Blockbuster vs Netflix Essay

1039 Words Aug 29th, 2013 5 Pages
Blockbuster vs. Netflix

Introduction
Blockbuster opened in 1985 and in its “first 20 years of business, the movie rental giant opened 9.100 stores in 25 countries” (Laudon, 2007, p. 121). Netflix launched in 1998 using a new business model and became Blockbusters biggest threat. The paradigm shift in the rental industry from having to travel to a store and rent a movie to being able to have a movie delivered to your mailbox changed the way people think about media entertainment. The next shift will be having the technology to download movies and shows directly to a television.

Analysis
Blockbuster and Netflix are using two different information system strategies. Blockbuster, which is a traditional retail store with a physical
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“This is a unique strategy for Netflix. There’s so much more competition, this is something they’ve done to get closer to the customer, because without that, there’s really no connection a customer has to Netflix” (Hafner, 2007). Industry’s best practices in the retail business tends to make it more difficult for the consumer to get a human on the line but Netflix’s unique platform makes it more effective to have people in Oregon helping customers when there is a problem.

Key Issues
A key issue for both Netflix and Blockbuster is the introduction of new competitors. Video-on-demand and “Apple TV service, which allows subscribers to download movies via iTunes on to a set-top box - as well as hundreds of free video podcasts - and watch them on the television sets in their living rooms” (Doran, 2008) are beginning to launch services that let customers download movies from the comfort of their sofas.
The changing culture and industry are hindering Blockbuster’s role in the video rental industry. As more and more people are using technology, “the idea of a high street video rental chain becomes more of an anachronism every week,” (Doran, 2008). Another factor that has created problems for Blockbuster are the two systems it has currently. One is the physical stores that it has built up over the years and the other is the online services

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