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Question completion Status Introduction UTTARS Nettle was co-founded in 1997 by Reed Hastings and Mark Handolph. At that time, they were offering customers the opportunity to rent movies debvered by mail for a flat for the story Hastings got the idea for Netffor only after he received a large late fee for a film he rented from his video store in California. Hastings had lost the film and atter warching for weeks to pay St. Later, on his way to the gym, he reflected on the gym's business model; you pay a set lee and work out as little or as much as you want. This became Netflix's offersstomers content for as long as they like and no late fees are ever charged Netflix is the world's leading internet television network, with more than 100 million members in over 190 countries. Source: Diablue/Shutterstock.com Netflix has gone through a number of changes since it began in 1997 as a DVD mail order service. The company has navigated the change from DVDs to streaming to become a global TV network th dominant competitor during its inception, Blockbuster, has long since gone bankrupt. Today, Netflix is the world's leading internet television network with more than 100 million members in 1 countries enjoying more than 125 million hours of TV shows and movies per day. This includes original series, documentaries, and feature films. Netflix members payasuneription to watch as much they want anytime, anywhere, on nearly any internet connected screen. Members can play. pause, and resume watching all without commercials or commitments Was it inevitable that Netflix's way of doing business would succeed over Blockbuster's and its use of streaming technology become the dominant format? Were there any gals which might warned blockbuster of a potentially disruptive technology? The truth is something always exists which might point to a change in competitive conditions. However, senior managers need to open it eyes to perceive the change. Competitors in the Same Market In 2000, Netflix was little more than a failing start-up. Far from making any money, the company was incurring increasing losses. The CEO, Reed Hastings. New to Dallas to propose a partnership Blockbuster CEO, John Antioco as Blockbuster was the established competitor in the market. A year earlier, Netflix had revised its business model from customers paying for sth ovo they entedt subscription service, which worked better for consumers. Hastings proposal to Blockbuster was simple. He was offering to sell Netflixto Blockbuster for $50 milion. As part of the deal, Netflix wa run the blockbuster brand online and Antioco would promote Netflix in its store. On the face of it, the idea made sense: Netflix was an online retaler while Blockbuster had a bricks and mor would have the last laugh presence. Why not try to expand the DVD market by helping each other? However given Netflie's loss-making business, Hastings and his team were laughed out of the office. Within ten years. Hace Back in 2000, Blockbuster was the dominant player within the video rental industry. It had access to more than 9,000 retail stores across America and 528 stores, at its peak in the UK. It had million customers, a massive marketing budget, and efficient operations. Viewed from this perspective, the approach from Hastines seemed to be asking Mr Antioco to hand over the brand they had war hard to build. The trouble with Blockbuster's business model wasn't entirely clear at that time, but it could be seen if you looked hard enough. The company's profits were headily dependent on late fees it charges its customers. Netflix, in contrast, had no retail locations, which reduced its costs. And, as it charged customers a subscription for its DVEX, this made late fees redundant o customer paid their subscription, it was up to the customer to decide how long they wanted to keep the DVD. At the same time, they could return their DVDs and cancel their subscription Competing in Different Ways A major advantage of Blockbuster was that the customer could walk into a store and immediately rent a DVD. With Netflix, customers received their DVDs by post which was slow in comparis Blockbuster. Also, the Netflix brand was not as developed as Blockbuster's, making it more difficult for consumers to find. However, as resistance to the Netfi model for renting DVDs was overcom would reach a tipping point. This occurred as existing customers shared their enthusiasm for the Netflix service with their friends and family. If Blockbuster was to compete effectively with Net would have to change its business model. It's easy to think 'Why do this, why incur a fall in proht just because a small niche player is operating in the market Nevertheless, Blockbuster opportunity to recognize that Netti's customer offering might cause the video rental industry to evolve in a manner which put it at a disadvantage , Competing in Different Ways A major advantage of Blockbuster was that the customer could walk into a store and immediately rent a DVD. With New customers rechers by post with window Blockbustes. Also, the Netflix brand was not as developed as Blockbuster's, making more difficult for commers to find. However to the model for DVD would reach a tipping point. This occurred as existing customers shared their enthusiasm for the Netflix service with their friends and family fat we need the would have to change its business model. It's easy to think, "Why do this, why incur a fall in profit just because maniche player is operating in the more the models opportunity to recognize that Netflix's customer offering might cause the video rental industry to evolve in a manner which put it tarpe They were faced with a choice of monitoring the changes taking place around them or simply continuing with business as usual blindly believe what has worted in the content the future. Unfortunately for Blockbuster this was not to be the case. Blockbusters US parent company filed for Chapter 11 bankruptcy protection 2010.wowheamh Network through a bankruptcy auction in 2011. Hy 2013, both US and UK blockbuster businesses were placed in administration. Was this inevitable hapset. There were Blockbuster had been scanning its environment and monitoring for signs of charge or disruption By 2013, both us and UK Blockbuster businesses had been placed in administration Source JL.Rohoteraply/Shutterstock.com Blockbuster is not the only competitor to underrate Netflix and other streaming providers. In 2007 Netflix introduced streaming, which wlows me to stay with shows the personal computers. By 2010 it had partnered with consumer electronics companies to stream on the Xbox MO, PS, Internet connected, and other interest.comel, Indian Art devices. In the same year, executives from the cable and entertainment industry predicted that the early so offers streaming I be show that we that supply of content from him studios and TV networks would soon slow down to a trick Around 2011, Netflix esecutiwe began to wonder of the day with cheaply might becoming to an end. TV and film companies were starting to realize how valuable streaming were within one and we Netflix made the decision to start making its own shows and movies, starting with the huge celouse of Candy and more on They were "Tiger King The huge investment Netflix has made in its originals over the past few years has paid off in a ring of Nite which has won consumer loyalty and direction having increased its martest value by more than other Netflix's market capitalization was a huge 564 billion (9 billion. By 2020 it had risen to a staggering 5196 bill 2020. With its share price hitting a record high of around $427, it was now worth more than its rival, Disney, Unibe Dineyte is entirely dependent on and cons for rent is much more varied, being as reliant on tourism and merchandise sales as it is on the content it puts out for streaming, What diversity has traditional bestry, it can in 2020 when the pandene forced Disney to shut down its theme parks and delay it im releases. For lockbuster it was a che of the wors end up com which you initially ignored. Unfortunately for Blockbuster, this relation came too late for their executive team to make a difference Sources Grey Sandoval lockbuster laughed til partner, we com Dember 2016 Wherwys.com 2012 Guardian 14 November 2013 Orego Alook back why Bluser really failed and why the Forester 2 25 Apr 2016's content he something about the one that should investors come to the web. 2017 www.me Hits Record High Is Now Wores More Than Disney Farbe 10 or 2030 Questions which were starting to impact Blockbuster's rental business before it went bankrupt. 2 Marks Questions 1. Use PEST analysis to identify the weak signals which were starting to Impact Blockbuster's rental business before it went bankrupt 2 Marks 2. What are the main reasons for Netflix's continued growth and profitability? 2 Marks 3. How sustainable is Netflix's subscription-based business model? 2 Marks that the ATED AITLENET