
Netflix, Inc. - Growth investor Erick Mokaya, CFA says the focus on three key areas (live programming, ad-tier growth, and expansion into emerging markets) promises to revolutionize audience ...

Netflix vs Blockbuster – 3 Key Takeaways

The Rise of Netflix (and the Fall of Blockbuster)

Image Source

3 Takeaways from the Netflix vs. Blockbuster Battle

2. You need to be willing to adapt. (And half measures won’t cut it.)

1997 era Netflix–before the company embraced streaming

Sandi Harding, the owner of the single remaining Blockbuster store in the world. Source .

3. The customer-driven approach always wins.

Final Thought: Change Is Inevitable

Want to drive Netflix-level growth for your business? Start here .

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Netflix & Blockbuster – Case Study Of Disruptive Innovation

Table of Contents

Brief History Of Netflix

Disruptive Strategies Used By Netflix

Lessons From The Netflix & Blockbuster Case Study On Disruptive Innovation

10. Learn From Failures

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Netflix Inc.: The Disruptor Faces Disruption

Learning Objectives

About The Author

Willy C. Shih

Netflix in 2011

Blockbuster vs. Netflix: A Case of Technology-Driven Strategy

Don’t underestimate the power of technology to change your competitive environment

Constantly be looking for ways to challenge and reinvent your value proposition, or your competitors will do it for you

Recognize and overcome the forces that will resist change in your own organization

Case Study: How Netflix Took Down Blockbuster

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History of Netflix

How Netflix beat Blockbuster

Technological Advances

Customer Relationship

Netflix Innovation

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