• Although, Blockbuster and Netflix competed in the same video rental market they really do

different jobs for consumers.

• Blockbuster has made its core business the idea of a “movie night”. They assumed that most
movie rentals were impulse decisions for people who want to watch a movie right now.
These are usually new releases and so this is a majority of what Blockbuster stocks.

• So, they operate in a brick and mortar way where customers come into the store and leave
with a movie. Their business model is to allow consumers to make an impulse decision to
rent a movie and get it right away.

• To accomplish this they have an operations strategy of actual stores located heavily across
the United States and stocked with mostly mainstream titles.

• A Blockbuster customer would probably watch fewer movies but the ones they do watch
would be new releases rented impulsively.

• Netflix on the other hand has evolved to view movie watching as a regular part of daily
entertainment. They appeal to the customers who do not see “movie night” as an event but
instead as an ordinary form of entertainment like watching television.

• The ability to hold movies longer and the convenience of receiving/returning through mail is
perfect option for this type of consumer. So, Blockbuster and Netflix cater to two different
types of movie renters.

• A Netflix customer would watch movies more frequently. They would also be more
interested in lesser-known films and would plan out their rentals in advance

• Monthly fees instead of rentals, mail delivery instead of pickup, and a wide choice of movies
instead of just new releases are all a part of their operations strategy.

• Today, Netflix has 44 distribution centers across the country, which can deliver to more than
90% of 6.6 million subscribers within a single business day.

• Using optimized processes, Netflix’s employees could open and re-stuff an average of 800
DVDs per hour, allowing the entire distribution center network to ship over 1.6 million DVDs
per day.

• The efficient and minimalistic work processes are part of their overall competitiveness.

• Their operating cost in relation to revenues is less than half that of their competition
Blockbuster.

• In addition, Netflix collaborated with USPS, to further reduce the turnover time and cost.
Netflix received a standard discount for presorting the mail by zip code.