What's Your Question?

What Is a Case Study?

When you’re performing research as part of your job or for a school assignment, you’ll probably come across case studies that help you to learn more about the topic at hand. But what is a case study and why are they helpful? Read on to learn all about case studies.

Deep Dive into a Topic

At face value, a case study is a deep dive into a topic. Case studies can be found in many fields, particularly across the social sciences and medicine. When you conduct a case study, you create a body of research based on an inquiry and related data from analysis of a group, individual or controlled research environment.

As a researcher, you can benefit from the analysis of case studies similar to inquiries you’re currently studying. Researchers often rely on case studies to answer questions that basic information and standard diagnostics cannot address.

Study a Pattern

One of the main objectives of a case study is to find a pattern that answers whatever the initial inquiry seeks to find. This might be a question about why college students are prone to certain eating habits or what mental health problems afflict house fire survivors. The researcher then collects data, either through observation or data research, and starts connecting the dots to find underlying behaviors or impacts of the sample group’s behavior.

Gather Evidence

During the study period, the researcher gathers evidence to back the observed patterns and future claims that’ll be derived from the data. Since case studies are usually presented in the professional environment, it’s not enough to simply have a theory and observational notes to back up a claim. Instead, the researcher must provide evidence to support the body of study and the resulting conclusions.

Present Findings

As the study progresses, the researcher develops a solid case to present to peers or a governing body. Case study presentation is important because it legitimizes the body of research and opens the findings to a broader analysis that may end up drawing a conclusion that’s more true to the data than what one or two researchers might establish. The presentation might be formal or casual, depending on the case study itself.

Draw Conclusions

Once the body of research is established, it’s time to draw conclusions from the case study. As with all social sciences studies, conclusions from one researcher shouldn’t necessarily be taken as gospel, but they’re helpful for advancing the body of knowledge in a given field. For that purpose, they’re an invaluable way of gathering new material and presenting ideas that others in the field can learn from and expand upon.


netflix blockbuster case study

Netflix vs Blockbuster – 3 Key Takeaways

netflix blockbuster case study

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 blockbuster case study

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.

netflix blockbuster case study

Image Source

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.)

netflix blockbuster case study

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 .

netflix blockbuster case study

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 .

netflix blockbuster case study

Related Stories

netflix blockbuster case study

MBA Knowledge Base

Business • Management • Technology

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. 

Netflix Blockbuster Case Study

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.

Related Posts:

  • Case Study: Doritos Chips "The Loudest Taste on Earth" Ad Campaign
  • Case Study: The Rise and Fall of Enron
  • Case Study: Success of Amazon's Kindle Fire
  • Case Study: Corporate Social Responsibility at The Body Shop
  • Case Study: Airbnb's Growth Strategy Using Digital Marketing
  • Case Study: BMW's "The Hire" Ad Film Camapaign
  • Corporate Restructuring at Arvind Mills
  • Case Study: Lifecycle of Video Game Consoles
  • Case Study of Zara : Application of Business Intelligence in Retail Industry
  • Case Study of LG Electronics: Repositioning a Successful Brand

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

  • Language English Polish German French Portuguese Finnish Italian Spanish Swedish Hungarian Japanese Dutch Danish Chinese (Simplified) Arabic Hindi Turkish

Blockbuster vs Netflix

Streaming into the future: the epic battle between blockbuster and netflix for video entertainment supremacy, introduction.

Blockbuster and Netflix are two of the most well-known names in the entertainment industry, and both significantly impacted how people watch movies and TV shows. Blockbuster was once the dominant video rental market, with thousands of retail locations worldwide. However, with the rise of digital streaming, Blockbuster struggled to keep up and eventually declared bankruptcy in 2010.

On the other hand, Netflix was founded in 1997 as a DVD rental-by-mail service. Over the years, the company has transformed into a significant player in the streaming industry, offering a vast library of movies and TV shows that can be streamed on demand. Netflix’s success has disrupted the traditional entertainment industry and led to a significant shift in media consumption.

Today, Netflix is one of the largest streaming platforms in the World, with millions of subscribers and a market value of over $100 billion. On the other hand, Blockbuster is a shell of its former self, with only a handful of remaining locations. The company’s decline is a cautionary tale for traditional businesses that fail to adapt to the digital landscape. At the same time, Netflix’s success highlights the importance of innovation and the ability to evolve with changing technology and consumer behaviour.

How Netflix Disrupted the Video Rental Industry and Left Blockbuster Behind

v500 Systems | enterprise artificial intelligence solutions

The Rise and Fall of Blockbuster: Lessons Learned from the Battle with Netflix

Netflix recognised the advantage of technology early on and leveraged it to disrupt the traditional entertainment industry. The company was one of the first to offer a DVD rental-by-mail service, a game-changer for customers tired of the hassle and inconvenience of visiting physical rental stores. Netflix then embraced the digital age by launching its streaming platform, which allowed customers to watch movies and TV shows on their devices instantly.

In contrast, Blockbuster was slow to adapt to the digital landscape and failed to recognise the potential of technology. The company relied heavily on its retail locations and could not see the writing on the wall as more and more customers switched to digital streaming. As a result, Blockbuster missed opportunities to innovate, such as the potential to launch its streaming platform, and instead focused on maintaining its traditional business model.

Another factor that contributed to Blockbuster’s downfall was its resistance to change. The company was slow to embrace change, even as the World was rapidly evolving. For example, Blockbuster was slow to offer online rental options and, later, slow to introduce a streaming service. The company’s inability to embrace change and adapt to new technology ultimately led to its downfall.

In conclusion, Netflix’s success was mainly due to its ability to recognise the advantage of technology and embrace change. The company’s early adoption of digital streaming and willingness to experiment with new technologies allowed it to gain a significant advantage over its competitors, including Blockbuster. On the other hand, Blockbuster failed to recognise the potential of technology and was slow to embrace change, ultimately leading to its downfall.

30 years of expertise in Data Networks and Security. Embrace our cutting-edge AI services for innovation.

Transform your efficiency with us try ai multiple document comparison for free and revolutionise your workflow. save 90% of your time and subscribe for just $20/month . join our expertise-driven journey to achieve unmatched accuracy and success. embrace the future of document processing today, some interesting facts, statistics, and comparisons between netflix and blockbuster:.

  • Origins: Netflix started as a DVD rental-by-mail service in 1997, while Blockbuster was a brick-and-mortar video rental store that expanded into online rentals in 2004.
  • Subscriber base: As of 2021, Netflix has 208 million subscribers globally, while Blockbuster’s subscribers are not publicly available.
  • Original content: Netflix is known for producing and distributing original content, such as “Stranger Things,” “The Crown,” and “Orange is the New Black.” Blockbuster also created original content but did not gain the same recognition as Netflix.
  • Business model: Netflix operates on a subscription-based model, while Blockbuster initially relied on rental fees for physical media. Blockbuster later switched to a subscription model but could not compete with Netflix.
  • Global reach: Netflix is available in 190 countries, while Blockbuster is only available in the United States and a few other countries.
  • Innovations: Netflix was an early adopter of streaming technology and was one of the first companies to offer on-demand streaming of movies and TV shows. Blockbuster was slow to adopt streaming technology and could not compete with Netflix’s head start.
  • Market value: As of 2021, Netflix’s market capitalisation is over $237 billion, while Blockbuster’s market value is not publicly available.
  • Competition: Netflix faces competition from streaming services like Disney+, Hulu, and Amazon Prime Video, while Blockbuster’s main competition is video rental stores like Blockbuster and Hollywood Video.
  • Legacy: Netflix is widely credited with disrupting the traditional video rental industry and paving the way for the streaming revolution. On the other hand, Blockbuster is remembered as a symbol of the decline of physical media and the rise of digital streaming.
The Battle for Streaming Supremacy: What the Competition between Blockbuster and Netflix Teaches Us

v500 Systems | advanced artificial intelligence provider

The Impact of Innovation on Competition: A Case Study of Netflix and Blockbuster

Blockbuster – didn’t understand technology.

Blockbuster was a chain of video rental stores popular in the 1980s and 1990s. Customers could go to a Blockbuster store, browse the selection of movies and TV shows, and rent a physical DVD or VHS tape to watch at home. Blockbuster also offered a mail-order rental service, where customers could order movies online and deliver them to their homes.

In its prime, ‘Blockbuster’ was one of the most well-known brands in the World, with over 5,000 rental stores in the US alone and more than 84,000 workers in 2004. However, despite having the resources and funding, they eventually filed for bankruptcy in 2010.

Organisations that are not using or planning to use innovative technologies, such as Artificial Intelligence (AI), Machine Learning (ML) and Natural Language Understanding (NLU), inevitably, given enough time, will join the line of bankrupts such as Blockbusters.

Technology gives you an advantage and opens new opportunities and lines of Business that haven’t been explored or available for many reasons – such as costs or profitability. Your competitors in saturated market space will recognise those benefits and expand their revenue and area of operations.

Blockbuster didn’t understand that TECHNOLOGY IS THE CORE of every organisation and paid the highest price.

Netflix – took advantage of the technology.

On the other hand, Netflix is a streaming service that allows customers to watch movies and TV shows online on a computer or various devices such as TVs, tablets, and smartphones. Netflix originally started as a DVD rental service similar to Blockbuster, but it quickly evolved into a streaming service as the technology for streaming video improved.

In simple terms, Netflix adopted a suitable business model backed by technology. They have recognised fast-growing networks – Broadband being available in increasing numbers of households. Subsequently, subscribers can watch what they want, when they want and on as many devices as possible in their own homes or on the go. Now they use AI as their operation’s backbone and enhance the User Experience (UX) by recommending a desired list of movies.

Many organisations even now have the old IT attitude when it gets to technology. It’s perceived as a necessary cost rather than the main business enabler it needs to be. Whether the product or service is: legal document processing, an insurance policy, or overnight parcel delivery, that product now has enabled technology at its CORE.

There are a few critical differences between Blockbuster and Netflix:

  • Availability: Blockbuster was a physical store, so customers had to go to a store to browse and rent movies. Netflix is available online, so customers can access it from anywhere with an internet connection.
  • Selection: Blockbuster stores had a limited selection of movies and TV shows because they had to stock each item physically. On the other hand, Netflix has a much more extensive selection of movies and TV shows because they are streamed from the internet and don’t have to be physically stocked.
  • Convenience: Renting a movie from Blockbuster required going to the store, browsing the selection, and possibly waiting to rent. Netflix can be accessed from any device with an internet connection, and customers can browse and watch movies and TV shows with just a few clicks.
  • Cost: Blockbuster charged a fee for each movie or TV show rented, and there were additional late fees if the film was not returned on time. Netflix charges a monthly subscription fee, which allows customers to watch as many movies and TV shows as they want during that time.
  • Netflix has primarily replaced traditional video rental services like Blockbuster due to its convenience, more extensive selection, and lower cost.

We should learn from the mistakes of others and focus our actions towards AI to make and deliver considerably better services and products. In 2000, at a meeting between executives of Blockbuster and Netflix, they had the opportunity to purchase Netflix for an asking price of$50 a million. Unfortunately, Blockbuster passed on this opportunity.

v500 Systems | solving challenges with Artificial Intelligence

From Physical Media to Streaming: A Tale of Two Companies, Netflix and Blockbuster

Ready to get started?

 ai (artificial intelligence) | efficiency | competitive | productivity | customer experience | operational costs | decision-making | security | sales | risk management | resource optimisation | quality | automation | data-driven | personalisation | cybersecurity | insights | business continuity | new customers | incresed revenue, clear document backlog — act now, sign up: embrace the power of ai for document processing, unlock the power of ai with our irresistible offer. get started for free on ai multiple document comparison and intelligent cognitive search today. experience unparalleled efficiency, accuracy, and time savings. after the free trial, continue the transformation for just $20/month . don’t miss out on this game-changing opportunity. empower your document processing journey now..

Schedule a meeting with us today and experience a virtual coffee with a difference.

Please take a look at our Case Studies and other Posts to find out more:

10 paths AI helps your Business grow

Why NAT because the World ran out of IPv4 addresses in Feb 2010?

Artificial Intelligence will transform the area of Law

Intelligent Search

Decoding the Mystery of Artificial Intelligence

#netflix #blockbuster #artificialintelligence #intelligent #automation


150 hours in a week: medical research, data is fuel for ai: the question is: do you treat data as an asset in your company, ai: it’s too early to do everything, too late to do nothing, how using ai will feel like a necessity without it as a substandard. no longer supports Internet Explorer.

To browse and the wider internet faster and more securely, please take a few seconds to  upgrade your browser .

Enter the email address you signed up with and we'll email you a reset link.

  • We're Hiring!
  • Help Center

paper cover thumbnail


Profile image of Phenathio Maina

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.

Related Papers

Jessica Izquierdo-Castillo

This is an English versión of the Paper originally published in Spanish in El Profesional de la información, v. 24, n. 6. To cite this article, please use: Izquierdo-Castillo, Jessica (2015). El nuevo negocio mediático liderado por Netflix: estudio del modelo y proyección en el mercado español. El profesional de la información, v. 24, n. 6, pp. 819-826. http://dx. Abstract: New actors, who link their activity to content distribution, lead the business of online media content. These actors operate adapted to the demands of converging media context, and they propose business models oriented through user benefit. Among them, Netflix notably highlights for the leadership he has in its home market, the United States, and its international expansion. This paper presents in detail the Netflix business model with a case study that focuses on three key areas: the catalogue and monetization's formula, policy relationships with key audiences (users and content and internet providers) and its internationalization strategy. From the results, a discussion on the projection of this model in the Spanish media market is opened.

netflix blockbuster case study

Pierfrancesco Mazzolini

Netflix company description. Netflix brief history. Netflix’s financial analysis. Financial strength. Netflix vs. competition. Brief description on Amazon’s business strategies.

Proceedings of the 2021 International Conference on Public Relations and Social Sciences (ICPRSS 2021)

Journal of Cultural Economics

Ricarda Schauerte

DergiPark (Istanbul University)

Münir Gökmen

Hồng Phúc Hoàng

Mohamad Allahham

Shahzad Ansari

Research summary: Firms introducing disruptive innovations into multisided ecosystems confront the disruptor's dilemma: gaining the support of the very incumbents they disrupt. Through a longitudinal study of TiVo, a company that pioneered the Digital Video Recorder, we examine how these firms may address this dilemma. Our analysis reveals how TiVo navigated coopetitive tensions by continually adjusting its strategy, its technology platform, and its relational positioning within the evolving U.S. television industry ecosystem. We theorize how (1) disruption may affect not just specific incumbents, but also the entire ecosystem; (2) coopetition is not just dyadic, but also multilateral and intertemporal, and (3) strategy is both a deliberative and emergent process involving continual adjustments, as the disruptor attempts to balance coopetitive tensions over time. Managerial summary: New entrants confront a dilemma when they introduce a disruptive innovation into an existing business ecosystem, viz., how can they gain the support of the incumbents that their innovation disrupts? Confronting this " disruptor's dilemma " , the disruptor must consider several issues: How might it pitch its innovation to attract end customers and yet reduce the threat of disruption perceived by ecosystem incumbents? How can the innovation be modified to fit into legacy systems while transforming them? Based on an in-depth analysis of TiVo and its entrepreneurial journey, we explore the strategies disruptors can deploy to address these issues.

JBTI : Jurnal Bisnis : Teori dan Implementasi

Melati Rosanensi

Multinational corporations (MNCs) are non-state actors who have a significant role in international relations. Globalization has facilitated the development of MNCs as well as the transformation of media. It impacts the presence of multinational entertainment media companies operating with the SVOD (Subscription video-on-demand) system like Netflix and Blockbuster. Netflix chooses Indonesia as one of its potential markets. However, Netflix has to face new competitors and resolve several obstacles and regulations from other companies and governments in Indonesia. This research aims to find out and analyze the strategy of Netflix is dominating the Entertainment Media market in Indonesia with the concept of MNC, international strategy, and competitive advantages. This research used a qualitative approach with descriptive methods where the data collection came from secondary data such as books, academic literature, and news portals. In data analysis, the researcher reviews and draw an e...


Media, Culture & Society

Michael L Wayne

Dr. Nikolaos Basias

Shahzad (Shaz) Ansari , Arun Kumaraswamy

Pieter Ballon

Leadership, Education, Personality: An Interdisciplinary Journal

Heiko Fischer

Proceedings of the 17th International Joint Conference on e-Business and Telecommunications

Selma Maria da Silva

Seppo Leminen , Westerlund Mika


Andrew Higson

Journal of International Management Studies


Television & New Media

Michael L Wayne , Deborah Castro

International Journal of Media, Journalism and Mass Communications (IJMJMC)

Adam Miller

Critical Studies in Television: The International Journal of Television Studies

Alexa Scarlata

Platform Capitalism in India ed. Adrian Athique, Vibodh Parthasarathi

Ishita Tiwary

California Management Review

sayan chatterjee

Journal of Media Business Studies

Päivi S Maijanen

MedieKultur: Journal of media and communication research

Anna Schiavo

Friedrichsen, Mike y Wolfgang Mülh-Benninghaus (eds.), Handbook of Social Media Management: Value Chain and Business Models in Changing Media Markets, Berlin: Springer-Verlag, pp. 329-348

Alejandro Pardo

Journal of Popular Film and Television

Alisa Perren

Journal of Knowledge Management

Stefano Magistretti

Prescott C. Ensign 安森

Albarran, Alan, Paulo Faustino & Rogério Santos (eds.), The Media as a Driver of the Information Society: Economics, Management, Policies and Technologies, Lisbon: MediaXXI/Formalpress and Universidade Católica Editora, Unipessoal Lda, pp. 67-97.

The Communication Review

Terje Colbjørnsen

Robert G. Picard

Matías Membiela Pollán

Ashmeet Thukral

2012 International Conference on Innovation Management and Technology Research

Nigel Walton

Aswin Punathambekar

International Journal on Media Management

Prof. Dr. John J Oliver , Robert G. Picard

Angel Arrese

Rohan Benhal

Fanghsi Zhou

saeid ghanbary

Journal of Marketing

El Profesional de la Información

Judith Clares Gavilán

Dr. Kristopher Alexander

Darcey Morris


  •   We're Hiring!
  •   Help Center
  • Find new research papers in:
  • Health Sciences
  • Earth Sciences
  • Cognitive Science
  • Mathematics
  • Computer Science
  • Academia ©2023
  • Success stories

Logo Drew blanco

Business Insights

Artículos, noticias, casos de estudio y documentación sobre negocios. Únete a la comunidad de +50.000 suscriptores de todo el mundo.

Áreas y funciones

Casos de estudio, tags destacados, key concepts.

Personas . Procesos . Tecnología .

Creemos que los procesos claros, con el apoyo de la tecnología adecuada, generan un entorno donde las personas trabajan más felices, y en consecuencia vuelve a tu empresa más productiva.


World class technology. Soluciones de primer nivel para tu empresa.

Case study Blockbuster: Why is it necessary to innovate?

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.

A new concept in management

Drew's editorial team

¿nos dejas un comentario.

Legal Scholarship Repository: A Service of the Joel A. Katz Law Library

  • < Previous

Home > STUDENT_WORK > Chapter 11 Bankruptcy Case Studies > 11

Chapter 11 Bankruptcy Case Studies

A Blockbuster Failure: How an Outdated Business Model Destroyed a Giant

Todd Davis John Higgins

Document Type

Publication date.

Spring 2013

The rise of the Internet in the 1990s and 2000s rapidly created new markets. Companies like Apple seized on the ability to distribute music online for a lower price than independent record stores, or even large-scale ones like Tower Records could afford, driving record stores to near-extinction. [1] A similar fate has fallen upon the video rental stores. Giants Movie Gallery and Blockbuster, driven by physical rental stores, began struggling to compete with streaming and mailing platforms. Both were driven into bankruptcy because they failed to adapt quickly enough. A series of poor choices by Blockbuster, including passing on the acquisition of Netflix for a mere $50 million, led the company to file Chapter 11 to reduce its roughly one billion dollar debt. [2] This paper tells the story of Blockbuster’s venture into and through bankruptcy in an attempt to reclaim its place in the video rental world.

Recommended Citation

Davis, Todd and Higgins, John, "A Blockbuster Failure: How an Outdated Business Model Destroyed a Giant" (2013). Chapter 11 Bankruptcy Case Studies . 11.

Since June 26, 2013

Included in

Bankruptcy Law Commons , Business Law, Public Responsibility, and Ethics Commons

  • Collections
  • Disciplines
  • Author Profile Gallery

Advanced Search

  • Notify me via email or RSS

Author Corner

Home | About | FAQ | My Account | Accessibility Statement

Privacy Copyright

Blockbuster LLC Failure: A Case Study Analysis Case Study


A competitiveness approach is a road map for a sector’s long-term sustainability. An industry’s competitiveness can be enhanced through strengthening market segmentation and branding. While firm-level actions may increase specific companies’ performance in the near term, the benefit is probably limited and temporary unless industry-wide obstacles such as a challenging governmental and regulatory climate are remedied (Momaya, 2019). How a business is structured and utilizes its core competencies to generate distinctive or lower-cost goods or services influences its potential to compete successfully and deliver exceptional value to its consumers while increasing profits (Momaya, 2019). This report aims to analyze some of the factors and issues that might have led to Blockbuster Company losing its competitive edge to other market players like Netflix.

Brief History of Blockbuster LLC

With roughly 8,000 locations, the Blockbuster Company is a market leader in rental movies and video games. The businesses rented movies and video games to consumers for personal use. Blockbuster’s eyesight is to be a one-stop-shop for games and films. Its objective is to continue growing its fundamental rental business while leveraging its company image, massive database, retail locations, and cinema interactions to convey an even wider scope of home entertainment to existing and new viewers.

The corporation has operations in the United States of America, Europe, Latin America, Australia, Canada, Mexico, and Asia. Blockbuster’s headquarters are in Dallas, Texas, and the company employs 58,561 individuals on a full-time, part-time, and occasional basis (Chopra & Veeraiyan, 2017). The business made $5,287.9 million in income during the fiscal year ending January 2009, down from 4.6% in 2008 (Chopra & Veeraiyan, 2017). Blockbuster blamed the profit reduction mainly on non-cash asset impairments against its goodwill and other long-lived investments. By renting DVDs by mail and downloading, or streamed, purchases.

Initially, Blockbuster generated income by renting movies from stores and charging late fees on leases. Blockbuster started an online movie rental program in August 2004 to offer competition to traditional industry leader Netflix and keep engaged with industry developments (Chopra & Veeraiyan, 2017). The only entity that can genuinely battle with Netflix against other contenders is a sustained strategic advantage in the digital renting marketplace (Tubbs, 2021). Currently, only Blockbuster and Netflix are fighting for online consumers. The innovation for in-home watching continues to advance, and it has become more affordable to stream videos via the net. Diverse distribution sources provide in-home entertainment.

Situational Analysis

Porter five forces analysis, industry competition.

The weaker a corporation’s position is, the greater the number of opponents and the more comparable goods and services they provide. Suppliers and customers will seek out a business’s competitors to offer a decent arrangement or reduced rates (Mishra & Tripathi, 2020). On the other hand, when aggressive competition is minimal, a business can significantly increase prices and negotiate terms of transactions to increase sales and profits (Mishra & Tripathi, 2020). When fierce competition, it becomes exceedingly challenging for established businesses like Blockbuster LLC to produce maximum yield.

Threat of New Entrants

The power of new competitors in a marketplace also affects Blockbuster’s dominance. The less energy and finances a rival must invest to enter and compete effectively in a firm’s market, the more an incumbent business’s foothold may be considerably undermined (Song et al., 2018). A sector with extreme entry barriers benefits existing businesses by increasing prices and securing better conditions (Song et al., 2018). Due to the more critical financial requirements for entering the film industry, Blockbuster LLC maintains a healthy market share despite severe competition from Netflix.

Bargaining Power of Suppliers

This characteristic describes the ease with which vendors can increase the cost of materials. The lesser distributors the film industry has, the more reliant Blockbuster will be on a single source (Lee & Yan, 2019). Consequently, the supplier gains leverage and can increase prices of raw materials and pursue other trade advantages. On the other hand, Blockbuster has a network of partners and low switching prices between competitor producers, it can reduce its supply costs and maximize efficiency.

Bargaining Power of Consumers

Consumer potential to manipulate price reductions or their amount of power determines business success. It is influenced by the number of clients or users a business has, the importance of each buyer, and the expense of acquiring new consumers or markets for the business’s output (Zhu et al., 2017). With a fewer and more robust client base, each individual has more bargaining power to negotiate cheaper rates and better packages (Zhu et al., 2017). When purchasers have a considerable bargaining advantage, they frequently force prices down, restricting Blockbuster’s ability to produce high revenues.

Threat of Substitutes

Substitute commodities are a danger since they can be utilized in place of a firm’s products or services. Businesses that manufacture items and services with no near alternatives will have a greater capacity to raise charges and secure advantageous conditions (Mauboussin & Rappaport, 2021). When close substitutes are accessible, Blockbuster’s customers might opt to purchase Netflix’s goods, eroding the corporation’s influence (Mauboussin & Rappaport, 2021). If the threat of substitutes is significant, Blockbuster LLC must invest consistently in research & development activities or risk losing market share to competitors.

PESTEL Analysis

Political factors.

The US administration abides by all World Trade Organization regulations and guidelines. Reliability in policy formulation and execution fosters a positive work environment at Blockbuster LLC (Chen, 2021). The United States appears to have a stable political structure, allowing Blockbuster to develop projections based on a predictable political climate. Furthermore, the United States has a thriving civil society, and Blockbuster should establish relationships with them and seek opportunities for collaboration (Chen, 2021). Civil society organizations exert influence not just on policymaking but also on developing a societal narrative.

Economic Factors

Increased inflation may compel Blockbuster to maintain constant price increases in line with inflation, resulting in decreased brand recognition and continual cost-cutting efforts. Cost-Based pricing may be a poor technique in several circumstances (Murmann, 2017). The faster pace of GDP growth indicates that the economy is expanding in demand (Murmann, 2017). Blockbuster may capitalize on this trend by diversifying its product offering and reaching out to new customers.

Social Factors

Blockbuster LLC should analyze the hierarchy in the environment where it works and how it affects economic demand. For example, the state apparatus in the US economy is gradually shifting toward the older population, which has a higher spending power than the younger age. Additionally, population trends are critical in anticipating an economy’s demand. For instance, as the United States population ages, demand for commodities aimed primarily at this demographic will increase. Blockbuster should analyze population changes while developing new products and incorporate elements that appeal to this audience.

Technological Factors

Countries worldwide are attempting to prepare for the deployment of 5G infrastructure. Blockbuster should determine the extent to which the local consumer base prepared to deploy a 5G connection. One area in which the US lags behind China is digital transactions. Blockbuster should determine which mobile wallet methods are favored in the local economy and build its corporate structure. Uber struggled in China because it entered before the mass adoption of smartphones in the country. Blockbuster should develop a plan that considers cultural attitudes, technology, and Blockbuster’s economic model.

Environmental Factors

Environment regulations compliance organizations play a key role in ensuring that standards are adhered to. However, in developing nations, these institutions frequently stall obtaining bribes. Blockbuster LLC should be conscious that such tactics exist in certain jurisdictions. The money spent on sustainable power should enable Blockbuster to justify its effort as part of its promotional strategy. Finally, Blockbuster should analyze the recycling policies applicable to its projected market and develop measures to comply with them.

Legal Factors

Blockbuster must determine a nation’s data protection legislation and the steps made following them. For example, most EU member states require that EU citizen statistics be stored solely in EU member states. Before entering a foreign market, Blockbuster must determine the applicable corporate laws and how they are distinct from those in its native market. Furthermore, if the court procedure is subject to unfairness, Blockbuster cannot be certain of the conclusions.

Assumptions and Missing Information

When Netflix began in 1997, Blockbuster was the sector’s most significant player. Between 1985 and 1992, the brick-and-mortar leasing network expanded from its headquarters in Dallas, Texas, to over 2,800 outlets worldwide (Hiller, 2017). Viacom acquired Blockbuster two years later for $8.4 billion. In 2000, Netflix understood that perhaps working alongside Blockbuster would be better than fighting against them (Hiller, 2017). Reed Hastings, co-founder, and CEO of Netflix contacted John Antioco, then-CEO of Blockbuster, with a partnership proposition (Hiller, 2017). The Netflix team would manage Blockbuster’s internet trademark as part of the partnership.

Naturally, that arrangement never transpired, in part because Blockbuster mocked Netflix during their meeting to explore the transaction. In 1999, Groupe Arnault backed Netflix with a $30 million funding investment that aided in establishing the subscriber-based business (Cohan, 2020). By 2006, Blockbuster’s internet services had expanded to more than 2 million subscribers. In 2008, Netflix announced a partnership with Starz to broadcast around 1,000 Hollywood films and television episodes (Cohan, 2020). Blockbuster was dropped from the New York Stock Exchange and declared bankrupt on July 1, 2010, after suffering over $1 billion in losses (Boland-DeVito, 2018). Thus, this was a big blow to the United States’ movie film producer.

Problem Definition and Mitigation Strategies

Gap analysis and recommendations.

Blockbuster can use exit strategies as they are frequently utilized by entrepreneurs or enterprise investors who wish to exit a failing operation. Exit techniques that Blockbuster could can sought for include being acquired by another business or the company’s initial public offering (Alsafadi et al., 2020). The process of acquisition by another company is usually not long considering that the business is changing management to another firm. After declaring bankruptcy, Dish bought Blockbuster intending to integrate activities by leveraging its architecture and identity.

In the short and medium run, offering Blockbuster’s discounted or free stores, which will increase the value of the firm’s television consumers. The long run action would be to the corporation in extending its distribution rights. By acquiring Blockbuster, the change in management would affect other parts of the organization such as finance and the overall administration. Because of its reduced market share and bankruptcy, the cost of acquisition of Blockbuster by Dish was $320 million. However, fierce competition from Netflix and Hulu, both of which have a sizable market share in the business are anticipated. Dish’s Blockbuster Movie Pass will bundle accessibility to films through television, broadcasting, or mail and help in handling the market rivalry with Netflix.

Apart from the takeover, another turnaround plan that Blockbuster could use to avoid bankruptcy is to consolidate its electronic and store inventory into a central repository. Under the legislation, all retailers will be permitted to function as mini-distribution facilities (Shahri & Sarvestani, 2020). The expertise required for this plan are the firm’s data management system. By having a centralized portal, Blockbuster clients will be able to browse the inventory of their retail stores and select their chosen films online. The short and medium plan actions for this suggestion include piloting using selected stores to monitor the efficiency of the idea. In the long term, Blockbuster should establish numerous databases to ensure all its information is secure. The cost of implementation is costly to because it requires the creation and maintenance of multiple databases. The estimated cost of setting up various websites is $200 million. This recommendation will strain the finance department of Blockbuster considering the economic crisis the business is in. The challenges anticipated with this resolution are the acquisition of the costs involved in setting up the plan. Blockbuster can auction some of its assets to raise funds for the implementation of the idea.

Alsafadi, Y., Aljawarneh, N., Çağlar, D., Bayram, P., & Zoubi, K. (2020). The mediating impact of entrepreneurs among administrative entrepreneurship, imitative entrepreneurship and acquisitive entrepreneurship on creativity. Management Science Letters , 10 (15), 3571-3576. Web.

Boland-DeVito, J. (2018). And the Oscar goes to… global cinema!!! Taking a close-up look at the business and legal challenges and opportunities of international and US film industries. Journal of Media and Communication Studies , 10 (8), 95-105. Web.

Chen, Y. (2021, December). Research on marketing strategies of different movies and film market. In 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021) (pp. 218-221). Atlantis Press.

Chopra, S., & Veeraiyan, M. (2017). Movie rental business: Blockbuster, Netflix, and Redbox. Kellogg School of Management Cases, 1 (1), 1-21. Web.

Cohan, P. S. (2020). Video entertainment. In Goliath Strikes Back (pp. 33-49). Apress, Berkeley, CA.

Hiller, R. S. (2017). Profitably bundling information goods: Evidence from the evolving video library of Netflix. Journal of Media Economics , 30 (2), 65-81. Web.

Lee, Y. H., & Yan, M. R. (2019). Factors influencing agents’ bargaining power and collaborative innovation. Asia Pacific Journal of Marketing and Logistics, 31 (2), 559-574. Web.

Mauboussin, M., & Rappaport, A. (2021). 4 Analyzing competitive strategy. In Expectations Investing (pp. 57-84). Columbia University Press.

Mishra, S., & Tripathi, A. R. (2020). Platform business model on state-of-the-art business learning use case. International Journal of Financial Engineering , 7 (2), 1-12. Web.

Momaya, K. S. (2019). The past and the future of competitiveness research: A review in an emerging context of innovation and EMNEs. International Journal of Global Business and Competitiveness , 14 (1), 1-10. Web.

Murmann, J. P. (2017). More exploration and less exploitation: Cultivating Blockbuster papers for MOR. Management and Organization Review , 13 (1), 5-13. Web.

Shahri, M. H., & Sarvestani, M. N. (2020). Business model innovation as a turnaround strategy. Journal of Strategy and Management, 13 (2), 241-253. Web.

Song, Y., Wang, H., & Zhu, M. (2018). Sustainable strategy for corporate governance based on the sentiment analysis of financial reports with CSR. Financial Innovation , 4 (1), 1-14. Web.

Tubbs, A. (2021). New machine control approaches: Digital assets create better customer experience, with open-automation advances, separating software from hardware, using open-source designs and easier to implement, flexible automation. Control Engineering , 68 (2), 12-14. Web.

Walker, R., Jeffery, M., So, L., Sriram, S., Nathanson, J., Ferreira, J., & Feldmeier, J. (2017). Netflix leading with data: The emergence of data-driven video. Kellogg School of Management Cases, 1 (1), 1-19. Web.

Weill, P., & Woerner, S. (2018). Surviving in an increasingly digital ecosystem. MIT Sloan Management Review , 59 (2), 26-28. Web.

Zhu, X., Wang, J., & Tang, J. (2017). Recycling pricing and coordination of WEEE dual-channel closed-loop supply chain considering consumers’ bargaining. International Journal of Environmental Research and Public Health , 14 (12), 1578. Web.

  • Chicago (A-D)
  • Chicago (N-B)

IvyPanda. (2023, June 3). Blockbuster LLC Failure: A Case Study Analysis.

"Blockbuster LLC Failure: A Case Study Analysis." IvyPanda , 3 June 2023,

IvyPanda . (2023) 'Blockbuster LLC Failure: A Case Study Analysis'. 3 June.

IvyPanda . 2023. "Blockbuster LLC Failure: A Case Study Analysis." June 3, 2023.

1. IvyPanda . "Blockbuster LLC Failure: A Case Study Analysis." June 3, 2023.


IvyPanda . "Blockbuster LLC Failure: A Case Study Analysis." June 3, 2023.

  • Netflix vs Blockbuster
  • Netflix Versus Blockbuster Versus Video-on-Demand
  • Blockbuster Company’s Management Style
  • Blockbuster Inc' and DVD Rental Company' Factors of Fall
  • Netflix and Blockbuster Battle for Market Leadership
  • Blockbuster’s Market in US
  • Netflix Company's Strategies
  • S.W.O.T. Analysis for the Blockbuster Entertainment
  • Blockbuster and CEMEX Company
  • The Home Movie Industry
  • Toyota Company Positive Sides and Analysis
  • Chick-Fil-A and Its Market Success
  • Premium Auto: Dodge and Chevy Analysis
  • The Eastman Kodak Firm's Story of Failure
  • Financial Analysis: United Airlines Holdings, Inc.

Netflix vs. Blockbuster Case Study

Netflix vs. Blockbuster Case Study

Case study by Angela Collins, Gaylene Meyer, and Lily Zimmerman examining the rise of video-on-demand and netflix and the fall of Blockbuster.


Netflix Case Study

Mais conteúdo relacionado

Mais procurados.

Strategy Analysis of NETFLIX

Mais procurados ( 20 )

Strategy Analysis of NETFLIX

Similar a Netflix vs. Blockbuster Case Study

Beyond INVEST - How to use story slicing to improve team and organisational a...

Similar a Netflix vs. Blockbuster Case Study ( 20 )

Beyond INVEST - How to use story slicing to improve team and organisational a...

Mais de Lily Zimmerman

Indeed Usability Research Study

Mais de Lily Zimmerman ( 8 )

Indeed Usability Research Study

Último ( 20 )

Observation Lab.pdf

  • 1 . Netflix vs. Blockbuster The Rise of Video-on-Demand Blockbuster’s Viable Options: Buy Netflix, or Become Netflix A Case Study by Angela Collins, Gaylene Meyer, and Lily Zimmerman Summer 2018
  • 2 . Convenience + Accessibility Affordability Netflix’s Business Model Studio Partners
  • 3 . Netflix’s (Customer) Data-Centric Strategy Netflix Tracked specific dimensions of customer use like: - Total time spent on Netflix site - Patterns among actors, directors, and genres watched - Time-gap between shows watched on Netflix site
  • 4 . Where did Blockbuster go wrong? Greed Hubris Lack of customer-centric business model. Inability to adapt and make the operational changes to harness power of customer data Netflix offered to sell to Blockbuster and they “laughed [Netflix] out of the office”. Inflexibility
  • 5 . Blockbuster’s Options - Missed Opportunities Buy Netflix Failed 50 Million Dollar sales offer to Blockbuster Become Netflix Blockbuster was inflexible and unable to accurately read the changing market
  • 6 . Netflix Eventually Usurped Blockbuster’s Throne
  • 7 . Netflix - Threats & Opportunities Threats - Risk of shifting too much focus/resources toward the streaming side of the business before enough consumers have adopted VOD as a regular/preferred form of media consumption - Lack of established partnerships with studio / content-producers (in contrast to Blockbuster) Opportunities - Fast growing customer base - Boldness and nimbleness to adapt to changing technological environment by leveraging customer data.
  • 8 . Netflix Partnerships: Prioritize Content Providers or Hardware Manufacturers? Prioritize partnerships with content providers!
  • 9 . Conclusion Blockbuster’s Viable Options: Buy Netflix, or Become Netflix
  • 10 . References & Image Links ujcAhV3FTQIHUiLB3YQ_AUICigB&biw=1472&bih=983#imgrc=qPNchAwDhB59aM:


  1. Netflix vs Blockbuster

    netflix blockbuster case study

  2. Winning the Customer Journey Battle: Netflix vs Blockbuster Case Study

    netflix blockbuster case study

  3. Case Study: How Netflix Took Down Blockbuster

    netflix blockbuster case study

  4. Winning the Customer Journey Battle: Netflix vs Blockbuster Case Study

    netflix blockbuster case study

  5. Blockbuster (Netflix

    netflix blockbuster case study

  6. Winning the Customer Journey Battle: Netflix vs Blockbuster Case Study

    netflix blockbuster case study


  1. What Is a Case Study?

    When you’re performing research as part of your job or for a school assignment, you’ll probably come across case studies that help you to learn more about the topic at hand. But what is a case study and why are they helpful? Read on to lear...

  2. Why Are Case Studies Important?

    Case studies are important because they help make something being discussed more realistic for both teachers and learners. Case studies help students to see that what they have learned is not purely theoretical but instead can serve to crea...

  3. What Are Some Examples of Case Studies?

    Examples of a case study could be anything from researching why a single subject has nightmares when they sleep in their new apartment, to why a group of people feel uncomfortable in heavily populated areas. A case study is an in-depth anal...

  4. Netflix vs Blockbuster

    Whereas Netflix developed a business model that simplified the video-renting process, making it more enjoyable for customers, Blockbuster only

  5. Case Study: How Netflix Took Down Blockbuster

    The character of innovation utilized by the Netflix organization is disruptive. The Netflix business enterprise is operating this characteristics from its first

  6. Blockbuster and Netflix in entertainment industry

    On the other hand, Netflix has a much more extensive selection of movies and TV shows because they are streamed from the internet and don't have to be


    Also, instead of acquisition, it doubled down on entrepreneurship and strategic clarity. Blockbuster focused on acquisition to gain market dominance and culture

  8. Netflix vs Blockbusters

    Netflix vs Blockbuster: Battle for Entertainment. Discover the challenges faced by Blockbuster and how Netflix disrupted the industry.

  9. Case study Blockbuster: Why is it necessary to innovate?

    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

  10. Why Big Companies “Fail” To Adopt Disruptive Technologies

    Why Big Companies “Fail” To Adopt Disruptive Technologies: The Netflix Vs Blockbuster Case Study. Hint: It's not what you think!

  11. Netflix vs Blockbuster

    Netflix do have a sustainable competitive advantage over Blockbuster because they have substantially lower costs for themselves and customers · Offer a wider

  12. "A Blockbuster Failure: How an Outdated Business Model Destroyed

    Chapter 11 Bankruptcy Case Studies. 11.

  13. Blockbuster LLC Failure: A Case Study Analysis

    Blockbuster started an online movie rental program in August 2004 to offer competition to traditional industry leader Netflix and keep engaged

  14. Netflix vs. Blockbuster Case Study

    Netflix vs. Blockbuster Case Study - Transferir como PDF ou ver online gratuitamente.