Netflix And Blockbuster Case Study

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History between Netflix and Blockbuster

Netflix Inc. is American entertainment Multinational Company. Netflix was founded by Reed Hastings in 1988; its headquarters is in Los Gatos, California. Netflix is one of the biggest internet television networks in over 190 countries that provide online streaming of TV shows and movies without any commitments or commercials.
Blockbuster LLC is an American based company, their headquarters’ in Dallas, Texas. The company was founded in 1985 after the sharp downfall of the gas and oil industry. Blockbuster offers home entertainment such as movies and video games rental services and DVD retailers and DVD by mail. Blockbuster slogan is "Never be without a movie" which basically is a catch phrase that advertise
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Blockbuster was bought by Viacom in 1992 for $8.4 billion. Back in 2000, Netflix was just an emerging company, and offered to be sold to Blockbuster for only $50 million while Blockbuster’s worth then was $3.5 billion, but Blockbusters declined the offer to buy Netflix more than once then it reached its peak of power in 2004 with almost 9,000 global stores and 60,000 employees in the United States. By then Netflix started to grow enormously and blockbuster realized how successful Netflix is decided that Blockbuster wanted to buy Netflix now, on a conference call with Reed Hastings, Netflix CEO had mentioned Blockbuster more than 20 times, and also admitted that Blockbuster is stealing their costumers and they had not formed a plan to stop tem and also said " Blockbuster had thrown everything at us but the kitchen sink". Blockbuster responded by sending a large box the next day that contained a used kitchen sink at Hasting's office with a note from Nick shepherd , blockbuster's COO that says " Here’s your sink”. In 2008 Blockbusters launched their own by mail DVD service that Netflix has already dominating that market after that blockbusters started launching new products that were already launched before and not that attractive to costumers…show more content…
The reason Blockbuster failed because of two reasons. One: Blockbusters was a too successful business that could not adapt to the market changes and technological development. And two: Blockbuster change in CEO 's that eventually lost sight of the company's purpose which lead to a serious of bad decisions that killed the company. Bad decisions such as pulling Blockbuster’s internet effort which made them loss 85% of the company's capital value within 18 months .Blockbuster’s growth slowdown due to its inability to compete in the online streaming segment in the film industry which made it harder for them to pay them their debt
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