Blockbuster Business Model

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What is Blockbuster’s Business Model?

Blockbuster was established in 1985 with the firms objective of renting and selling videos. Before information technology really influenced the world’s business, Blockbuster’s business model, like most businesses, was a traditional model. Blockbuster Headquarters

Physical Store

The simple business model consumers visit their nearest Blockbuster store to hire videos over a period of time e.g. 2 nights or a week, then return the hired videos to the Blockbuster store and hire other movies. The process continues.

Blockbuster headquarters centralised important data, sales volume and demographic date, from each of its independent stores. Management used the data to assist the corporation in growth and it wasn’t long before thousands of stores were opened in many countries around the world including Australia - The first Blockbuster store in Australia opened in Melbourne in 1991. Blockbuster Australia still uses the above business model today.

With the launch of Netflix and its online business model in 1998, the age of consumer convenience attracted a large amount of consumers in the video/DVD rental industry. With the huge success of Netflix, Blockbuster had to either throw away its original business model and imitate the Netflix business model, or build on its current model. The current Blockbuster business model is described below.

Validate mem-ship & rental plan, & determine the need to despatch videos/DVDs sitting on que Blockbuster HQ
Select videos/DVDs - On Que
Physical Stores
Membership/ Rental Plan
Online Interface
Blockbuster ships videos/ DVDs from consumer’s que to consumer mailbox Traditional method - consumer visiting store.
Consumer can either return videos via free postage to BB warehouse or physical store

Blockbuster has introduced its online interface to complement its already existing physical stores. The current business model is rather complex,...
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