Evolving Strategies for Blockbuster: Lessons in Adapting to Industry Disruption

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Blockbuster's failure to adapt to industry disruptions serves as a cautionary tale for businesses. This case study explores the challenges faced by Blockbuster, analyzes its key issues, and provides recommendations for adapting to changing consumer behaviors and technological trends.

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BLOCKBUSTER: DISRUPTED OR Asper Consulting Group Emily Sanders Matt Borgford Tanis Brako Carlos Kan DISRUPTOR?

WHY BLOCKBUSTER? Blockbuster is a great example of a company that did not adapt to disruption in their industry, eventually becoming obsolete. Introduction Analysis Alternatives Critique Recommendation

KEY ISSUE How should Blockbuster react to disruptors in their industry? Introduction Analysis Alternatives Critique Recommendation

RECOMMENDATION Acquire Netflix to adapt to changing consumer and technological trends Introduction Analysis Alternatives Critique Recommendation

WHO IS BLOCKBUSTER? Video rental service Sell complementary products Has subscriptions for repeat movie watchers Blockbuster is in the business of providing an experience to it s customers Introduction Analysis Alternatives Critique Recommendation

VALUE PROPOSITION To entertain and delight customers with a wide variety of available options. Introduction Analysis Alternatives Critique Recommendation

CORE COMPETENCIES Physical Stores Store Operations Great Movie Selection In-Store Experience Introduction Analysis Alternatives Critique Recommendation

THE CONSUMER All Ages Adapt to trends Current Looking for entertainment Value Experience Introduction Analysis Alternatives Critique Recommendation

THE CONSUMER All Ages Adapt to trends Current Adoption to technology Looking for entertainment Value Experience Blockbuster did not adapt to the customers changing needs and eventually went bankrupt Introduction Analysis Alternatives Critique Recommendation

WHO IS NETFLIX? Started as mail order subscription Went direct to consumer New Technology Leveraged online streaming Created Standalone rental boxes Located in high traffic areas Netflix was adaptive in it s model to reach consumers Introduction Analysis Alternatives Critique Recommendation

NETFLIX TIMELINE Mail Order Subscription Created standalone rental boxes Approach Blockbuster Started Online Streaming Adapted to consumer trends Introduction Analysis Alternatives Critique Recommendation

NETFLIX TIMELINE Mail Order Subscription Created standalone rental boxes Approach Blockbuster Started Online Streaming Adapted to consumer trends Netflix was better at adapting to consumer trends Introduction Analysis Alternatives Critique Recommendation

WHAT SHOULD BLOCKBUSTER HAVE DONE? Introduction Analysis Alternatives Critique Recommendation

ALTERNATIVES Develop streaming platform Status Quo Acquire Netflix Stay the course and ignore the disruptor Ex: What happened Build an online streaming platform Ex: Blockbuster Online Acquire an existing online streaming company Ex: Acquire Netflix Introduction Analysis Alternatives Critique Recommendation

ALTERNATIVE 1 Pro Con Status Quo Stay true to course and ignore the disruptor. Introduction Analysis Alternatives Critique Recommendation

ALTERNATIVE 2 Pro Con Develop streaming platform Build an online streaming platform. Ex: Blockbuster online Introduction Analysis Alternatives Critique Recommendation

ALTERNATIVE 3 Pro Con Acquire Netflix Acquire existing online streaming company. Introduction Analysis Alternatives Critique Recommendation

DECISION CRITERIA Stay true to your value proposition Value Proposition Adapt to changing consumer and technological trends Core Play to your strengths Adaptability Competency Financial Health Ensure profitability and growth Introduction Analysis Alternatives Critique Recommendation

ADAPTABILITY Develop Streaming Platform Status Quo Acquire Netflix Improves consumer experience Improves consumer experience Does not meet consumer trends Not adaptable to technology changes Meets changing consumer trends Meets changing consumer trends Introduction Analysis Alternatives Critique Recommendation

ADAPTABILITY Develop Streaming Platform Status Quo Acquire Netflix Improves consumer experience Improves consumer experience Does not meet consumer trends Not adaptable to technology changes Meets changing consumer trends Meets changing consumer trends Introduction Analysis Alternatives Critique Recommendation

VALUE PROPOSITION To entertain and delight customers with a wide variety of available options. Develop Online Streaming Platform Meets Meets Status Quo Meets Acquire Netflix Introduction Analysis Alternatives Critique Recommendation

CORE COMPETENCY Physical Stores Store Operations Great Movie Selection In-Store Experience Develop Online Streaming Platform Does not meet Meets Status Quo Meets Acquire Netflix Introduction Analysis Alternatives Critique Recommendation

STATUS QUO: FINANCIAL HEALTH 1200 Revenue Profitability 25% 20% 20% 1000 15% 15.00% 800 10% 8.00% 5% 600 0% 0.00% 400 -5% -10% 200 -15% -15.00% 0 -20% 1 2 3 4 5 Introduction Analysis Alternatives Critique Recommendation

DEVELOP ONLINE STREAMING: FINANCIAL HEALTH Revenue Profitability 1200 25% 1000 20% 800 15% 600 10% 400 5% 200 0 0% 1 2 3 4 5 Introduction Analysis Alternatives Critique Recommendation

ACQUIRE NETFLIX: FINANCIAL HEALTH 2500 30% Revenue Profitability 25% 25.00% 2000 21.00% 20% 20% 1500 18.00% 18.00% 15% 1000 10% 500 5% 0 0% 1 2 3 4 5 Introduction Analysis Alternatives Critique Recommendation

RISK OF EACH ALTERNATIVES Develop streaming platform Status Quo Acquire Netflix Lack of innovation to improve customer experience Slow growth and reduction of market share to competition Capital intensive for acquisition and integration of platforms Introduction Analysis Alternatives Critique Recommendation

RECOMMENDATION Status Quo what they did Develop streaming platform i.e. Blockbuster online Acquire Streaming cia. i.e. Netflix Value Proposition Core Competencies Financial health Adaptability Introduction Analysis Alternatives Critique Recommendation