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Blockbuster: Past and Future Strategies of A Video Rental Giant

Blockbuster was once the dominant video rental company but has struggled against competition from Netflix and online streaming. It has tried various strategies like creating its own mail rental and streaming services, eliminating late fees, and adding in-store concessions, but has had trouble catching up with Netflix's innovations and reputation. Going forward, Blockbuster needs to become more technologically savvy and appeal to younger internet-focused consumers if it wants to compete with Netflix and remain relevant in the changing video rental market.

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40 views21 pages

Blockbuster: Past and Future Strategies of A Video Rental Giant

Blockbuster was once the dominant video rental company but has struggled against competition from Netflix and online streaming. It has tried various strategies like creating its own mail rental and streaming services, eliminating late fees, and adding in-store concessions, but has had trouble catching up with Netflix's innovations and reputation. Going forward, Blockbuster needs to become more technologically savvy and appeal to younger internet-focused consumers if it wants to compete with Netflix and remain relevant in the changing video rental market.

Uploaded by

ejholt
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Blockbuster

Past and Future Strategies of a


Video Rental Giant
Historical Background
 Original owner David Cook opened
first store in October 1985 in
Dallas, Texas
 Cook sought out investors in mid
1980’s to expand business
 Company went public in 1987
 Chicago businessman Wayne
Huizenga owned 60% of the
company’s shares
Historical Background
 Blockbuster expanded by acquiring
other local video rental chains
 February 1987 bought Video to Go
 Purchased Erol’s Video Club in

1991
 Purchased British Company Ritz

Video of mid-1990’s
Historical Background
 Huizenga sold Blockbuster to Viacom in 1994 for
$8.4 billion
February 1987, August 2004,
Blockbuster goes Blockbuster Online
public Introduced

Early 1990's November 1, 2006


October 19, 1998 Netflix is
Acquires U.K.'s Rizv Blockbuster Total
1985 Opened established
Video Access Introduced
first store

1985 1990 1995 2000 2005 2010

August 25, 1986 1994, Viacom Janurary 1, 2005


Opened first purchases Elimination of Late Fees
franschise store Blockbuster
in San Antonio

June 1987
Blockbuster acquires
Movies to Go
Competitive Environment

 Chief competitors in current market


 Movie Gallery
 Hastings Entertainment

 Netflix
Competitive Environment

 Blockbuster has launched


programs such as Blockbuster
Total Access to compete with
Netflix
 Competition in the market has
become very fierce because of the
variety of video formats available
to consumers for home viewing
Competitive Environment

 The traditional video store now


makes up a much smaller
percentage of total video rental
market share
 Competitors like Netflix offer rental
by mail subscriptions and online
video downloads
 Blockbuster also competes with
cable and satellite companies’ pay-
per-view offerings
Marketing Strategies and
Tactics
 Blockbuster attempting to respond
to changes in video rental industry
by adding services
 Relying on its well known brand
name to generate revenue
 Attempting to set itself apart from
rest of industry
Marketing Strategies and
Tactics
 1998 Blockbuster sponsored the
American Film Institutes 100 Years
of Film museum tour
 Blockbuster has attempted to use
its rental store locations as venues
for movie promotion
 2002 “Rent it, like it, buy it”
promotion
Marketing Strategies and
Tactics
 2004 “Flip Card” promotion which
enabled card holders unlimited
video game rentals for $49.99
 2005 Blockbuster eliminated late
fees.
Marketing Strategies and
Tactics
 2006 began the era of head-to-
head competition with Netflix
 Blockbuster began the year by
offering an extended rental to
customers who brought in the flap
of a Netflix DVD rental envelope
 November 2006 Blockbuster
launched Blockbuster Total
Access, an online subscription
based business similar to Netflix
Human Resource
Strategies
 Blockbuster employs 67,300
employees worldwide
 Just over 50% of Blockbuster’s
employees are part-time workers
 Tries to create a culture of fun,
teamwork and exceptional
customer service
Human Resource
Strategies
 Company hires roughly 1,800
seasonal employees annually
during the busy holiday season in
November and December
 Blockbuster recruits many full-time
and management employees from
its large pool of part-time labor
Human Resource
Strategies
 Management structure

Regional Manager
District Manager
Store Manager
Sales Manager
Shift Leader
Customer Service Representative
Circumstances Leading to
Change
 Introduction of Netflix into the video
rental market in 1998
 Customers lost to Netflix
 Revenues lost to Netflix
Course of Action
 Creation of Blockbuster by mail
and Blockbuster Total Access were
created to win back customers lost
to Netflix
 Netflix signed up 3 million
subscribers by 2005
 Blockbuster offers a pricing
schedule similar to Netflix that
allows subscribers to pick a rental
plan that works best from them
Course of Action
 Reinvented store business by
adding consumables such as
popcorn, candy and soda to the
checkout lanes
 Blockbuster eliminated a large
source of profitable revenue – late
fees – to stay competitive with
Netflix and others.
Course of Action
 Online video rental business
projected to grow by 43% in 2007
 Blockbuster is devoting more
resources toward the online rental
business
Future Global Marketing
Consequences
 Blockbuster playing catch-up with
the following Netflix marketing
innovations
 Movies by mail
 Movies and TV episodes viewable

on a PC
 Faster turn around of rentals

 Larger online rental catalog


Future Global Marketing
Consequences
 Blockbuster must become more
savvy with internet commerce if it
is to stay competitive with Netflix
 Blockbuster has earned a bad
reputation among Netflix loyalists
on the web who tend to be very
internet savvy consumers
 Blockbuster attempting to learn
from Netflix early mistakes
Future Global Marketing
Consequences
 Blockbuster must create marketing
innovations that appeal to the
younger generation of technology-
savvy consumers
 This is the only way the company
will be able to emerge from
Netflix’s shadow and become a
major market force again

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