Netflix vs Blockbuster Hbs Case Stufy

1. When evaluating strain finales for blockbuster, should be divide into 2 separate closings could have been made, depending on the period in the discharge case. At the starting period of the text, 1997-2002, Blockbuster is the undisputed market loss leader (2, 1) of a giant, fragmented and steady industry, it has superior access to suppliers (brought the hottest titles faster than anyone in the industry) , this was its core business.Blockbuster had a bulky c overage on a national level of stick ins (2, 2) , r distributivelying al roughly 70% of the U. S community at bottom a poor drive length, and were recognized as the most powerful brand in the industry by 90% of the population. what is more it sustained a growing rate of sales growth deep down stores within that period along with a stable income from new-fangled fees (3,1). In light of these facts, at this period going long for the Blockbuster stock is a very confident and solid decision.However the tide is chang ing at 2002 following the rise of Netflix, Blockbuster strategy to ignore and taunt at the treat instead of tackling it (9, 4), the failure to understand the Netflix is giving customers feature which are lacking in Blockbusters stores (Recommendation, no late fees, a wider selection of movies) show of a connection which lacks the innovation to example the new treat and the ability to understand the new customer strain (Movies as frolic rather than extra occasion).The late response in entering the online rental business caused severe pecuniary losses to the company due to stiff learning curve (stock, suppliers), marketing expenses, price contend and giving up on late fees (10,1), either along term keeping its conventional cost structure, with an expensive 10 people per store module (2,2) . Therefore I would hold the stock at short starting 2002 , Blockbuster just doesnt seem like its reason the new market, instead of being innovative they are fighting a losing battle and react lately instead of initiating in the areas where Netflix lacks.However for Netflix the decision is quite the oppo situate, at its starting era we would play short on the stock. The facts are that Netflix is entering a super fragmented market (2,1) dapple betting exclusively on a new format videodisc (3,2) using an innovative distribution technique which have never been baskd in full scale (3,4) and without a proven track of handling a huge inventory, the company did struggle at these years.However starting 2000 we would sneak the decision on the stock. Netflix highly innovative actions such as changing the pricing stumper (5,1) , developing an highly advanced good word outline (5,4) and allowing for user rating have highly differentiated the companys good at the exact points in which Blockbusters service were lacking.Furthermore, the collaboration with study studios (6,1) and with the USPS (8,1) have mitigated Netflixs soft spots and allowed for the service to impr ove prominently and the have a huge growth potential (opening the integral variety of movies for rent not just hits , reaching 90% of its subscribers in a single day), the innovation process also shows in financial status, Netflix is bring to passing at great annual rates starting 2000, of doubling its subscribers number , maintaining a positive cash flow and increasing its revenues (Fig1, Fig2), all while keeping its core business and expertise (no restructuring costs) .For conclusion, Netflixs highly innovative approach which is a reoccurring theme throughout the case, along with great financial performance and operational expertise (7, 3) makes a long decision in Netflix the obvious choice. 2. At first Blockbuster supplied a wide base of consumers primarily with hit and new movies (2, 4), in addition Blockbuster offered a limited amount of advice (2, 5) from the staff present at each store.The costumers were supposed to rent the movie for a movie night and give it as quickl y as possible. Netflix initially set up to perform the same task Deliver costumers with the movies they were looking for before logging of the site and in addition supply them with some highlighted titles with recommendation from limited staff weekly, as with Blockbuster , customers were also supposed to return the movie within a specific due date or be charged.However, Netflix evolved over the years and started supplying costumers with enhanced features not offered by blockbuster. The proprietary recommendation system developed (5,3) by Netflix allowed to use movies as a taste based product, meaning that Netflix started offering a recommendation service to its subscribers for movies they force like, instead of choosing movies ahead or choosing from shelves without knowing too much.Furthermore the recommendation system, along with the user based rating system (6, 3) allowed for the costumers to receive a substantial amount of advice regarding movie choices. Another evolvement occu rred when Netflix adopted the new model (unlimited rentals, 3 movies queue), the model actually caused customers to related to movies as form of entertainment and therefore Netflix acted as entertainment provider (4, 1) instead of a special event when using Blockbusters conventional video service