Blockbuster Case
BADM375
CASE #2
Blockbuster Fights for Survival against Intense Competition
Blockbuster Company is one of the largest providers of videos, DVDs and video games worldwide. Blockbuster’s revenue reached $5.5 billion in 2002, and during the same year, nearly 80 % of Blockbuster’s revenues were generated in the U.S., where the company has 48 million member accounts. At first Blockbuster was grown from a single video rental store to more than 8,500 stores in the United States, Mexico, the United Kingdom and other countries in less than 20 years. Blockbuster was acquired by Viacom in 1994, and since then Viacom still controls 81% of Blockbuster 's equity.
First, when company was established, it was a question mark, according to Boston Consulting Group Matrix, or a problem child, if we go back to 1985. By the 1987 Blockbuster Entertainment became a Star still requiring investment but growing very fast, only in one year about $18 million was invested in. In 2005 company could be described as a Cash cow – it had a very large market share, while the market itself stopped growing fast. Spreading of fast internet connection and ability to download large volumes of data changed the market, demand for DVD discs was gradually decreasing still allowing Blockbuster to generate cash, and the company managed to hold that position for rather a long period of time. Company purchased several companies, such as Game Station, Film Cadyy, etc. to stay competitive and to increase a market share. However within next few years Company was losing its position and came across multiple problems discussed further.
Blockbuster has consistently faced competitive challenges throughout its history. However, changing technology and shifting customer preferences with respect to movie distribution have become Blockbuster’s biggest challenges to date.
The company has struggled with in the past because of its reactive, rather than proactive, stance toward a rapidly changing market. As Blockbuster
CASE #2
Blockbuster Fights for Survival against Intense Competition
Blockbuster Company is one of the largest providers of videos, DVDs and video games worldwide. Blockbuster’s revenue reached $5.5 billion in 2002, and during the same year, nearly 80 % of Blockbuster’s revenues were generated in the U.S., where the company has 48 million member accounts. At first Blockbuster was grown from a single video rental store to more than 8,500 stores in the United States, Mexico, the United Kingdom and other countries in less than 20 years. Blockbuster was acquired by Viacom in 1994, and since then Viacom still controls 81% of Blockbuster 's equity.
First, when company was established, it was a question mark, according to Boston Consulting Group Matrix, or a problem child, if we go back to 1985. By the 1987 Blockbuster Entertainment became a Star still requiring investment but growing very fast, only in one year about $18 million was invested in. In 2005 company could be described as a Cash cow – it had a very large market share, while the market itself stopped growing fast. Spreading of fast internet connection and ability to download large volumes of data changed the market, demand for DVD discs was gradually decreasing still allowing Blockbuster to generate cash, and the company managed to hold that position for rather a long period of time. Company purchased several companies, such as Game Station, Film Cadyy, etc. to stay competitive and to increase a market share. However within next few years Company was losing its position and came across multiple problems discussed further.
Blockbuster has consistently faced competitive challenges throughout its history. However, changing technology and shifting customer preferences with respect to movie distribution have become Blockbuster’s biggest challenges to date.
The company has struggled with in the past because of its reactive, rather than proactive, stance toward a rapidly changing market. As Blockbuster
References: Thomas K. Arnold, “Economic Downturn May Be Behind a Rise in DVD Rentals,” USA Today, May 4,2009 (http://www.usatoday.com/life/movies/dvd/2009-05-04-rentals_N.htm)