BLOCKBUSTER LLC

American-based Company
-By N1 Group
Team-N1

N001-Akhilesh N009 -Anu Yadav N068-Dhananjay Sehgal N017-Devansh Dwivedi

Kumar

N025-Jivanshi Arora N033-Manish Sharma N042-Pankaj Nath

N059-Sonia Choudhary N051-Ranjeet Gupta N077-Rajesh Singh

Introduction MARKET MYOPIA
Sustained growth depends on how broadly you define your business—and how carefully
you gauge your customers’ needs. - Theodore Levitt

The article is as much about strategy as it is

about marketing, but it also introduced the
most influential marketing idea of the past
half-century: that businesses will do better in
the end if they concentrate on meeting
customers’ needs rather than on selling
products.

“Marketing Myopia” won the McKinsey

Award in 1960.
 Study includes following points:-

Shadow of
Obsolescence Population Myth
Fateful Purposes
An expanding market
The failure is at top. The process of being keeps the manufacturer
Error Analysis. outdated from having to think very
hard or imaginatively

Production Product Dangers of R & D

Pressures Provincialism
Top management is wholly
Mass production and Product fails to adapt transfixed by the profit
complete neglect of to constantly possibilities of technical
marketing changing patterns of research and development
customer needs.
Chronicles 1985–1996

Blockbuster was a multibillion-dollar company during this era running video rental
industry which was an "entertainment complex" aimed at adults, containing eight
themed areas housing a restaurant, games, laser tag arena, and motion simulator
rides, and was housed in a windowless building the size of a city block.

The company bought a company with approximately 270 Record Bar, Tracks, Turtles
and Rhythm and Views music stores and approximately 160 video retail superstores
into the corporation. It also owned 35% of Republic Pictures; that company merged
with Spelling in April 1994.

In 1991, just three days after Time Warner had announced it would upgrade its cable
system, Blockbuster's shares dropped more than 10 %. It was an effect of new
technology which threatened their business, such as video on demand and the
growth of cable television.

Viacom acquired Blockbuster as a merger in 1994 for $8.4 billion as no proper

solution was found to face the growing threats to the traditional video store.

The original Blockbuster company, Blockbuster Video Inc., was merged into the parent company
Blockbuster Entertainment Inc. which had earlier replaced the Blockbuster Entertainment
Company. In 1996, Blockbuster Entertainment Inc. merged into a new Blockbuster Entertainment
Corporation. The second Blockbuster Entertainment Corporation was later merged into Blockbuster,
Inc.
Myopia Effect 1985–1996

Dangers of R & D

Shadow of
Obsolescence During this period the decision of
upgrading the cable system led to
Blockbuster process outdated,
wherein top management failed to
check the possibility of making
profit. The company also did not
make himself compatible with the
needs of market.

Product
Provincialism
Chronicles 1997–2006

When Netflix launched in 1997, Blockbuster was the undisputed champion of the
video rental industry. Between 1985 and 1992, the brick-and-mortar rental chain
grew from its first location (in Dallas, Texas) to more than 2,800 locations around
the world. Two years later, Viacom paid $8.4 billion to acquire Blockbuster.

So by the time Netflix showed up on the scene with its video rental-by-mail service,
it appeared to be a classic case of David vs. Goliath. In fact, in the year 2000 –
perhaps realizing that it’d be easier to fight alongside Blockbuster than against
them – Netflix co-founder and CEO Reed Hastings approached Blockbuster’s then
CEO, John Antioco, with a merger proposal: Hastings wanted $50 million for Netflix.

And as part of the deal, the Netflix team would run Blockbuster’s online brand. Of
course, that deal never materialized. Partly because Blockbuster laughed in Netflix’s
face when they met to discuss the deal.

At the time, Antioco considered Netflix to be small potatoes, and would come to
realize only too late that having an online platform would be the way of the future.
Chronicles 1997–2006

In 1999, Netflix received backing from Groupe Arnault, giving them a $30 million cash
injection that helped launch its subscription-based service.

In 2004, Blockbuster did launch a Netflix-like online DVD rental platform, and even
abandoned their unpopular (but lucrative) late fees for overdue rentals.

By 2006, subscribers for Blockbuster’s online services had grown to more than 2
million. (Meanwhile, in that same year, the number of Netflix subscribers reached 6.3
million.)
Myopia Effect 1997–2006

Dangers of R & D

Shadow of
Obsolescence The methods used were outdated and also
involved time consuming process such as rental-
by-mail, online DVD platform. Company did not
realise the growth factor of Netflix at that time
and also underestimate the planning of Netflix
and reject the proposal of $50 million for
Netflix. It also failed in assuming the profit that
they could acquire after the merger of
Blockbuster and Netflix, which clearly showed
the lack of technical research and development
to be done under the proper guidance of top
management.
Product
Provincialism Population Myth
Chronicles 2007–2011

James Keyes era – in 2007, Total Access campaign was introduced as a strategy
against Netflix. Online customers rent a DVD online and receive a new movie for
free when they returned it, to attract new subscribers. it was a major success but
every free movie cost the company two dollars. Before the deal could be realized,
refusing to let the company lose more money through Total Access. James Keyes,
raised the price of online DVD rentals and put an end to the free movie deal. As a
consequence, Blockbuster Online's previously massive growth quickly stopped.

On June 19, 2007, Blockbuster announced that it had chosen Blu-ray over HD DVD
format to rent in a majority of its stores.

On July 2, 2007, Blockbuster acquired Movielink for $6.6 million, forecasting a shift
to streaming video. Movielink was an online video service that allowed customers to
download movie rentals from a library of over 6,000 films.

Despite growing competition, company focus on Apple and Walmart as their primary
competition. On September 14, 2007, Blockbuster GB Ltd bought a number of retail
stores from ChoicesUK plc.
Chronicles 2007–2011

On February 17, 2008, Blockbuster proposed a buyout of struggling Circuit City but
withdrew its offer in July 2008

At the beginning of 2010, Blockbuster had over 6,500 stores, of which 4,000 were in
the U.S, a number that fell to 3,425 in late October the same year. It has been
claimed that more than 43 million U.S. households had Blockbuster memberships.

On February 10, 2010, Blockbuster announced that it would cease all its operations
in Portugal, closing down 17 outlets and leaving over 100 workers unemployed.
Blockbuster representatives in Portugal blamed internet piracy and the lack of
government response to it as the key factors to the company's failure in the
country.

In March 2010, Blockbuster began "Additional Daily Rates (ADRs)", for rentals not
returned by their due date in the United States. An ADR was charged for each day a
member kept the rental beyond the rental terms. On March 17, 2010, Blockbuster
issued a bankruptcy warning after continued drops in revenue threatened its ability
to service its nearly $1 billion debt load.
Chronicles 2007–2011

By April 1, 2010, Carl Icahn had resigned from board of directors and sold nearly all
his remaining Blockbuster stock.

Blockbuster paired up with Time Warner to have Warner Bros. movies made
available in Blockbuster stores on the DVD release date. Similar agreements were
also made with Universal and 20th Century Fox.

On July 1, 2010, the company was delisted from the New York Stock Exchange after
its shareholders failed to pass a reverse stock split plan because of the stock's
below $1 per share.The stock was then traded on the OTCBB (over-the-counter
bulletin board).

On September 23, 2010, Blockbuster filed for Chapter 11 bankruptcy protection due
to challenging losses, $900 million in debt.
Myopia Effect 2007–2011

Shadow of
Obsolescence Dangers of R & D
Augmentation of technology not according
to time.
The time period of survival of Blue-ray did
not checked by the technical team and also
the market was not read well by the
marketing team.
Product
Provincialism The marketing teams also not properly
analyze behavior and needs of costumers.
.Lack of Able leadership.

Population Myth

Population Myth
Chronicles 2011-2015

In January 2011 Blockbuster decided to keep open 3300 store but closed 182 in
December 2011.

In February 2011, it was reported that Blockbuster would be sold for $300 million or
more, along with taking over debts and leases

On March 1, 2011, the U.S. Department of Justice filed a claim disclosing that
Blockbuster did not have the funds to continue reorganizing and should liquidate.

Dish won the auction on April 6, 2011, agreeing to buy Blockbuster for $320 million
and assumption of $87 million in liabilities and other debts. Dish announced to
keep open only 500 Blockbuster stores.
Chronicles 2011-2015

On May 6, 2011, Keyes resigned as Blockbuster's CEO, being replaced by Michael

Kelly under the new title of president.

On August 31, 2011, the liquidators announced the closure of the remaining 253
Canadian stores and shutting of the entire Canadian unit.

In September 2011, Blockbuster and Dish Network launched a Blockbuster Movie

Pass to compete with Netflix. For US$10 per month subscribers of Dish Network’s
PAY-TV service would have access to both a streaming service & movies and
games-by-mail. But package eventually folded .

On January 13, 2012, Dish CEO Joe Clayton announced that while Dish had
planned to keep 90% of the stores in operation and will close unprofitable stores,
additional stores. Potential closing was to be assessed on a case by case basis.
Between November 2013, and January2014, all 300 remaining corporate-owned
Blockbuster stores in U.S. were closed and DVD-by-mail program was shut down.
Myopia Effect 2011-2015

Shadow of Fateful Purposes

Obsolescence Closing of stores
Able leadership
Alternative options and
promotional plans.

Product
Provincialism
Chronicles 2015-Present

Dish maintained its video streaming services, Blockbuster on Demand and

Blockbuster@Home, until they were replaced by a new subscription service in 2015
called "DISH Movie Pack".

The company's decline was attributed to poor leadership according to others in the
industry.

Keith Hoogland, owner of Family Video, attributed poor decision-making as a primary

reason the company did not survive.

Jonathan Salem Baskin, a former Blockbuster marketing communications executive,

stated, "Digital would have changed Blockbuster's business, for sure, but it wasn't its
killer. That credit belongs to Blockbuster itself.

Blockbuster is a perfect example for losing the game of digitalization by sticking too long to an outdated strategy
and failing to understand market changes which another exploit.2020 was already expected to be a weak year at
the box office, coronavirus could mean ‘cinematic disaster’
Chronicles 2015-Present

Blockbuster in Bend, Oregon:

Additional store closures would continue. By January 2018,the company's website
listed nine remaining franchise-owned stores in the U.S., including six in Alaska,
two in Oregon, and one in Texas.

Eight of those nine had closed by August 2018, leaving only one store in Bend,
Oregon.

In March 2019, the last remaining store outside of the United States, located in
Morley, Western Australia, closed its doors.
Myopia Effect 2015-Present

Population Myth Fateful Purposes

Skills and decision making
skill.
Change in subscription pack
which shows product failure in
the market
Conclusion
Marketing myopia refers to a short-
sighted approach to marketing that Knowing it exists isn’t enough though.
focuses more on the business and the It’s important to take action to prevent it
product than the customers. Implicitly it from affecting your bottom line.
affects business of the company.

However, marketing myopia can be

avoiding, if the management of company
Blockbuster is simply failed to
can emphasize on the customer rather
understand its customers and the
than just yourself and your product.
technology that was empowering a
Bringing a product or service to market
change in their habits. Failing of
can be so exciting that it’s easy to get
Blockbuster is become a classical
carried away and forget that it needs to
example of marketing myopia.
be useful to people. If it’s not useful, why
would people buy it?

Establish your value, understand your

audience and grow alongside their
needs. By doing so, you’ll avoid the kind
of thinking that’s helped in failing of
company.
References

https://en.wikipedia.org/wiki/Blockbuster_LLC

Harvard Business Review @ www.hbr.org

https://www.drift.com/blog/netflix-vs-
blockbuster/
Thank You