Political and Legal Environment
Blockbuster has had many challenges when it comes to the law. Netflix has always felt Blockbuster has tried to steal many of its ideas. Netflix runs its operations where customers will setup an account, pick the movies they want to watch, and setup a payment plan (Sanders). Since the dawn of Netflix, millions have joined and have enjoyed the benefits of not having to drive to the store to rent movies. Blockbuster has known that Netflix was a rival from the very beginning. Blockbuster enacted a late fee policy a few years prior to Netflix being born. When Netflix enacted the no late fee policy and prepaid shipping labels to and from, business shifted from Blockbuster to Netflix. To rebound against Netflix, Blockbuster began its very own mailing program where its customers would get unlimited rentals and only charge a one time monthly fee. Then Blockbuster began an online service to allow customers to stream movies right to their computers and pick the movies they couldn’t watch online shipped to their house. Netflix filed a lawsuit against Blockbuster for patent infringement (Sanders). There were two patents that Blockbuster copied from Netflix: The first patent which was issued to Netflix in 1999 included the process where customers can pick and choose movies from the convenience of their home (Sanders). The second patent that was copied just this year was where customers would receive one or two movies at a time and not incur any late fees (Sanders). Movies would be exchanged once a movie is returned to the processing plant. Netflix stated in a news brief, “Since we had the forethought to patent its ideas, Blockbuster has no right to use them (Sanders).” Blockbuster commented on this statement saying “it is trying to force it into the red.” Blockbuster feels that Netflix is attempting a monopoly. With more competition against Netflix, profits began to decline. The big question behind all of this comes down...
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