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How Blockbuster DVD Rental is Changing
Blockbuster had small beginnings. The first Blockbuster store was opened in 1985 by founder Dave Cook. They grew the business by establishing market niches such as a large number of copies of a single movie, highly visible stores, and a larger selection of movie titles. This allowed them to reach 27% market share in the United States and more than 6,500 stores. Being the big guy in the neighborhood has created some tough competition lately.
The start-up known as Netflix has exploded onto the DVD rental scene over the past five years. Its model has been based on purely online DVD rental. You go to their website and select from their thousands of titles and they mail them to you. You then look at your selection and return it in the prepaid envelope provided to you. They didn’t offer any late fees, which means you can keep the movies for as long as you want. This gave them an immediate competitive advantage and had negative effects on the blockbuster. Since revenue was constantly being generated from late fees, Blockbuster had a serious problem to solve.
Blockbuster’s reaction to Netflix was to create its own online DVD rental program called Blockbuster Total access. It is similar to Netflix and prompted the company to sue Blockbuster for patent infringement.
Blockbuster Total Access allows DVD renters to choose from several different plans. They all include a DVD mailed to you along with the postage envelope to send them back. The different plans allow you to have a different number of DVDs at any time and another option is in-store exchanges.
In-store exchanges could be the competitive edge Blockbuster DVD rentals need. If you compare to their rival Netflix, they don’t have the infrastructure. There are over 6,500 Blockbuster stores in the United States. What in-store exchanges do for the customer is twofold. The first is the fact that customers will get movies they sometimes don’t like and with Blockbuster DVD rental, they now have the ability to quickly redeem the movies at their local store. The second is the fact that movies in the mail only come on working days. Come over the weekend if you haven’t received your new titles, you might find yourself without a new movie to watch in your free time. In-store exchanges are again the solution.
Blockbuster is still behind in online DVD rental, but with competition from Netflix, they have tried to adjust their business model. Only time will tell who will emerge victorious.
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