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Netflix vs Blockbuster

 Netflix vs Blockbuster


In the 1990s, Blockbuster was the king of the DVD renting market. It was the launch of Netflix which ended up the company in Bankruptcy. Between the launch of Netflix and Blockbuster Declaring Bankruptcy, there was a war, which went on for years. 


Quality x Price

Blockbuster as we know was the king of the DVD-renting market.  They were a market leader and a billion-dollar company. The hefty late fees charged by the company were a pain point for Millions of Americans. Around 16 per cent of Blockbuster's Revenue came from Late fees. 

Like many other Americans, the founder of Netflix was annoyed by Blockbuster's late fee model. He with his friend started Netflix in 1997 as a DVD in-mail service. They ended up building a subscription-based business model and that too without the late fees making it more affordable to the customer.

Quality x Quality

By 2004, it had a revenue of 500 Million dollars. The Unique Selling Proposition of Netflix was delivering DVDs to the customer in 2-3 days on a subscription-based model of monthly fees of 9.99 a month without late fees being charged.

In 2004, Blockbuster understood that DVD In-mail service will be the next big market. So immediately  Blockbuster launched their own DVD In-mail service. Directly giving Competition to Netflix. 

Quality  x Advertisement

Netflix was growing exponentially in the market and its 2-3 days delivery was taking over Americans. Around 5.8 % of American households had Netflix Subscriptions. 

Blockbuster made a lot of changes parallel to Netflix and wanted to market it. They came out with an advertisement campaign where they aired a series of ads showing how they have changed ie No late fees will be charged or How a customer can easily replace the DVDs from the nearest store without any charge. Many of the advertisements directly targeted Netflix. I have attached a few screenshots down below. 






Netflix, initially a DVD-by-mail rental service, introduced a disruptive innovation that allowed subscribers to receive DVDs conveniently at their doorstep. This innovative approach provided customers with a more convenient and hassle-free rental experience compared to visiting a physical Blockbuster store.

 

Recognizing the shift, Blockbuster attempted to compete by launching its own online rental service and eliminating late fees. Later when Netflix shifted to an online store from Netflix 

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