Management Challenges of Blockbuster

Management Challenges of Blockbuster

Introduction

Blockbuster is considered as one of the largest rental chain of videos with around 7,800 franchised or company owned stores in approximately twenty countries of the world. In 2007, it came up with a record of 5.5 billion dollars revenue and it is very famous in the world because of its service of video rental through blockbuster online and through several video stores of block buster. A new Netflix made launchings of some online rental subscriptions of DVDs in September 1999 and surpassed about 1 million of subscribers in just two and half years. This new type of business model bent a chief shift in that sector of the industry. The inadequate service of online distribution channels would cut off the company from doing interactions from its customers of some of the most important places; the customers of World Wide Web. As the rental market of movies was changing radically then the late reaction of Blockbuster was contrasted with many of its competitors. The challenge involved with a drastic shift in the market which is originated by Netflix one of its big competitor.

Discussion

Netflix Company did not only create a new worthy proposition for the customers but also presented them with a competitive pricing of model. Other than Netflix, some of other competitors of Blockbuster are Comcast Video and Amazon Unbox also did react on that competition after the success of Netflix. Blockbuster had been endeavoured to settle this situation with offering rental services online and then encouraging its overall accessing services that could allowed customers to renting out movies online and then returning them to a store of Blockbuster for a movie rental free in-store.

The Blockbuster of the Texas was among the largest rental chains of video in the world since the 90s. Among the 5000 stores which were operating in the United States, Blockbuster was on the leadership position in that business of video rental by following the Hollywood Entertainment. In 2001, Blockbuster lowered its stored inventory for making more space for DVD movies with a hope for capturing some new trends. The technology of DVD altered the business of movie rental in the environment of internet. In 1999, Netflix initiated the online subscription system of monthly basis for DVD movies in the bay area of San Francisco. The new business of Netflix model enabled subscribers to renting out lot movies at a same time and allowed its members to keep with them the DVDs for relatively longer times to eliminate the late fee charges of the rental of Blockbuster movies. After the operations of three years, Netflix made launchings of IPO and became dominant in the rental business of online DVDs. In February 2003, around one million of subscribers increased and doubled in just one more year.

The renter of DVDs took the advantage of the online services provided by Netflix and due to that the brick rental business was declining rapidly. The expansion of online services of ...