Team B - Business Failure Analysis
Jeffery Rhymes, Terri Zubrod, Abel Dominguez, Eric Paniagua, Su Rodriguez
January 11, 2015
Professor David Warren
The mission statement for Redbox and Blockbuster both have focused on providing customer satisfaction with media entertainment that includes movies and games. In the years prior to the inception of Redbox in 2002, Blockbuster offered customers a value price entertainment experience, combining the broad product depth of a specialty retailer with local neighborhood convenience (Poggi, 2010). Blockbuster Inc. was a global business with 8,000 stores and offered movie and game rentals for home use by consumers (Poggi, ...view middle of the document...
This is the point that was the down turn for the Blockbuster because in September, 1993 Blockbuster proposed a merger with the media giant Viacom, who was in a bidding war with Paramount Communication, and over time the battle became a drain on both Blockbuster and Viacom (Poggi, 2010). Over the next few years Blockbuster went through many different appointments of Chief Executive Officers and in September, 1994 Mr. Huizenga stepped down. Blockbuster filed for bankruptcy in September of 2010 and was bought by Dish Network by April of 2011 in an auction for $233 million.
Blockbuster failed to comprehend the business and assumed they were in the entertainment distribution business; however, the business had more to do with the retail consumer experience (Baskin, 2013). Blockbuster failed to see the greater picture and identify the Hollywood’s box office earnings were worsening yet the customer still looked-for something to do with their time (Baskin, 2013). After the year 2000, cable and satellite companies offered video on-demand movies, online rentals were available, and retailers such as Wal-Mart and Target were retailing inexpensive movies and games. The inability and desire for Blockbuster to compete with its competitors and while there was a need for change on understanding how consumers were choosing to buy or rent movies; Blockbuster did not develop a new business model (Baskin, 2013). Blockbuster’s leadership role, organizational structure and culture of the organization and it departments were critical to its failure. While the leaders were proposing enhanced measures on how to become more effective in their company’s objectives and direction was missed with how they could be reaching their customers in a more effective way (Baskin, 2013). Redbox and Netflix as competitors were making it easier to rent videos at low cost, while Blockbuster was still pushing the customers to come to their stores along with not having the ability to determine if the movie of interest was even available prior to driving to the store.
Redbox (Outerwall LLC) - Sucess
Redbox’s (Outerwall LLC) mission extends beyond the retail solutions it is to create a better every day; from the Clinton Global Initiative commitment to recycle 2 million pounds of e-waste, to the engagement in the communities in which our employees live, we're backing up our mission with real action (Outerwall.com, 2015). Redbox Automated Retail LLC, was initially started the company with four automated convenience store kiosks that sold grocery items such as milk, eggs, and sandwiches as well as 11 DVD rental kiosks but Redbox quickly withdrew from the grocery kiosks within a year, to recognize the success of the DVD-rental kiosks (Technori.com, 2015). The company surpassed Blockbuster in 2007 in number of U.S. locations, passed 100 million rentals in February 2008, and passed 1 billion rentals in September 2010. In July 2013, Redbox announced its 3 billionth rental of a...