FORMATIVE ASSESSMENT $1$

Read the extract below and answer ALL the questions that follow

The internet didn't kill Blockbuster, the company did it to itself.

The video$-$rental company Blockbuster was at its peak in $2004.$ They survived the change from VHS to DVD but failed to

innovate into a market that allowed for delivery $($much less streaming$).$

While Netflix was shipping out DVD$\text{'}$s to their consumer's homes, Blockbuster figured their physical stores were enough to

please their customers. Because they had been the leader of the movie rental market for years, management didn't see

why they should change their strategy.

Back in $2000,$ the founder of Netflix Reed Hastings proposed a partnership to the former CEO of Blockbuster John Antioco.

Netflix wanted Blockbuster to advertise their brand in the stores while Netflix would run Blockbuster online. The idea got

turned down by Antioco because he thought it was ridiculous and that Netflix's business model was "niche business".

Little did he know that Hasting's idea would have saved Blockbuster. In $2010$ Blockbuster filed for bankruptcy and Netflix is

now a $$28-$billion$-$dollar company. The Forbes article aptly describes what exactly happened to Blockbuster, "The internet

didn't kill Blockbuster, the company did it to itself." QUESTION $1$

$(25$ Marks$)$

Discuss how Blockbuster failed to innovate at the time and how they could have restored brand equity.