Questions

Blockbuster was a US video-rental business whose first store opened on 19 October, 1985. Blockbuster rented out each video for a rental fee, and the videos had to be returned to the store within a specific time frame to avoid penalties. The companys success allowed aggressive expansion to over a thousand stores in the 1990s (History.com, 2019). However, its success did not last. Blockbuster launched an unsuccessful online DVD-rental service in 2004 and closed the last of the company-owned stores in 2014.

In 1997, Netflix started as a rent-for-mail business. Netflix sold subscriptions that gave customers access an unlimited number of DVDs, which would then be delivered to the customers address. In 2007, Netflix launched their streaming feature, which changed Netflix from a rent-for-mail business to a hugely successful streaming service.

Use the information about Blockbuster and Netflix, as well as the content from this module, to answer the following questions.

Question 1

Identify the reasons why Blockbuster failed. Include insights into the nature of the company and where their focus on innovation was. Consider the following frameworks:

• Exploitexplore ratio
• Product and service, business model, and system-level innovation

(Max. 250 words)

Question 2

What market trends did Netflix pay attention to that Blockbuster did not? Provide an answer using the TMO framework and consider changing technologies, customer needs, and organisational capabilities.

(Max. 250 words)

Question 3

What possible alternative courses of action were available to Blockbuster? Justify your answer by referring to possible types of innovation that Blockbuster could have developed.

(Max. 250 words)