Question #1:
What is Blockbuster's business model? Blockbuster is one of the largest, well known, movie retail chains in the world. Their business model is one composed of heavy marketing and advertising to the public along with strategically placed retail stores to cater to customers seeking video rentals and/or purchases. They have been around since 1985 and were able to thrive throughout the years by offering their customers a recognizable brand to rent and buy movies from.
How successful has it been? Based on their market share in the rental video industry of 40%, it is safe to conclude that their business model has led them to success. By 2004, Blockbuster generated yearly revenues of $7-9 billion from video rental business and $16 billion from video sales.
Question #4:
How successful is Netflix and its business model? Netflix developed a unique business model in 1998 which allowed customers to rent movies through an online store without the risk of late fees. This provides the customer with unparalleled convenience which other video rental stores were not providing at the time.
Netflix is enjoying success from its online video rental business and has seen steady growth in their yearly revenues. In 1998, Netflix generated $522 million ; in 2005 they generated $1 billion and they are projected to generate $3 billion in sales in 2009. Apparently, their entry into the video rental industry has been well-received.
Question #5:
Do you think that Blockbuster or Netflix will succeed in the future? Explain your answer.
Given today's shaky economic landscape and the emergence of convenience through technology, it is difficult to predict the success of any company, but I strongly believe that Netflix holds a better chance of succeeding than does Blockbuster. Although, Blockbuster has the added advantage of having retail stores placed in numerous locations, they carry a large burden of maintaining a large workforce and mounting capital long/term liabilities such as rent, mortgages, etc. Nevertheless, I doubt that either company is going to go bankrupt anytime soon and that they will remain as competetive forces in the movie rental industry. I see both companies adapting to, if not setting, future trends in the industry.
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In response to your question 5 I totally agree. Especially with the use of netflix instant queue ability you can watch movies instantly. Before that was introduced that would have been the only real knock on netflix. But now they have a much brighter future than blockbuster!
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