Blockbuster and New Media
How Technology and New Media have Changed the Way Blockbuster
Does Business
IMC 498-24: Entertainment Marketing Monday, November 16, 2009
Stephen Davis and Melissa Lopardo
Blockbuster’s Competition
On-Demand iTunes Netflix Redbox (kiosk) Mom-&-Pop video stores
Blockbuster’s Plan of Attack
Store Closings Divesting its Foreign Operations Renew Focus on North American
Business and Digital Future
Source: AOL Finance, Blockbuster INC Profile
http://finance.aol.com/company/blockbuster-inc-class-a/bbi/nys/overview
THE PRICE$
Blockbuster• Store rental $4.89 for new release• Mail plan ranges from $4.99 to $34.99 per mo.
for as many as 3 dvd’s Redbox• One dollar per day up to 25 days• After 25 days customer can keep dvdNetflix• $4.99-$47.99 monthly for as many as 8 dvd’s• No late fees
Source: Chicago Tribune
The way movies are rented from Redbox, NetFlix and Blockbuster differ as much as the
way they are priced
Netflix Plan
“We named the company Netflix, not DVD’s by Mail, because we knew we would eventually deliver movies over the Internet. DVD’s will be around for a long time, but we are building for the day they are not.” – Reed Hastings, CEO, NFLX
NetFlix Fun Facts
• Created due to a $40 late fee for movie Apollo 13
• Spends $600 million per year at USPS
• Has patent on business model which reduces imitation by competitors
• As broadband becomes more prevalent and
cost of set-top boxes decreases, VOD is expected to gain ground in entertainment market
Source: Forbes Magazine
Netflix Focus 2009
Exclusively on subscription segment ofinternet delivered content
source Netflix Annual Report
BlockBuster Focus 2009 Online subscribers
deals with free in-store rentals
Rewards program to enhance customer loyalty towards stores
Source Blockbuster Annual Report
BlockBuster FutureTent-Pole-Title Program
A major focus is bringing customers more copies of big box office titles to rent or to buy and is supported with marketing message in the store.
Example- Indiana Jones-themed car Marco Andretti drove in Indy 500. Show car was featured at local events at BB stores before hitting track at Indy 500 in May 2008
Soucre Blockbuster Annual Report
Some movies streamed instantly:
• Instantly watch online on your PC or Mac
• Instantly watch right on your TV via a Netflix ready device.
• Choose from a growing library of movies & TV episodes.
As a bonus to your DVDs by mail,some movies streaming to your TVover the Internet!
Source Netflix Press Kit
NETFLIX FUTURE
Blockbuster Operations
Stores- Domestic stores generally open 365 days a year, with daily hours 10 am-10pm. As of Jan. 2009 4,585 stores in U.S.
Mail- offer 90 thousand movie titles, no due dates and option of video-game rentals beginning in 2009
Vending- used to expand physical distribution of media entertainment, continue to test solutions to offer convenience to customers
BlockBuster Digital Delivery Movielink, LLC- offered on
Blockbuster website, movie downloading business with one of the largest libraries of digital content for both rental and sale. Allows for capitalizing on film downloading market and additional choices for customer needs. Blockbuster In store
Mail NETFLIX
Monthly price per number of DVDsout at a time
1 DVD $11.99 $8.99 $8.99
2 DVDs $16.99 $13.99 $13.99
3 DVDs $19.99 $16.99 $16.99
Reed Hastings-Netflix CEO
Never underestimate the competition: We erroneously concluded that Blockbuster (BBI, Fortune 500) probably wasn't going to launch a competitive effort when they hadn't by 2003. Then, in 2004, they did. We thought, well, they won't put much money behind it. Over the past four years they've invested more than $500 million against us.
Source : Forbes Magazine Jan. 2009
BBI Stock
HIGH 2002 $28.60LOW 2009 .82
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NFLX- MOST RECENT STOCK PRICE $59.33 /last Friday
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STOCK PRICES
PARTNERSHIPS 2009
NFLX & MICROSOFT
MICROSOFT AND SONY BEGAN OFFERING XBOX CONSOLE OWNERS VIDEO-WATCHING SERVICES– THROUGH A PARTNERSHIP WITH NETFLIX
SONY, WITH THE PS3, BEGAN OFFERING ACCESS TO NETFLIX
BBI & SONIC SOLUTIONS
Provides “know how” to bring movie downloads and rental services to devices and to extend business to media players, set-top boxes and internet ready tv’s