Minnesota School of Business
What role has Netflix played in the development of Blockbuster’s strategic planning? How important is Netflix to Blockbuster’s future strategic plans?
The success of Netflix forced Blockbuster to see the growing popularity of rent-by-mail formats. In 2003 Blockbuster launched a rental subscription program, which would allow subscribers to rent an unlimited number of movies during the subscription period like Netflix, but with Blockbuster there was no waiting for movies to arrive. Blockbuster also fine-tuned its rental program and introduced a no-late-fee policy to compete against the growing number of subscribers to online rental companies. In 2004 Blockbuster moved into the online rental market in the United States so it could directly compete with rent-by-mail companies like Netflix. Blockbuster also allowed online subscribers to rent two free movies from their brick-and-mortar stores every month. This was done to keep customers coming to their stores and to overcome customer complaints about waiting for movies to arrive. In another attempt to gain ground on rent-by-mail companies Blockbuster started fulfilling online rental orders through 1000 of its local sores to create a more efficient service. Blockbuster saw how popular rent-by-mail companies were becoming and had to change their strategic plan to compete with this new threat to their company.
Netflix’s continued growth will play a big part in Blockbusters strategic plans in the future. Netflix is one of the fastest-growing U.S. companies and the largest online entertainment subscription service. Blockbuster knows they are a threat and needs to move towards new technological innovations to compete with their growing popularity. Netflix has a different approach than Blockbuster, focusing on older movies and classics, but that is not enough to ensure Blockbuster’s future success. To compete against Netflix in the...