Netflix vs Blockbuster
The competition in the movie rental industry has been so frighteningly fierce for the precedent few years that it has been termed by many opinion leaders as unhealthy business wise. Netflix and Blockbuster are actually the current leaders in the booming rental movie industry and by extension and to that effect the major rivals. The Blockbuster has been in the business for long, in fact, since 1985 on the other hand, Netflix only entered its 12th existence year this year. Actually the founder, Reed Hastings did establish Netflix in the year 1997. Nevertheless, at the moment, Netflix appears to lead the market in terms of market acquisition. Netflix which is largely viewed as a newcomer does have around 9.6 million online customers who have subscribed to their services. In comparison, Blockbuster has just slightly more than 3 million online subscribers despite its longer years of existence. In the United States of America, there are other online movie rental companies which include companies such as Intelliflix, Redbox and GameZnFlix. However, GameZnFlix and Redbox do not serve the locals most of the time. Instead they more often than not target Asian markets. Additionally, Wal-Mart also did attempt to spawn profits in the movie rental industry but sooner was outrun in the business by Netflix. These days Wal-Mart merely possesses an advertising contract with Netflix in the industry. Several forces do propel the movie rental industry especially with regard to the performance of one of the market leaders, the Netflix, and they include such forces as i) Market Features-The industry was in actual market maturity stage previous to the application and utilization of the Internet technology as a medium of distribution. Netflix did capitalize and subsequently utilized the Internet sophistication to gain huge market share by offering customers and members with direct movie download accessibility and undeviating shipments to their home. As earlier stated, Netflix was and for that matter still remain a market leader that realized the first potential of the market which did exist for Internet movie rentals.
Block buster on its part is only involved in online rentals and retail operations such as GameRush stores and Blockbuster Express (Schermerhon, 2011, p. 27). Given the above status of services offered by both companies it is clear that Netflix has diversified its sources of revenue more than Blockbuster. Unlike Netflix whose ownership has been steady, Blockbuster has had to change ownership a couple of times. The company stock’s tumble in 1994 led to a takeover by Viacom. Blockbuster however de-merged from Viacom in 2004 and immediately introduced the Game Pass nationally. At the same time, the company introduced Blockbuster Online, an online DVD subscription. The takeover and apparent boardroom fights have had an adverse effect on Blockbuster, something its competitor Netflix has been successful in avoiding. Netflix’s cautious approach to expansion and successful avoidance of the business twists that come along with takeovers and change of leadership are evident in their financial results (Hill & Gareth, 2008, p.50). At the same time, the effect of the above trends is clear in the financial performance of Blockbuster. Near bankruptcy has led to the closure of numerous stores in Europe and a chapter 11 bankruptcy protection filing saw Blockbuster purchased by Dish Network. The company sought protection due to apparent failure to service its $900 million debt as well as mounting losses. Management by the new owners has seen the closure of hundreds of stores in its areas of operation including a wind up of the Canadian unit.
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