Scribd Logo
Upload

Welcome to Scribd!

  • 3 views

    Blockbuster - Business Failure

    Uploaded by

    sumerajawad2007

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Blockbuster - Business Failure

    Uploaded by

    sumerajawad2007
    3 views2 pages

    Original Title

    Blockbuster - Business failure

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    3 views2 pages

    Blockbuster - Business Failure

    Uploaded by

    sumerajawad2007

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 2

    Blockbuster – it is startling how a monopoly in the entertainment

    industry that made an annual revenue of more than $6 billion,


    employed more than 80 000 employees during its height of success and
    once, used to open a store every 24 hours, collapsed in one day. It is
    commonly believed that the decline of Blockbuster is a result of failing
    to its advanced competitor Netflix, though this is not entirely accurate.
    During the height of its popularity, Blockbuster expanded exponentially.
    This rapid expansion resulted in extremely high costs, which led to a
    debt of more than $1 billion. The company also used to charge a “late
    fee” to customers for late payment of rented DVDs, from which the
    company made a revenue of more than $800 million alone – this is
    what customers hated most about Blockbuster, but they were forced to
    pay it as it was the monopoly of the industry. Despite angry customers,
    Blockbuster continued to make money and saw it as a trade-off
    between happy customers and happy shareholders. The shareholders
    won. Before the arrival of Netflix in the market, Blockbuster faced
    threats from technological advancement which disrupted its business
    model, as television channels like HBO and TV on demand made
    watching a movie easier and more convenient for customers, as they
    could watch shows with just a click of a button. Despite all these factors
    which would later combine to cause the downfall of the company, the
    owners remained overconfident and decided to continue believing that
    it would remain successful, no matter what.
    However, this all changed with the arrival of Netflix in the industry. At
    first, it was just a DVD-mailing company that was in no comparison to
    Blockbuster, and was in great loss. The company had lost so much
    money in its early years, that by the year 2000, it decided to approach
    Blockbuster and offered to sell Netflix for $50 million. John Antioco, the
    owner of Blockbuster left the room laughing, thinking it was a joke and
    turned down the offer – so, Netflix continued on its way to
    advancement. It received increasing support from customers day by
    day, who were fed up of the late fees of Blockbuster and so, Netflix
    developed an online service of delivery of movies and DVDs without
    having to pay any late fees. Customers, therefore found it much more
    convenient to use Netflix. In response, Blockbuster tried to develop an
    online competitor service and succeeded to crumple Netflix, until, it
    spent over 200 million (while in debt of more than $1 billion) on the
    development of such services which the shareholders were not happy
    about – consequently, it collapsed. Therefore, it was not because of the
    lack of innovation that caused Blockbuster to fail, but it was the lack of
    ability to keep up with the changing demands of their customers,
    underestimating their rivals and inaccurately managing their finances
    and debts, which ultimately lead to its deterioration.
    As the cofounder of Netflix, Reed Hastings said, “If it hadn’t been for
    their debt, they could’ve killed us”.

    Help taken from:


    - https://www.youtube.com/watch?v=s0qcG-g_Jk0
    - https://www.youtube.com/watch?v=ylVy8YvzPuY

    You might also like