Blockbuster vs Netflix
Q1. (a) What is Blockbuster’s Business Model?
(b) How successful has it been?
Ans: (a) We can define Blockbuster’s Business Model as a- Bricks Model.
* It has video rentals & sales stores.
* Customers have to come to the stores to buy or rent movies from these stores.
* It is a total physical process.
(b) It was a successful model before Netflix entered into the video rental market. The reason behind that is,
* They’ve 40% share of the whole U.S. video rental market .
* From the video sales they’ve got $16 billion.
* Enjoying a ...view middle of the document...
They constructed their business by developing a new online division. They wanted to beat Netflix in both pricing & distribution. To do that their Cap Ex was getting higher. Now, a business should gain profit by spending less. Where we can see blockbuster failed to fulfill the Revenue Recognition Principle of an organization.
(b) We think that Blockbuster,
* Shouldn’t continue their traditional business..
* It’ll reduce their Cap Ex. Then they can put more emphasize on online services.
* In their solution busket to the changing situation they also try to buy Nelflix Inc.
Q4. How successful is Netflix & It’s Business model?
Business model of Netflix is a type of Subscription Business Model.
* It offers video rent & sales using internet.
* Customer can have the movie as long as they wanted without paying a single penny as late fees.
* No need for a physical store. Actually it’s a virtual process.
Now, this model became popular & successful. It gave blockbuster a real threat. Their market share goes up by 2% to 7%. But most importantly they brought the change in video sales & rental system of U.S. Market. Which is followed by other competitors in the industry later on.
Q5. Do you think Blockbuster on Netflix will succeed in the future?
Explain your answer?
Blockbuster on Netflix will not get success if they don’t change their business model according to the customer’s preferences. Now what they should do is the main concern. Blockbuster’s or...