Professional Documents
Culture Documents
The case to study is that of the BLOCKBUSTER company, it was an American franchise of
video stores, specialized in movie and video game rentals through physical stores, mail-
order services and video on demand. It was founded in 1985 by David Cook, it had a great
growth in the 1990s, and after being acquired by Viacom it came to control 25% of the
world market share of video stores. In 2004 it had more than 9,000 establishments
worldwide. it was weighed down in the 2000s by new forms of electronic consumption
such as Netflix mail-order rentals, the DVD price war, copyright infringement, and
eventually Internet video-on-demand services. In 2010, he declared bankruptcy with a
debt of more than 1 billion dollars.
Although Dish Network took over the company to turn it into a streaming service, the
plans did not come to fruition; the 300 own stores that the company still operated were
closed in January 2014. Since the mid-2000s, Blockbuster has not been able to face the
obsolescence of the physical format in the face of new forms of consumption as disparate
as cable television, newsstands, self-service, video on demand and even copyright
infringement, for which he had not planned a strategy. Antioco resigned from Blockbuster
in 2007 and was succeeded by James W. Keyes, the former head of 7-Eleven. Because the
video store chain was already in the red when it arrived, Keyes focused all efforts on
reducing administration costs, saving only the most profitable physical stores and betting
on video game rentals, which also led to a postponement of the digital strategy: the online
rental system was redesigned and little progress was made in terms of video on demand, a
market in which Hulu and Netflix had already gained ground. As a last resort, in 2010 the
group reinstated the late penalties it had eliminated five years earlier.
On September 23, 2010, Blockbuster filed for Chapter 11 bankruptcy. At that time, more
than 3,000 stores were still open in the United States. Despite several attempts to
restructure its debt, in March 2011 the United States Department of Justice ruled that the
company should be liquidated.
Blockbuster was taken over in April 2011 by Dish Network, the largest pay television
provider in the United States, for $320 million. Its initial goal was to accomplish the
gradual closure of the remaining 1,700 brick-and-mortar stores and retain the brand to
launch a video-on-demand service to compete with Netflix. However, the plans did not
prosper and two years later the complete closure of all video stores was announced as of
January 2014.
In the Blockbuster case, we can conclude that resistance to change can render an
apparently profitable business obsolete and lead to bankruptcy. Blockbuster had
everything to stay: sufficient financial capital, a recognized brand that customers chose,
but it did not see the end of an era coming, the era of movies on DVDs and Blu Ray and
the advent of the digital era, it did not contemplate the imminent change in technology,
nor changes in consumer preferences, strategic planning was not carried out and effective
contingency plans were not created in such a way that Netflix, its main competitor, the
same one that could be a strategic ally to conquer the cinephile market of digital
platforms, took an unattainable advantage that meant its ruin.
BLOCKBUSTER
Aunque Dish Network se hizo con la empresa para convertirla en un servicio de streaming,
los planes no prosperaron; las 300 tiendas propias que aún operaba la compañía fueron
cerradas en enero de 2014. Desde mediados de la década del 2000, Blockbuster no supo
afrontar la obsolescencia del formato físico frente a nuevas formas de consumo tan
dispares como la televisión por cable, los quioscos de autoservicio, el video bajo demanda
e incluso la infracción de derechos de autor, ante las cuales no había previsto una
estrategia. Antioco dimitió al frente de Blockbuster en 2007 y fue reemplazado por James
W. Keyes, anterior responsable de 7-Eleven. Debido a que la cadena de videoclubes ya
estaba en números rojos cuando llegó, Keyes centró todos los esfuerzos en reducir costes
de administración, en salvar sólo las tiendas físicas más rentables y en apostar por el
alquiler de videojuegos, lo cual conllevó también un aplazamiento de la estrategia digital:
el sistema de alquiler on-line fue rediseñado y apenas se avanzó en materia de video bajo
demanda, un mercado en el que Hulu y Netflix ya le habían ganado terreno. Como último
recurso, en 2010 el grupo recuperó las penalizaciones por demora que había eliminado
cinco años atrás.
Blockbuster fue absorbida en abril de 2011 por Dish Network, el mayor proveedor de
televisión de pago de Estados Unidos, por 320 millones de dólares. Su objetivo inicial era
cumplir el cierre gradual de las 1700 tiendas físicas que aún quedaban y conservar la
marca para lanzar un servicio de video bajo demanda que compitiese con Netflix. Sin
embargo, los planes no prosperaron y dos años después se anunció el cierre completo de
todos los videoclubes a partir de enero de 2014.