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Block Buster vs. Netflix Essay

  1. The model of the company Blockbuster used to be to pay-per-rental. They concentrated mainly on leasing out and selling videos to those who like them. Blockbuster was really thriving in the past because of their dimensions and rate. The company had a lot of stores with convenient monitoring system and special identification cards for consumers in order to make the business simple and successful.
  2. At the beginning of the new century Blockbuster has appeared in a serious struggle with Netflix Company created in 1998. Netflix provided customers with a very convenient way of getting movies and games not leaving their homes through the internet. With the internet popularity growing the physical stores like those Blockbuster had became completely unnecessary. So Blockbuster was about to fail and disappear and needed the new business model as soon as possible.
  3. In order to stay at the market and survive Blockbuster decided to create its own on-line store. The company also decided to connect the online and physical selling. Blockbuster consumer really has a lot of opportunities. Its consumers could lease online or lease at the shop, lease online and give back to the shop, lease at the shop and give back online, lease online and give back online. In order to compete with Netflix, Blockbuster even created a program called “No More Late Fees”. However, according to many analysts, it did not bring the excepted results and the program influenced the company’s income negatively. Than Blockbuster created lower prices for its service but nevertheless Netflix had more customers than Blockbuster.
  4. The company Netflix uses the very new Internet technologies to create a market sector for video and games rental that has permitted them to have smaller cost of possession, broader variety, and durability of DVDs. Netflix only offers buyers one service form which is to lease and give back online, provides a broader variety, no termination charges, and small payment for subscription (Hansel 2006).Netflix business model comprises of permitting individuals to lease DVDs at a set monthly fee; no late charges, no harass, just videos in the posted letters at a normal price. Netflix is thriving due to its know-how technology and discovered way to interlink it to providing delivery service to consumers. Netflix’s grade of achievement has been due to their advanced service provision. Nowadays Blockbuster competes with Netflix only with charges without considering quality of service that buyers prefer. They weaken their online competitors because their services are not so cheep.
  5. I think that Netflix will be the winner due to its taking into accounts all the desires of their consumers, applying a value chain model and new technology in order to maintain their comparable benefit (Hansel 2006). Netflix’s scheme (purchaser and dealer intimacy) will permit them to do well and be the first particularly because such a scheme uses the new technology to evolve powerful connections with buyers and suppliers (Hansel 2006).The problem of Block Buster is that it did not react to the new technologies appearance at the market on time and now it simply can not reach Netflix because it is two steps ahead. Also it is necessary to pay attention not only to price but also to quality of service completion because with the development of the civilization in the future people will chose not the cheapest but the service of high quality.
  6. The most interesting thing I learned is about the business conducting and competition. It was on the real example of the real companies. Now I understand that it is very important to react to the changes on the market on time and to make stress on the quality of service.
  7. I would like to know more about the struggle in the conditions of competition in the Information systems Technologies as in the most fast-developing sector.


Hansel, Saul (2006) “At last, Movies to keep arrive on the Internet”, The New York Times April 3,

Mcbride, Sarah (2006) “Movie Debate: Films for Sale by Download”,

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