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Blockbuster Inc: a Strategy and Competitive Analysis

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Blockbuster Inc: a Strategy and Competitive Analysis
Blockbuster Inc: A Strategy and Competitive Analysis

April 27, 2007

Table of Contents

Introduction 3

Blockbuster History 4

Competition and the State of the Rental Industry 5

The Strategy to Remain Competitive 6

Economic Factors 10

Supply Chain Strategy 11

Sales, Service and Promotion Strategy 13

Conclusion 16

Appendix 17
Exhibit 1 Blockbuster SWOT Analysis 17
Exhibit 2 17
Blockbuster Video Facts 17
Hollywood Video Facts 17
Netflix Facts 17
Exhibit 3 U.S. Home Video Industry: Historical Statistics………………….……19

References………………………………………………………………………………20

Introduction
Blockbuster Video is facing many challenges in trying to remain competitive in the video rental industry. Besides strong competition from Hollywood Video and Netflix, consumers are migrating to new choices, including video-on-demand and DIVX (Digital Video Express), an alternative rental option that allows consumers to eventually own the movie. This report will describe Blockbuster’s strategy and will compare Blockbuster to its main competitors, Hollywood Video and Netflix (see exhibit 2). The research and analysis will attempt to answer the question of whether Blockbuster can survive in the fast changing video rental industry.

A competitive comparison will be done between Blockbuster Video, Hollywood Video and Netflix, with regards to the state of the rental industry, strategy to remain competitive, economic factors, innovation and development strategies, the supply chain strategy and the sales, service and promotion strategy.

Blockbuster History
The first Blockbuster Video store opened on October 19, 1985 in Dallas, Texas. David P. Cook, the founder, with the help of CEO, Wayne Huizenga, grew the business from a $7 million business with 19 stores to a $4 billion global enterprise with more than 3,700 stores in 11 countries. In 1994, Blockbuster sold to Viacom for $8.4 billion


References: http://premium.hoovers.com/subscribe/co/history.xhtml?ID=ffffrftrxxfcksxkct Wall Street Journal (“New Signs of Strain for Blockbuster”), September 19, 2005 p. B5 http://www.heartland.org/Article.cfm?artId=17903 http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2000/09/20/BU88546.DTL http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=7215981&site=ehost-live">Blockbuster Rushing Into Gaming Retail Realm http://online.wsj.com/public/article/0,,SB117439398275442673-AqwDhB5Yar44eBWiO0htH_vSSPY_20080320.html?mod=rss_Whos_News Blockbuster Inc. & Technological Substitution (A):Achieving Dominance in the Video Rental Industry, May 4, 2004, Case# 9-704-404 http://jobfunctions.bnet.com/casestudy.aspx?docid=263636 “Blockbuster Repackages Its Supply Chain to Compete With Growing Retail Market”
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