Blockbuster Case Essay

1624 Words Jan 9th, 2014 7 Pages
Movie Rental Industry: Blockbuster Case
David Cook founded Blockbuster video in 1985, opening the first store in Dallas Texas and has grown to become the world's number one video chain. Mr. Cook took the idea of video rental and improved it by creating the video superstore concept. Many family-owned video rental stores could not compete against Blockbuster' stores. Blockbuster stores were highly visible stand-alone structures that appealed to customers. Blockbuster His stores had a wider selection of videos and offered longer hours of operation.
He focused on creating a family image for his stores by including a children's section and excluding adult movies. He also made it possible for busy people and people with children the
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In fact, it became even more critical for any new venture to pay off-because the money for such investments was dwindling (Smiley, 2010).
Where did Blockbuster go wrong? Blockbuster's fall from the top highlights a key fact about change: The time to change is when things are good, not when they are bad. Mistakes can be absorbed and more easily corrected when the ledger sheet is in the black and not the red. At one time Blockbuster had a large following of people and could easily have used that following to test new ideas and build new markets. But when times are good, people often get comfortable. Innovation suffers. Blockbuster failed to adequately respond to changes in distribution of content, as services like video on demand, Netflix and Game Fly (essentially Netflix for video games) delivered movies, television shows or games straight to the customer's home, phone, video game system or computer. At the same time, Redbox brought movie rentals out of the video store and into just about any grocery or big-box location. The end result: Blockbuster declared bankruptcy in September, with $900 million in debt and no way to pay for it. At the time, the store had 3,300 stores; that number has since been reduced by more than 1,000, including the loss of many Lehigh Valley franchises (Holguin, n.d.). One of the most attractive parts of Netflix's business model was the low cost subscription service. This

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