Premium Essay

Blockbuster Analysis

In: Business and Management

Submitted By Vkam
Words 7812
Pages 32
Blockbuster Analysis
Company Background Information The first Blockbuster store opened in 1985 in Dallas, Texas and has now expanded to operate 6,500 video rental stores (“Blockbuster Inc.,” n.d.). The chain began as a competitor to smaller video rental stores with a much wider selection in movie and eventually game rentals (“Blockbuster Inc.,” n.d.). Blockbuster quickly grew and opened stores across the nation along with its first stores in London and Canada in the late 1980s (“Blockbuster Inc.,” n.d.). In 1994 Viacom bought out Blockbuster after the company had acquired two music companies, Sound Warehouse and Music Plus, making it a very successful corporate giant in the video rental business (“Blockbuster Inc.,” n.d.). Although Blockbuster has faced many challenges with its “new ownership, increased competition, and a relatively soft market for videos,” Blockbuster has been able to remain in the movie rental industry (“Blockbuster Inc.,” n.d.). Despite the company’s struggles and dwindling cash flow in the late 1990s, Blockbuster decreased its rapid expansion, but slowly continued to open stores so that it featured a store close to every large neighborhood in the country (“Blockbuster Inc.,” n.d.).
Currently, Blockbuster is still facing struggles in the video rental industry but is working to compete against its newer main competitors, Netflix and Redbox (Merced, 2010). After filing for bankruptcy in late September of 2010, Blockbuster was purchased by Dish Network in hopes to save the company and reposition it as necessary (Merced, 2010). The company will apparently be closing a large number of stores as it works to create an online video-streaming outlet (Merced, 2010). The main advantage that Blockbuster has over its competitors that is keeping it afloat is that it is allowed to carry videos as soon as they are released as opposed to the...

Similar Documents

Premium Essay

Blockbuster Swot Analysis

...10-23-13 Blockbuster Video Swot Analysis Blockbuster Inc. is an American-based chain of VHS, DVD, Blu-ray, and video game rental stores currently under Chapter 11 bankruptcy. As of January 3, 2010, there were over 5000 Blockbuster stores in the U.S. and 17 countries worldwide. It is headquartered in the Renaissance Tower in Downtown Dallas, Texas.[1] Because of competition from other video rental companies like Netflix, Blockbuster has seen significant revenue losses. The company filed for bankruptcy on September 23, 2010. Strengths * Lead market share of online rentals * Low fixed costs * Worlds largest selection of DVDs * Fastest delivery time of any online DVD rental company with over 35 DCs * Service: over 90% of DVD's are received by customers within one day of ordering * Strong website (shopability, navigation, reviews) Weaknesses * Can't control most important expense: shipping expenses * Older demographic has a hard time understanding their concept * Watch instantly feature only allows a small selection of DVD's * Distribution time * presence in only DVD segment Opportunities * Pricing segmentation (i.e., different plans) * Online distribution * Other types of rentals (Video games, educational, institutional, etc) * Internationalization * Expanding to Video Game rental Threats Rising stamp costs, Other larger retailers launching into similar space (i.e., Wal-Mart, Online digital distribution iTunes, Napster Redbox, Blockbuster......

Words: 1576 - Pages: 7

Premium Essay

Blockbuster Case Analysis

...1148 – GEB6896 – Case Analysis “Blockbuster” Session 4 – Case Analysis Student: | Tarkan Koçoğlu | Date: | 02/21/2015 | Answer the following 10 questions, using the financial statement data from Blockbuster Entertainment Corporation. 1. What is Blockbuster's amortization timetable? Do you think it is appropriate? Based on Blockbuster Entertainment Corporation and Subsidiaries consolidated financial statements, the amortization period for intangible assets related to acquired businesses is 40 years on a straight-line basis. There are two areas that are against a 40 years amortization timetable: 1. 25 years term for company franchise agreements, which is less than the amortization period. 2. Typical high-tech industry assets have a short lifecycle and current practice, which is required by the SEC is around five to seven years and it needs to be related to the nature of business acquired; in this case video stores. 2. What would be the impact on Blockbuster's 1988 earnings per share if 5-year amortization were applied to this goodwill? The application of a 5-year amortization timetable impacts the amounts that would have to be recognized as the goodwill, which would decrease Blockbuster’s net income and hence their 1988 earnings per share. 3. What would have been the effect on earnings per share if Video Superstore purchases were not included in 1988 revenues? The exclusion of the Video Superstore revenues would have reduced the......

Words: 526 - Pages: 3

Premium Essay

Failure Analysis/Change Strategy: Blockbuster vs Netflix

...Failure Analysis/Change Strategy: Blockbuster vs Netflix LDR/531 Failure Analysis/Change Strategy: Blockbuster vs Netflix Organizational Behavior Theories The organizational behavior theories which explains Netflix’s success are two; decision-making and systems approaches. Netflix made the monumental decision to become a virtual dvd rental versus a brick and mortor provided a solution in the company’s goal and vision to be ahead of technological advances in the industry. Netflix took on the systems approach in understanding and measuring the company’s input and output processes. Netflix uses the systems approach to integrate and drive processes in developing adaptive capacities, driving innovation. Blockbusters organizational behavior theory focus was on scientific leadership. The company placed a great deal of focus on how to become more effective in the company’s brick and mortor business, redefining company objectives and direction. How employing this theory failed the company was the leadership decision to not pledge the same level or more focus on the click initiative which the company could not capture the needed momentum in becoming competitive with Netflix. Blockbuster could have had a more competitive edge over Netflix sustaining its presence in the industry if only the company could define better performance practices leveraging its click business over its brick and mortor presence. Role of the organization on the Fail/Success So how did an upstart......

Words: 1224 - Pages: 5

Premium Essay

Business Failure Analysis: Blockbuster

...Business Failure Analysis Many companies lose their businesses due to underestimating startup costs, depending on others, and hiring the wrong people. Then there are others that become successful from having an understanding of the customer, having charisma and perseverance as well as seeing failure as an opportunity to learn (Conrad, (n.d.). Blockbuster is known for their business failure back in 2010. The rental chain which was one of the largest video rental chains in the United States filed for bankruptcy. Around the same time Hollywood videos filed for bankruptcy. That signaled the end of store-based video rentals. Their failure was a result of not preparing for the change from store video rentals to streaming and online rentals. Both paid the price when their mistakes lead to a failed business. The best time for their business was in the 1980s and 1990s. In that time many people owned a videocassette recorder and renting from a store was the only alternative to a movie theater. Around this time video rental companies did not exist; only from small home owned stores. This allowed for David Cook and his wife Sandy to open their first Blockbuster rental company in Dallas, Texas. Because of his inexperience in the rental business he lost his funds due to an article written by Barron. At this point the company finished with $3.2 million in 1986. After this incident he ended up selling a majority position for $18 million to a group of investors. Wayne Huizenga was a......

Words: 1570 - Pages: 7

Premium Essay

Blockbuster Case Analysis

...sophisticated technologies in times, and these | | | | | | | | | | | | | | | technologies will be get outdated / obsolete very soon say 3-4 years. Hence it would be ideal to amortize the goodwill for 5-7 years. | | | | | | | | | | | | | | | It won't be appropriate to amortize for 40 years or less. |   |   |   |   |   |   |   | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2) What would be the impact on Blockbuster's 1988 earnings per share be if 5 year amortization were applied to this goodwill? | | | | | | | | | | | | | | | On April 20, Blockbuster announced an agreement to merge with its largest franchisee, Video Superstore. |   |   | | | | | | | | | | | | | | | Video Superstore was Blockbuster's largest customer for videotapes, accounting for 10% of such sales in 1988, 21% in 1987, and 48% in 1986. | | | | | | | | | | | | | | | If the 5-year amortization were applied instead of the 40-year timetable, |   |   |   | | | | | | | | | | | | | | | | | the company would have to recognize the goodwill in larger amounts, which would increase their tax liability. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |...

Words: 629 - Pages: 3

Premium Essay

Titanic

...When people think of the sinking of the Titanic, they will most likely think of the great Hollywood blockbuster movie that was more a love story then a historical movie with documentation of what happened on that cold night of April 14, 1912. Historians like to tell people what happened from the facts that are given to them, and eye witness accounts of what had happened on the ship the night it plunged to its deep dark grave. Everyone knows that the ship sank and that it is gone, but what they don't know is what had happened while people were being loaded into the lifeboats and what was occurring after the ship went down. Men played a big role in all of this; some were looked upon as cowards and others as heroes. There are different view points of what the roles of men were. Not only during the night the Titanic went down, but also the roles they played in society in 1912. For everyone who survived the sinking, should be thankful and happy because more then half the people on the ship that night passed away. The male survivors however had to justify how they survived, because the rule of the sea was women and children got on the life boats first. The men aboard the Titanic had responsibilities after the ship collided with an iceberg. They were looked at as if they knew they weren't going to live, but they had to save the women and children who were aboard the Titanic. As for the men who just wanted to save their own lives and didn't care about anyone else, these men......

Words: 363 - Pages: 2

Free Essay

Test

...I. Strategic Profile and Case Analysis Purpose Blockbuster L.L.C., as it is known today, was opened in October of 1985 before access of the internet had become hugely successful (Blockbuster, 2013). By the end of the century, the video rental industry was seeing signs of extinction. In 2004, Blockbuster offered its first online DVD rental, and attempted to offer its own streaming by purchasing Movielink (Hitt, Ireland, & Hoskisson, 2011). Per this case analysis, the Movielink strategy failed to attract the immediate cash-flow Blockbuster had expected which resulted in bankruptcy. By April of 2011, Dish Network, with14 million subscribers, acquired Blockbuster for $320 million in a court auction (Blockbuster, 2013). Products and services include; Blockbuster, Blockbuster Video, Blockbuster online, Blockbuster Night, Blockbuster GiftCard’s, Blockbuster Game Pass, Blockbuster Movie Pass, Blockbuster Rewards and in 2006, the Blockbuster Total Access Program. The strategy of this program was based on returning the disc through a prepaid envelope or exchange at a retail location. The retail stores offer rewards and special promotions for visiting retail stores. Blockbuster Movie Pass is tied to a Dish subscription; “the company can offer content to which it already has the rights to through program deals for its satellite TV business” (Fritz, 2011). The purpose of this case study is to analyze the current internal and external factors of the evolving home entertainment......

Words: 515 - Pages: 3

Premium Essay

Blockbuster Acquires Movielink

...Blockbuster Acquires Movielink: A Growth Strategy? Joao Marcos da Silveira Terra 6/7/2012 Wayland Baptist University BUAD5312 – Strategic Management Summer VC02 Executive Summary 2 Introduction 3 Business and Financial Metrics 5 Business Segments 6 In Store 6 By Mail 6 Vending 6 Download to PC 6 Trends and Forces 7 Cyclicality of Rental Sector 7 The Future of Media and BBI´s Brick-and-Mortar Model 7 Saturation in Kiosk Distribution Market 7 Competition 8 In-Store Rentals and Sales 9 Movie Gallery 9 Online Rentals 10 Netflix 10 Amazon 11 Apple 11 Online Viewing 11 SWOT Analysis 12 Strengths 12 Weaknesses 12 Opportunities 12 Threats 13 Summary 13 Executive Summary Movielink is the leading movie download service offering U.S customers an extensive selection of new and classic movies, foreign films, TV shows and other hard-to-find content. It is a web-based video on demand (VOD) and electronic sell-through (EST) service offering entertainment for rental or purchase. It was created in November 2002, as a joint venture ($100 million investment) of most of the big studios – Metro-Goldwyn-Mayer Studios, Paramount Pictures, Sony Pictures Entertainment, Universal Studios, Warner Bros., and others on a non-exclusive basis. While it was only available to users in the United States, it was the first company in the world to offer legally downloadable movies from major studios. Today, Movielink is a wholly-owned subsidiary......

Words: 3880 - Pages: 16

Free Essay

Blockbuster

...* Should Blockbuster have known that dramatic change to their Business Plans would be necessary? Blockbuster didn’t have a technology problem, because digital distribution was minimal, but rather a customer problem. It gave customers no reason to visit stores in lieu of the latest and greatest hit. (www.forbes.com/.../the-internet-didnt-kill-blockbuster-the-compa... Forbes Nov 8, 2013) * When should they have sensed or perceived a change to their business would be necessary? Lack of ease of accessibility and higher prices in connection to other video rental outlets. Blockbusters main competitors such as Netflix, Redbox, and many On Demand services seem to have a much better grasp of the importance of instant access at a lower price. (Blockbuster Inc. (SWOT analysis). http://www.yousigma.com/comparativeanalysis/blockbusterinc.html) * When should they have innovated or changed their plans to comprehend the perceived changes? Blockbuster’s biggest mistakes were that it failed to modernize its business strategy to include a multi-channel avenue for its customers to decide how they wanted to rent movies. Movie renters were and still are moving away from the traditional format of renting movies. Failure to adapt to changing consumer behavior and new technology helped companies like Netflix and Redbox gain considerable ground in the video rental industry. * What should they have considered when looking at their Porter’s Model? What do you think kept them from......

Words: 980 - Pages: 4

Premium Essay

Leadership Review

...Team B - Business Failure Analysis Jeffery Rhymes, Terri Zubrod, Abel Dominguez, Eric Paniagua, Su Rodriguez LDR/531 January 11, 2015 Professor David Warren Introduction The mission statement for Redbox and Blockbuster both have focused on providing customer satisfaction with media entertainment that includes movies and games. In the years prior to the inception of Redbox in 2002, Blockbuster offered customers a value price entertainment experience, combining the broad product depth of a specialty retailer with local neighborhood convenience (Poggi, 2010). Blockbuster Inc. was a global business with 8,000 stores and offered movie and game rentals for home use by consumers (Poggi, 2010). Since 1992, Outerwall LLC had looking for ways to provide value, convenience and simplicity to consumers and retailers with the kiosk brands best known, Coinstar a leader in money services and Redbox, the best value in home entertainment. Outerwall LLC has a network of more than 66,000 kiosks and will be re-imagining new retail solutions to fit everyday consumer needs for the present and the future (Outerwall.com, 2015). Blockbuster – Success and Failure Blockbuster’s vision Statement: "At Blockbuster, diversity means valuing differences. It's a corporate value that must be continually developed, embraced and incorporated into the way we do business" (Poggi, 2010). Blockbuster was a video rental store that started in Dallas, Texas the first store was opened in October, 1985 and......

Words: 2155 - Pages: 9

Premium Essay

Netflix Case Study

...In order to assess the attractiveness of the video rental business, the industry necessitates an evaluation through the analytical lens of the five contending forces of competition. First, there is a significantly low threat of new entrants mainly due to high barriers of entry and economies of scale. For example, there are substantial capital requirements in construction of fixed facilities in strategic locations in order to distribute DVDs; there are also unrecoverable expenditures in up-front R&D and advertising costs, both of which are emphasized in order to differentiate service and build brand equity. There are also government policies to reinforce the barrier. For example, in addition to its red envelops, Netflix has patents to protect essential characteristics of its business model such as its “Max Out” and “Max Turns” approaches. This creates cost disadvantages through a greater learning curve for new entrants, especially when competing against algorithmic programs such as Netflix’s CineMatch, which becomes more effective at recommending movies as more subscribers provide feedback. Another governmental restriction is seen specifically with Amazon.com, whereby distribution channels are choked out in the US unless Amazon sacrifices its competitive advantage of avoiding sales tax. The second force of competition, the bargaining power of the supplier, is assessed as moderate to high. The movie studios and independent movie distributors provide the rights to......

Words: 1295 - Pages: 6

Premium Essay

Video Concepts, Inc

...Executive Summary Whether to remain in the business with increase in Rental to $ 2.49 whereby increasing the profitability of the business due to stiff competition from the Blockbuster or to sell it off or hire a manager for the shop and start doing job at some other place, has to be evaluated on the basic objectives of economics of the firm. The main objective of the firm is to maximize the profit and thereby maximize the return on investment. In order to attain this at the same market share it is suggested to sell the business to the competitors, if they are interested. Word Counts: 102 Table of Content SITUATION ANALYSIS | 2 | THE PROBLEM STATEMENT | 5 | OPTIONS | 5 | CRITERIA FOR EVALUATION | 6 | EVALUATION OF OPTIONS | 7 | RECOMMENDATIONS | 9 | ACTION PLAN | 9 | Situation Analysis Outlook of Video Rental business in Lexington In Research conducted by the Chad Rowan for the business of Video Rentals when it was relatively a new business, it was found that it is profitable enough to earn more than the average rate of return on investments. So it was possible to start with the store of 200 square feet with the 500 video tape library in Lexington, North Carolina, a town of 28,000 people. Due to innovative ideas and marketing strategies, it was possible to generate the sales volume of $64,000 in the first year itself which was further invested in the business to buy the video tapes. Just because the expansion and to cope with the demand of the......

Words: 1313 - Pages: 6

Free Essay

Netflix’s Underperformance Analysis

...Netflix’s Underperformance Analysis | BUS 478 FINAL GROUP PROJECT | Instructor: Anthony Chan | Group MemberJackSandraJing(Ivy) Cong 301087222Gavin | Table of Contents EXECUTIVE SUMMARY 1 BACKGROUND INFORMATION 3 CORE ISSUES 5 Price Pressures 5 Competition 5 International Expansion 6 ANALYSIS 6 Industry Analysis 6 Business Model 8 Company Analysis 9 Competitor Analysis 11 Amazon 11 Blockbuster 12 Redbox 13 ALTERNATIVES 13 Additions of Subscription Fee Package 14 Introduction of Netflix' Pay-For TV Channels 15 Domestic Elimination of DVD-mail-in Services in 16 Strategic Partnerships 17 International Expansion 19 Market Strategy 20 RECOMMENDATION 22 CONCLUSION 26 REFERENCES 26 EXECUTIVE SUMMARY Netflix is the world’s leading subscription service provider, offering its members access to an extravagant collection of TV shows and movies. Initially, the company offered its subscribers a low price, single monthly plan, consisting of both the unlimited Internet video streaming service and a DVD-mail-in service. Subscribers could “watch TV shows and movies anytime, anywhere.” In July 2011, Netflix eliminated the combined plan and separated the two services into their own monthly plans. If subscribers wanted to continue receiving both services, they were obliged to sign up for both the services separately, Consequently, the resulting price increase of the new “combined” plan significantly increased subscription......

Words: 6770 - Pages: 28

Free Essay

Bus 640 Final

...Blockbuster’s lack of blockbuster Frankie L. Jones February 11, 2013 BUS: 642 Thomas Hennefer Abstract Blockbuster video, the once dominant force behind consumers’ movie rental needs has suffered a significant loss in revenue to the rise of RedBox and Netflix. The competitive advantage offered by the two companies has tapped into Blockbuster’s market and cause a lack of blockbuster for the company. Since 2009 the company has continue to reported decreased revenue and profits against its competitors. In 2010 the company filed bankruptcy and has since then implemented new services and products similar to its competitors, however, customer’s still prefer RedBox and/or Netflix. Once upon a time on a Friday night after work, you were looking to go home, relax, and watch a good movie. You come up on a big blue sign with yellow lettering, and think, “I’LL RUN TO BLOCKBUSTER!” Today, we’re looking for the nearest RedBox, or browsing Netflix for a good flick. There was time when families would take a trip to Blockbuster, order a pizza, and make it a movie night. Today, people have the luxury of not even leaving the house to find a good movie; thanks to Netflix. After a routine run to Wal-Mart, Walgreens, or Kroger’s it has become second nature to browse the RedBox, especially since the cost is only $1. But what has happened to good ol’ Blockbuster? Over the past few years Blockbuster video locations have steadily declined. Blockbuster, the once powerful source for......

Words: 2466 - Pages: 10

Premium Essay

Case Study 4

...booms we have seen in technology. The cost of HDTV’s has been dropping and has now become more practical for each person to obtain. This leads to the desire to view movies and shows on the big nice screen as opposed to the smaller devices we used to. The movie rental fee as well as the late charges always gave people pause but were not unsurpassable boundaries for consumers who wanted the movie viewing experience without making a purchase. The growth of the movie rental industry via an online presence I feel will continue to grow as more and more people become accustomed to the idea of owning or viewing things through a purely digital means. With a growth in any industry comes the inevitable competitiveness that we see between Netflix and Blockbuster. I would not be surprised to see Redbox throw their hat into the ring with online offerings in the future. 5) What is Netflix’s strategy? Which of the five generic competitive strategies discussed in Chapter 5 most closely fit the competitive approaches that Netflix is taking? What type of competitive advantage is Netflix trying to achieve? Netflix’s strategy was a “six-pronged” one: 1. Providing comprehensive selection of movie DVDs 2. Providing an easy way to choose movies 3. Providing a fast delivery of selections 4. Having no due dates for return 5. A convenient drop-it-in-the-mail return procedure 6. Aggressive marketing to attract subscribers and build widespread awareness of the Netflix brand and......

Words: 1488 - Pages: 6