Why did blockbuster decide to stop renting movies?
By eschewing retail locations, it lowered costs and could afford to offer its customers far greater variety. Instead of charging to rent videos, it offered subscriptions, which made annoying late fees unnecessary. Customers could watch a video for as long as they wanted or return it and get a new one.
When did the video rental chain Blockbuster go bankrupt?
Bankruptcy at the video-rental chain shows the risk of sticking with an outdated strategy. When Blockbuster, the huge video-rental chain, set up a mail-delivery service in the summer of 2004, rival Netflix watched its stock price tumble.
How did Netflix change the business of blockbuster?
While Blockbuster clung to its business model of being a video rental company, Netflix constantly disrupted itself. Netflix went from being a DVD subscription rental service, to a streaming of movies and TV series model, to being a creator of content.
How much money did blockbuster make for late fees?
Blockbuster was known for charging customers a fee for every day they were late returning a movie rental. In fact, Blockbuster said it made $800 million in late fees, or 16% of its revenue, Quartz reported. This frustrated many customers, including Netflix founder Reed Hastings.
Who was the CEO of blockbuster at the time?
In 2000, Reed Hastings, the founder of a fledgling company called Netflix, flew to Dallas to propose a partnership to Blockbuster CEO John Antioco and his team. The idea was that Netflix would run Blockbuster’s brand online and Antioco’s firm would promote Netflix in its stores. Hastings got laughed out of the room.
Why was Netflix a bad idea for blockbuster?
Despite being a small, niche service at the time, it had the potential to upend Blockbuster’s well oiled machine. While Netflix’s model clearly had some compelling aspects, it also had some obvious disadvantages. Without retail locations, it was hard for people to find it.
Why did blockbuster fail and why did Antioco fail?
The irony is that Blockbuster failed because its leadership had built a well-oiled operational machine. It was a very tight network that could execute with extreme efficiency, but poorly suited to let in new information. Antioco’s fatal flaw wasn’t one of intelligence or capability,…
