Blockbuster Corp. in a Mature Video-Store Industry: Options and Strategies
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Code : COM0063
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Region : US
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Introduction:Founded in Dallas, Texas, in 1985, Blockbuster had become one of the strongest entertainment brands in the US and a leading global provider of in-house videos, DVDs and video games on rent. It had more than 9000 stores across America, Europe, Asia and Australia, and its total revenues were accounted at $6.05 billion in 2004. Over the past few years, new technology such as video-on-demand (VOD) and the availability of movies (VCDs/DVDs) for purchase at low prices at discount stores such as Wal-Mart and Best Buy had sapped some of the demand for rentals. Blockbuster, which was a part of Viacom and a cash cow for the media giant (Blockbuster had a split-off from Viacom in October 2004), witnessed its business model come under immense pressure. It found that experts had labeled its business as an industry in decline. Executives in the video rental industry concede that the video market has changed permanently, and that video rentalmay become a shrinking business. Tom Adams, president of Adams Media Research, said, "After two down years in a rowand a veryweak start to the year, it's got to be assumed that the rental market is not going to see significant growth years again in its current form". While rivals like Netflix, had embraced the VOD technology to counter the threats of declining DVD-rentalmarket, Blockbuster was still putting its future at stake over traditionalDVD rentals in-stores and online. |
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