Historical Analysis of Blockbuster
Blockbuster’s competitors featured a variety of companies, including Netflix, Amazon Instant Video, Redbox, Apple TV, Direct TV, and Comcast on Demand. Many of these organizations gained more traction than Blockbuster due to their increased ease of accessibility, which made it more convenient for their customers. Moreover, the organizations offered lower prices for the same services the company provides. Many of the other firms, for example, Netflix and Redbox, also understood and implemented the concept of instant access at a lower price as they adapted to the changing customer requirements. Nevertheless, the company maintained the upper hand for numerous years due to its 28-day rule, which involved offering new movie releases within the first month. This program was significantly comparable to Blockbuster’s competitors, meaning the firm maintained an upper rank in the industry.
The organization’s differentiating strategy centered around the convenience that it offered its customers who did not have to purchase every film that they wanted to watch. The company was the first rental company for most of the 1990s and early 2000s since it recognized the leading format for movies and rented the DVDs out to all clients. Additionally, the business also kept up with the continuous demand for a vast range of video games, thus, managing client trends as they came up. This efficient operating system featured rented movies from local stores from VCR-owners. A franchising scheme also accelerated the company’s growth, coupled with the aggressive acquisition of other chain stores in the same environment (Phillips and Ferdman 1). Through strategic management, Blockbuster focused on marketing, store design and branding, and product pricing to sustain their opening rates at new locations and an increase in clientele.
Blockbuster’s target clientele featured television, movie, and game lovers who seek to obtain the latest release of their favored entities. Phillips and Ferdman (1) claim that the customers did not have to incur the expense of purchasing the released material or finding the space to store a collection of DVDs. Alternatively, customers who wanted to re-watch a classic could do so without having to purchase the release and save it at home. The diverse nature of their offered products meant that Blockbuster could cater to almost every individual’s entertainment needs. The company’s advertisements were also geared towards individuals in numerous demographic categories ranging from young adults to senior citizens. In 2011, the firm also briefly appealed to disgruntled Netflix clients who were unhappy with the increase in subscription rates. During its efforts, the business chose to target each segmented group separately to make all their potential and existing customers happy.
According to Phillips and Ferdman (1), the company’s peak/plateau period occurred in 2004 when it comprised 9,000 stores all over the globe. The organization had built a strong brand with 100% recognition, which offered a customer-friendly encounter, including candy, popcorn, and other movie snacks. The organization had captured value by owning the copies of popular movies, which could be rented so many times that they exceeded the purchasing costs. New releases cost more than older versions, and each client was liable for any delays in returning the film. Phillips and Ferdman (1) argue that in 2000, Blockbuster collected over $800 million from late fees, which accounted for only 16% of its revenue. For the prior five years, Blockbuster had integrated policies that encouraged aggressive expansion. The company owned almost all of its outlets and dominated the video rental chain by buying nearly all of its previous significant competitors. However, after the launch of Netflix, the organization’s popularity plummeted, which led to a drastic transformation in company revenue.
Work Cited
Phillips, Matt, and Roberto A. Ferdman. “A Brief, Illustrated History of Blockbuster, Which is Closing the Last of Its US Stores.” Quartz, Quartz, 6 Nov. 2013, https://qz.com/144372/a-brief-illustrated-history-of-blockbuster-which-is-closing-the-last-of-its-us-stores/.