From being one of the most successful ventures to declare itself bankrupt in the year 2010, this is a story of ‘Blockbuster LLC’. They shut their business officially in November 2013, almost three-decade after their initiation. Blockbuster used video rental shops, mail, streaming, video on demand, and Cinema Theater as modes to provide movies and video game rental at home of their customers.
Competition from the Netflix mail-order service and video on demand services were major factors in Blockbuster’s eventual demise (Ferguson, 2014). There was a point in time in 2000 when Netflix offered itself at US$50 million for purchase to Blockbuster but they laughed them out. The business by acquiring Netflix and their modality could have made use of their over nine thousand outlets and eighty thousand employees to speed up the sell. But they didn’t care much about it. Netflix on the other end was growing in size and its popularity was increasing. Along with that all, the demand for the service was on the rise as well. Blockbuster didn’t realize it either, they failed to move as per the shifting trend.
Blockbuster declined Netflix just for they still had to see a profitable year after three years in business and disregarded their popularity but rather decided to partner with Enron Broadband which is very much popular for its fraudulent accounting practices even to date. The price of DVD player plummeted to now be under 100$ in 2001 and with 9/11 people stayed back home and that was one of the favorite past time for most of the people. Netflix, on the other hand, was growing at a rapid pace with more than a million subscribers joining them by 2003 and finally had their first profitable year. However, Blockbuster decided to do nothing about it nor change their process until 2004, when they launched their online DVD mail service. Walmart joined the race as well and it was now a three-way race to the top. However, Blockbuster and Walmart both were kicked out of the race as they were unable to get any success as they were too late. Blockbuster CEO at the time told that they might have won had they started sooner. That marked the end of brick-and-mortar video rental service along with their huge success. The company filed for bankruptcy in the year 2010 and went through liquidation process (Chopra & Veeraiyan, 2017).
The business might have still been in business and as much success as it once was if they were willing to change their business model and show some flexibility. In the world of business, being ridged would mostly back-fire. A business should look at what customer needs and act on their demand. It looked like Netflix was doing the market research/testing for Blockbuster and they could have easily capitalized had they shifted their focus to the same business model as Netflix. They could have still kept their business model intact and work on that as a side idea and could have crushed Netflix and established themselves as the king in the field. But the unwillingness from the business to experiment and take risk marked the end of the business altogether. Looking back at the situation, I would have thought longer into the future and capitalized every opportunity to make use of the advancing technology and proven business method used in my working area. Facebook acquired WhatsApp for a record amount as it was building up and might put a competition to their messaging application. So, at times a way for a business to keep progressing is also by acquiring or following in the footsteps of other business which have made the best use of technology to prove a market segment.
References
Chopra, S., & Veeraiyan, M. (2017). Movie Rental Business: Blockbuster, Netflix, and Redbox. Kellogg School Of Management Cases, 1 (1), 1-21.
Ferguson, C. (2014). Technology Left Behind-The Temptations of Netflix. Against The Grain, 22(6), 83-84.
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From being one of the most successful ventures to declare itself bankrupt in the year 2010, this is a story of ‘Blockbuster LLC’. They shut their business officially in November 2013, almost three-decade after their initiation. Blockbuster used video rental shops, mail, streaming, video on demand, and Cinema Theater as modes to provide movies and video game rental at home of their customers.
Competition from the Netflix mail-order service and video on demand services were major factors in Blockbuster’s eventual demise (Ferguson, 2014). There was a point in time in 2000 when Netflix offered itself at US$50 million for purchase to Blockbuster but they laughed them out. The business by acquiring Netflix and their modality could have made use of their over nine thousand outlets and eighty thousand employees to speed up the sell. But they didn’t care much about it. Netflix on the other end was growing in size and its popularity was increasing. Along with that all, the demand for the service was on the rise as well. Blockbuster didn’t realize it either, they failed to move as per the shifting trend.
Blockbuster declined Netflix just for they still had to see a profitable year after three years in business and disregarded their popularity but rather decided to partner with Enron Broadband which is very much popular for its fraudulent accounting practices even to date. The price of DVD player plummeted to now be under 100$ in 2001 and with 9/11 people stayed back home and that was one of the favorite past time for most of the people. Netflix, on the other hand, was growing at a rapid pace with more than a million subscribers joining them by 2003 and finally had their first profitable year. However, Blockbuster decided to do nothing about it nor change their process until 2004, when they launched their online DVD mail service. Walmart joined the race as well and it was now a three-way race to the top. However, Blockbuster and Walmart both were kicked out of the race as they were unable to get any success as they were too late. Blockbuster CEO at the time told that they might have won had they started sooner. That marked the end of brick-and-mortar video rental service along with their huge success. The company filed for bankruptcy in the year 2010 and went through liquidation process (Chopra & Veeraiyan, 2017).
The business might have still been in business and as much success as it once was if they were willing to change their business model and show some flexibility. In the world of business, being ridged would mostly back-fire. A business should look at what customer needs and act on their demand. It looked like Netflix was doing the market research/testing for Blockbuster and they could have easily capitalized had they shifted their focus to the same business model as Netflix. They could have still kept their business model intact and work on that as a side idea and could have crushed Netflix and established themselves as the king in the field. But the unwillingness from the business to experiment and take risk marked the end of the business altogether. Looking back at the situation, I would have thought longer into the future and capitalized every opportunity to make use of the advancing technology and proven business method used in my working area. Facebook acquired WhatsApp for a record amount as it was building up and might put a competition to their messaging application. So, at times a way for a business to keep progressing is also by acquiring or following in the footsteps of other business which have made the best use of technology to prove a market segment.
References
Chopra, S., & Veeraiyan, M. (2017). Movie Rental Business: Blockbuster, Netflix, and Redbox. Kellogg School Of Management Cases, 1 (1), 1-21.
Ferguson, C. (2014). Technology Left Behind-The Temptations of Netflix. Against The Grain, 22(6), 83-84.