The concept covered in the discussion on Netflix responding to blockbuster is an interesting topic. Netflix is a great example of disruptive innovation. Its DVD-by-mail turned the video rental business on its head and helped push Blockbuster into bankruptcy. As a start-up and outsider, Netflix was able to see that Blockbuster underserved many users. In response, Netflix created a business that offered more affordability, accessibility and availability to these under-served customers. Netflix saw this as a great opportunity and with customers busier lifestyles, demand and the advancement in the technology, Netflix made a move and serve the underserved customers of Blockbuster. Netflix is definitely the most successful of these Blockbuster-replacement services and has been steadily gaining power over the years. They started out as a DVD rentals-by-mail service and business has been booming ever since they introduced a streaming subscription service as well.
The rise of internet media also raised the success of Netflix. Blockbuster’s demise was linked to the success of Netflix. The business model of Netflix focuses on addressing unmet needs on the part of consumers. The business model for video rental industry back then in early 2000 was to pay-per-rental. Customers were frustrated by late fees and not being able to find their movie of choice when they wanted it.
Netflix used a design principle that any company aspiring to succeed at disruptive innovation must adopt – Think Big. Start Small. Fail Quickly. Scale Fast.
Think Big. Netflix pursued the big idea of streaming video, even though it would render obsolete its mail-based system for distributing DVDs. By contrast, most companies think small—they try to protect their existing business even if they can see a long-term threat from the Internet or other technological disrupter. These companies tell themselves they’re making incremental improvements, only...