Netflix vs. Blockbuster

Blockbuster

Netflix

What do they make?- An outlet for consumers to watch unlimited movies and TV shows online at a given subscription cost. As of October 2011, their vision for the future of the company is as follows; Become the best global entertainment distribution service, license entertainment content around the world, create markets that are accessible to filmmakers, and help content creators around the world to find a global audience.

What are their sales from the last ten years?- Annual Revenue growth over the last 10 years is roughly 29.60%. The earnings before interest, taxes, depreciation, and amortization (EBITDA) is a steady 42.10% growth over a 10 year period.

What about profits?

- For this past fiscal year, Neflix’s revenue consisted of $1.07 billion, and their net income was around $29 million or 51 cents per share. They are currently worth $323.19m.

What innovations have they made?

- Netflix has introduced original shows that only air on their site. They revived Fox’s show Arrested Development, and host the hit series House of Cards. The launch of Arrested Development on the site boosted the company’s quarter 2 earnings, which usually falls compared to the other quarters.

How has the market changed? How have the companies changed? Were those plans successful?

Company Profile

Blockbuster

Netflix

- Understood emerging technology

-Reed Hastings- internet streaming

- delivered movies "cheaply and flawlessly"

- customer friendly

- giving away movies online for a low monthly fee

- "avoid the burden of retail stores"

- No late fees

- customers could rent unlimited amount of movies

- suggests movies/tv shows for the individual user- movie rating system

- Bank on working with Dish Network, the owner of Blockbuster, to try and compete with Netflix

- In order to have a successful plan for a profitable future, Blockbuster has to keep up with modern distribution

- The old way of Blockbuster’s distribution was a big part of their downfall.

-When technological advances made home computers and laptops the norm, people flocked to the convenience of Netflix

- Dish Network could bring Blockbuster great advertising and attention

- Blockbuster will have to analyze modern distribution of movies and realize what would be most convenient to people.

What do they make?-

- American based home movie and video game rental provider

- Originally provided through their video rental shops and later added DVD by mail, streaming, video on demand, and cinema theatre to keep up with the innovating movie providing market.

What are their sales from the last ten years?

- Blockbuster hit its sales peak in 2004 having more than 9,000 stores open worldwide

- From the period of 2003-2005 blockbuster lost 75% of their market value due to emerging competitors like Netflex. Their $500 million annual late fees dwindled as competitors introduced a no-late-fee policy.

- In 2006, Blockbuster was valued at $500 million

-By September of 2011, Blockbuster has suffered revenue losses of $1.1 billion and was valued at just $24 million - On September 23, 2010 Blockbuster filed for Chapter eleven bankruptcy protection due to challenging losses and being $900 million in dept.A

-After Blockbuster’s rapid decline in sales and revenue, as of August 2013 it now only has 350 stores open nationwide.

Works Cited

Supply and Demand

What about profits?-

- At it’s peak in 2004, Blockbuster recorded $5.9 billion in revenue

- By 2011, Blockbuster recorded revenue losses of $1.1 billion

- "Blockbuster is a victim of a changing industry," Maddux said. "When the automobile was invented, buggy manufacturers were challenged. Same thing here."

What innovations have they made?

- In 2004, online DVD subscription was introduced to Blockbuster’s website

- Dropped their late fee policy that generated so much revenue before to keep up with their competitor Netflix. - Blockbuster fell victim to modern innovation. Netflix became the future of the DVD rental viewing service while Blockbuster became a thing of the past.

Where the companies are today/five year plan

Blockbuster

Netflix

Work Cited:

"Blockbuster Bankruptcy: A Decade of Decline | Fast Company | Business Innovation."Fast Company. N.p., n.d. Web. 16 Oct. 2013. <http://www.fastcompany.com/1690654/blockbuster-bankruptcy-decade-

decline>.

"Case Analysis Report: "Blockbus vs. Netflix: Which Will Win Out?" Case Analysis Report Blockbus vs. Netflix Which Will Win Out? N.p., n.d. Web. 08 Oct. 2013.

Halal, Bill. "How NetFlix Beat Blockbuster: An Exemplar of Emerging Technologies."William E Halal RSS. N.p., n.d. Web. 15 Oct. 2013. <http://www.billhalal.com/?p=295>.

"How Netflix (and Blockbuster) Killed Blockbuster." US News RSS. N.p., n.d. Web. 08 Oct. 2013.

Farfan, Barbara. "NetFlix Movie Rentals Mission Statement - A Vision, A Promise and Nine Values." About.com Retail Industry. About.com, n.d. Web.

Sandoval, Greg. "Netflix Q2 2013 Earnings Show Solid Growth in Revenue, a Bit Light on Subscribers." The Verge. N.p., 22 July 2013. Web.

Washington Post. The Washington Post, 10 Oct. 2010. Web. 16 Oct. 2013. <http://www.washingtonpost.com/wp-dyn/content/article/2010/10/10/AR2010101003147.html>.

"Watch TV Shows & Movies Anytime, Anywhere.Only $7.99 a Month." Netflix. N.p., n.d. Web.

"10 Year Financial Data of Netflix, Inc. (nflx) - GuruFocus.com." 10 Year Financial Data of Netflix, Inc. (nflx) - GuruFocus.com. Guru Focus, n.d. Web.

- With the popular competition Netflix proposes to Blockbuster, the demand for going and renting movies at a physical Blockbuster store is almost nonexistent compared the abundance of people flocking to rent through Netflix

- This is easily proven just by looking at the rapid decline of Blockbuster store’s. More and more stores have closed down due to lack of productivity.

- People need movies without leaving their homes

- Anyone can sign up for netflix

-They can have it any time

- Makes the "supply" infinite, even though the "demand" is what matters

- If Netflix is doing well and a lot of people want it, they have plenty of demand and can afford to lift the price

- If not that many people want to use Netflix, they would lower the price to get more consumers

-

Blockbuster

Netflix

- tried to innovate, constantly late in the game

- have not brought any new innovations

- tried an online store but their prices were too high

- recession is what finally made them file for bankrupcy

- Netflix's rise in popularity is making cable companies grow weary

- Production of original Netflix content, Netflix is becoming less of a threat to traditional cable companies

- Netflix has began discussion to offer their services on cable TV boxes

- 5 Year Plan- vital course of action for the company

- Monday ,October 13th, the company’s stock jumped 7.7% on the optimism surrounding such deals

- This partnership will help Netflix reach more viewers as their company grows and awareness of the company grows as well