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Failures of Blockbuster

In: Business and Management

Submitted By jiniepie
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Blockbuster Incorporation Blockbuster was “the largest movie rental chain” in the Movies industry around the world (Biesada a). According to Rourke, Rothburd and Stansell (2006), Blockbuster mainly focused on “providing in-home rental, retail movie, and game entertainment”. It created 9,100 video stores and provided services to almost three million of customers in America and 24 other countries (p. 74). In 2010, the company filed for bankruptcy since it failed to adapt new technology in their strategies, and “was sold to satellite TV service provider DISH Network in 2011” (Biesada b). Blockbuster used to have so much power in the movie rental industry until Redbox and Netflix have come to the market. One of Porter’s five forces is needed to mention here is the buyer power. After Redbox and Netflix became really serious competitors of Blockbuster, buyer power is high. There are many options for buyers to choose from and they are in the “driver’s seat”. Since the price war has become so competitive, the price is an important factor for consumers’ decisions. Netflix offers a monthly payment of 7.99 dollars with unlimited choices of available movies and TV shows on demand while Blockbuster charged people more including the late fee and limited time of rentals. This is why the switching cost is low if customers change from Blockbuster to Netflix or other movie rental companies. The next one is supplier power. For Blockbuster’s industry, supplier power was high, as well. In this case, the studios have power in the market because it generates movies’ contents and provides to movie companies. The studios obviously give a threat of forward integration to Blockbuster. The company had to fight each other to have earlier movie from the studios, and the studios would only release a new movie to the one pays more. Since Blockbuster faced the high deficit of 314.3...

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