GROUP 15

Puja Kumari( M21MS056)

Riya Bhagat( M21MS065)
Ritwik Panja( M21MS063 )
Rajesh Gajbhiye (M21MS058)
Teddu Leela Bharani( M21MS081 )
1.HOW WOULD YOU CHARACTERIZE THE DIFFERENCES BETWEEN
BLOCKBUSTER’S AND NETFLIX’S BUSINESS MODELS

Blockbuster used a pay-as-you-go business strategy to rent VHS video cassettes through retail locations.
The hit and new movies were prominently displayed on Blockbuster's shelves. In comparison to other
retailers, it provided a better experience and reduced costs. The sales team offered a recommendation to
the consumer regarding movies they prefer. Selling products and collecting late fees for late rental returns
also brought in a lot of money. For company expansion, they concentrated on growing the number of shops.
Netflix was a DVD rental service that relied on subscriptions rather than retail locations. DVDs were sent to
your house once you placed a purchase on their website. They later incorporated a subscription-based
online entertainment strategy.
By analysing user preferences, Netflix's unique recommendation technology assisted customers in choosing
their next movie. The expense of acquiring a consumer was considerable. Netflix's website had features
such as ordering, subscribing, and unsubscribing, as well as a "queue" option for creating a list. With a larger
selection of films to choose from, new movies accounted for around 30% of rental income, while established
or small studio productions accounted for 70%.
 2.Was Netflix disruptive? How? How would you evaluate Blockbuster’s
response?

Netflix is a classic example of disruptive innovation that used a new business model and technology to disrupt an
existing market. The first innovation was to use a fully online based portal for unlimited rental along with a subscription
model and was riding along the dot com bubble. Unlike competitors , when it launched its mail-in subscription service, it
didn't go after the core customers of competitors like Blockbuster and it targeted movie buffs who didn't care about new
releases, early adopters of DVD players, and online shoppers. Then it moved upstream adding value and suddenly it had
outpaced Blockbuster.

Blockbuster was not new to the VOD concept. Enron Broadband Service had tried to partner up with them and proposed
a revenue sharing model. But VOD back in 2000 was an alien concept to both Blockbuster and major film studios were
skittish. Blockbuster had developed a core competency centering around timely delivery of VHS tapes and didn't want to
move away. So they missed the chance and became skeptical from that. Their response came in too late at 2004 and
they had no USP They also had an anti-consumerist stance of charging late fees and was too late to remove it. In other
words they failed to become a first mover even when they had the opportunity, failed to recognize the threat and
adapted too late
External Analysis
Political Economic Social
Censorship and rules of Fit to life model makes more
Piracy, Rival companies,
countries like EU (30% viewers to attract (tv, tab to
Internet rates hike and
local content). Because of phones). Local content in
exchange rates affects
this rules, not all the local language with local
business at mass performers makes it closer to
content are visible to all
viewers around the globe people.

Technological Environmental Legal

Hermes for automatic
translating, 4K content,
recommendation system
based on AI will deliver
faster and higher quality
translation efforts
Company is focusing over
renewable energy (PEA) is
hyped, it also uses e-ads
and reportedly uses less
paper in their offices
Cultural sentiments and
country laws has to be
abide by the company. it
has faced controversy in
past. They need to refine
strategy in this sector.
4.Did Reed Hastings make the right move in trying to separate the DVD-by-
mail business from the streaming business? How do you think he should
proceed now?
It was clear that streaming was the future and that DVD take-rates would wane
It was intended that Qwikster would not only deliver DVDs but also sell other goods as
well. Basically, a logistics company.
Splitting up may be the best for the company but less convenient for the customers.
Two companies will have two face - two log ins, two password and two subscription
fees. (that too on higher side)
The brand position is "movie enjoyment made easy", but splitting up may not be that
easy on the customer part (maintaining two account)
So one website - One bill was way much catchy and convenient, hence it will not be a
wise thing to separate out the business in two.
Since the company already spun off two, now 'Reed Hastings' will have new challenge
to face.
Qwikster will have to cater those customers who are bewildered with two way, hence
shall make them available the movie title on competetive rates and certainly the mail
service has to be quick (as the name). Prepaid service, unlimited titles, monthly plans,
availability of new titles could be the show runner for them.
 5. Discuss with insights from available data if Netflix have the Resources, Processes, and
Strategic Intent to become a leader?

Named Fortune magazine's businessperson of the year in 2010,² Hastings had built the DVD-by-mail company into an
enormously popular consumer service.
Realizing the inadequacy of the traditional merchandising system, Netflix engineers developed a proprietary recommendation
system to better balance customer demand
Netflix's proprietary algorithm then used these survey results and the respective ratings of millions of similar customers to
recommend films to its subscribers.
Netflix's software refined its understanding of customers' preferences and more accurately recommended movies that would
appeal to each customer.
Key to the success of Netflix's inventory management was a filter placed between the output of the recommendation system and
the results shown to the subscriber, screening for those movies that were out of stock.
If you have plenty of ways
The system increased the utilization of Netflix's library of films by satisfying customers with Touch
moviesupalready
on key acquired
metrics and in
to make money, focus on
stock, rather than requiring the purchase of more copies of newer films. here too, such as Life Time
one main method, such
Netflix considered delivery time to be the key measure of customer satisfaction and continuallyValue sought
(LTV) and Customer
to improve the
as subscription, ads,
operations within each of its existing distribution centers. Acquisition Cost (CAC).
and transactions.
Netflix built its film library, it grew in importance as a distribution channel for many small and independent film studios. For
lower-profile and independent films that did not enjoy the advertising support of major releases, generating customer awareness
was a major priority.
As Netflix became known as the best source for lesser-known movies, the studios began to look on this partnership with
increasing favor.
Netflix saw several keys to success for its streaming service, including content, user personalization, TV attachment, and
 6. Changes in the profit pools map in the video renting business from 2011 to 2021.
Change to rentals: Netflix launched in 1997 as a mail-order DVD sales and rental service, with
almost every DVD available at the time (about 925) in its catalog. The launch was a success, with
between 90 and 95 percent of revenue coming from sales, as opposed to rentals.
Change to subscriptions: In 2000, Netflix launched a rent-by-the-DVD model, similar to traditional
video rental stores, to a monthly subscription model.
Change to ‘unlimited’: The original Netflix subscription model was for a limited number of DVDs per
month. However, later in 2000, the company adopted the idea of unlimited rentals.
Change to streaming: By 2007, Netflix reached a big milestone, delivering its one billion DVD’s and
also starting to move toward its biggest change to date i.e. streaming video, instead of renting
DVD’s along with the expansion of streaming to all computers, TVs, mobile phones, etc. to be a
separate decision, dating to about July 2011.
Change to original content: Netflix subscribers witnessed some of the network's biggest self-
produced hits like Stranger Things, Tiger King, Bridgerton. (It all started in 2013, really, with House
of Cards.)
Change to international production: Netflix has been the producer and distributor of the leading
in-country content in places like India, Korea, Turkey, and the U.K.
The future projects: Netflix announced plans to add a new change, a push hard into video games.
Videogames have started generating similar revenue as movies so the profit pool there will be
maximum in the future