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THE DEMISE OF BLOCKBUSTER
The Demise of Blockbuster
Kristina Toussaint
School of Human Resources, Liberty University
Author Note
Kristina Toussaint
I have no known conflict of interest to disclose.
Correspondence concerning this article should be addressed to Kristina Toussaint.
Email: [email protected]
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THE DEMISE OF BLOCKBUSTER
Abstract
Once a major player in the cinema leasing industry, Blockbuster encountered several difficulties
that ultimately led to the company's failure. Although Netflix's rise had a significant impact, it is
also worth discussing other aspects that contributed to its success. A worldwide economic
downturn, growing debt, and business decisions all contributed to sealing Blockbuster's doom.
The writers discussed how the Internet's explosive growth at the close of the 20th century opened
novel markets and possibilities for visionaries. Recording shops were forced to almost become
defunct because of corporations like Apple seizing the opportunity to offer content online at
cheaper rates than small or even massive operations, such as Tower Records, could manage.
Media leasing establishments also suffered an analogous fate. Blockbusters, whose primary
business strategy is based on retail locations, began to struggle to compete with shipping and
streaming services. It is essentially the narrative of a firm that filed for an4appeal to reduce its
over $1 billion debt load because it was unable to adapt swiftly enough and made several poor
decisions, such as not purchasing Netflix when it had the chance to do so for a fraction of the
millions of dollars.
Keywords: Netflix, Apple, music industry, cinema rental, organizational principals
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THE DEMISE OF BLOCKBUSTER
The Demise of Blockbuster
In what ways did Blockbuster achieve better strategic fit than local stores?
According to Chopra (2019), strategic adaptation involves synchronizing a company's finances
with its environment. It entails ensuring that the organization's strengths and skills complement
its long-term objectives. Through various strategies, Blockbuster was able to outperform local
shops in terms of strategic fit. To start, their prominent retail locations in busy communities
allowed them to provide a far more extensive and comprehensive selection than their local
competitors. Blockbuster had a competitive edge in satisfying client requests thanks to its large
stock.
Additionally, Blockbuster increased productivity and optimized the entire customer
experience by streamlining store activities using electronic systems for managing stock and
checkout. The goal of this digital platform was to enhance the overall customer experience, not
just to maintain inventory records. Clients would not have to search far and wide to find the
movie they were looking for, thanks to Blockbuster's ability to quickly identify the latest hits and
most popular movies. It was like having an individual movie consultant who was always
available to help people select the perfect show for their upcoming movie night. Therefore, even
if Blockbuster may have died too soon, we cannot dispute that their decision to use an automated
system for controlling their inventory was brilliant, as it represented some astounding innovation
for the late 20th century. They were able to serve their customers better, control their enormous
inventory, and establish themselves as the premier location for renting movies (Hoppe, 2021).
Furthermore, by guaranteeing easy accessibility for clients, their outlets' advantageous
positions in busy areas contributed to their excellent fit for strategy. Furthermore, Blockbuster's
dedication to staying open throughout the year, including midnight, enabled them to become a
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THE DEMISE OF BLOCKBUSTER
common sight in the area, giving them an edge over other businesses with restricted hours,
vacations, and early closures. Furthermore, by waiting a few fortnights after the initial
introduction, when costs were smaller, Blockbuster's plan of action enabled them to buy a
limited quantity of recently launched Films at a discounted price. This improved their
organizational fit by enabling them to offer a broader range of films at a lower cost (Zhang & Jia,
2022).
How much implied uncertainty do Netflix and Redbox face? What levers do they use to
deal with this uncertainty?
Due to the shifting movie distribution market and changing customer habits, Netflix and
Redbox both face inevitable challenges. Netflix successfully managed the transition from
physical movies to Internet broadcasting, which raised questions about customer acceptance and
emerging technologies. Nonetheless, some of the factors include Netflix's strategic investments
in broadcast technologies, which have improved the flexibility and efficiency of the service.
They were particularly adept at diversifying their offerings by providing a wide selection of
items to suit a range of tastes (Edelmann et al., 2023). Additionally, because they started early in
the video game of managing databases, they could employ data to inform their purchase and
material choice decisions and provide tailored suggestions. They also efficiently collaborated
with production facilities and content publishers to obtain confidential and restricted products.
By putting dispersed material near clients, Redbox, on the contrary, had comparatively little
indicated unpredictability—this improved consistency by providing fresh products while
lowering expenses. In contrast to Blockbuster's corporate strategy, Redbox's popularity was
aided by its planned placement of machines close to grocery stores, which allowed customers to
rent movies conveniently. Redbox employed several strategies to strengthen its market position,
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THE DEMISE OF BLOCKBUSTER
including placing programmed red kiosks in easily accessible locations to ensure customer
comfort, charging a nominal one dollar per night for movie rentals to attract budget-conscious
renters, and expanding its collection of shops nationwide (Timotin & Margineanu, 2025).
How did Netflix and Redbox achieve better strategic fit than Blockbuster?
By utilizing technical improvements and leveraging shifting consumer tastes, Netflix and
Redbox were able to form a better strategic partnership than Blockbuster. According to Tripathi
and Roy (2024), Netflix achieved this by providing internet streaming, a revolutionary
innovation for both the business and the sector. They were able to identify the shift away from
tangible Films to those available on the Internet and adjust their business strategy accordingly.
They offered an online video service with a pricing scheme that enabled users to access a vast
collection of titles across multiple platforms. Utilizing a diverse range of materials was a
different strategy they adopted, as Netflix concentrated on many titles and accumulated more
than one hundred-thousand-disc positions, including previous releases. A wider range of people
found this appealing, and soon, Netflix had more than 200 million4paying members globally.
Their 2007-launched downloadable service was crucial, providing access to more than seventeen
thousand recordings by 2009. Redbox employed a more economical strategy, targeting users who
appeared to be price-driven and focused. They took advantage of this by placing robotic red
booths in practical and convenient areas. This was a brilliant move because it streamlined the
operation and reduced the number of employees in the company's model. Redbox also offered
film rentals for one dollar every evening, and by 2012, it had grown to more than forty thousand
booths around the country, securing its place in the rental industry. However, since then, Redbox
has experienced a decline in rental revenue, primarily due to the growth of video-on-demand
services (Chopra, 2019).
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THE DEMISE OF BLOCKBUSTER
Conclusion
Blockbuster is an overview of commercial power, speedy ascent, millions of dollars in
profits, and a sharp decline that serves as an alarming indication of how swiftly things may shift.
Marketing and content are two different things. The main mistake made by Blockbuster was
assuming that consumers appreciated the physical environment of browsing and selecting films.
However, they failed to recognize that what buyers wanted was the actual movie-watching
pleasure. Although having an extensive inventory of films was important, the main draw was not
having to go into a shop. Blockbuster was unable to link its earnings to the things that its clients
cherished most. Being dependent on delinquent fees—a technique that consumers hated—was
another crucial error. Most Blockbuster's earnings came from these costs, which also resulted in
an unpleasant customer experience. Netflix, on the other hand, upended the market by providing
regular membership rates that allowed users to keep films without incurring penalties for late
payment. This welcoming strategy ultimately contributed to Blockbuster's demise. Disruptive
does not go completely if it is ignored. Blockbuster had multiple chances to purchase Netflix.
They turned down the offer, however, since they believed it would disrupt their current financial
structure. Regretfully, they were blind to the sector's imminent change. Finally, a disturbance
may happen too quickly for one to keep up with. By first offering postal mail rentals of films and
then experimenting with cinema video streaming, Blockbuster tried to adapt. Nevertheless, their
achievement was hampered by their slow pace and unyielding adherence to conventional
procedures. What made Blockbuster so successful has turned against it. Due to their reliance on
physical stores and hiring decisions based on retail sales, they were unable to implement the
necessary reforms and ultimately lost their relevance.
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THE DEMISE OF BLOCKBUSTER
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