FIU Project Netflix and blockbuster Paper

Introduction

Blockbuster was a brick-and-mortar home movie and video game rental service, founded in 1985 that quickly grew from 1 location to thousands around the world. In 1997, Netflix was founded and they started renting out movies by mail. In 2000, Netflix went to blockbuster with a merger proposal to work together instead of against each other. The merger did not happen and eventually, Netflix became the largest streaming service in the world while BlockBuster went bankrupt. With 117.6 million paying subscribers, $11 billion in revenue in 2017, $100 billion in stock market value and original productions that allow it to compete with cable channels and movie studios, Netflix is now a true tech giant on par with Amazon or Facebook.

1. What advantages/ disadvantages did Disrupter have versus Disrupted

“Disruption” describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses. By entering in the low-end market (for consumers who don’t have the means to pay the standard price of market) and so, you earn market share compared to the incumbents.

Here, advantages that Netflix had over BlockBuster was first their elimination of late fees, this was an advantage for Netflix but late fees were one of BlockBusters main sources of revenue. BlockBuster tried to follow Netflix with this trend, but their revenues took a big hit.

Another advantage Netflix had over BlockBuster was getting the movie to the customer without them having to leave their home first by shipping DVD’s and then eventually turning into an online streaming service. Netflix provided a much more convenient and easier service for consumers as they did not have to go anywhere to purchase the product. This provided a convenient experience for consumers of Netflix and provided a personalized experience to consumers. BlockBuster stayed stagnant and racked up a lot of debt with poor leadership and the company was unable to evolve to online streaming which consumers started to prefer.

2. Why did Disrupter succeed?

At a time when the Internet was beginning to take hold in homes and DVDs were about to replace VHS and LaserDiscs, Reed Hasting and Marc Randolph sensed that these two trends were here to stay.

They decided to offer a new service in the United States: the online rental and purchase of DVDs delivered to the home, quickly supplemented by a monthly subscription offer. This innovation, both marketing and commercial, established what would become the trademark of Netflix: a natural appetite for innovation and audacity, an understanding of users’ needs and a fierce desire to build community loyalty.

Netflix has been successful because it has been able to adapt to trends and customer demand. The company has been able to seize opportunities, innovate when needed and above all they dared the self-disruption by understanding that streaming is the future.

The company first relied on DVDs rather than VHS cassettes, and then evolved into a streaming service. By eliminating the extra fees, offering subscription instead of rental, and removing the physical constraint (people no longer have to travel to rent a movie), they have revolutionized the market.

Moreover, the innovations didn’t stop there as Netflix kept on developing and looking for new ways to improve. For example, the company has set up an algorithm to analyze the tastes of users in order to offer them the most suitable movies for them! Its system, dubbed “Cinematch,” uses algorithms to suggest rentals based on movie availability and DVD rental history – which allows the software to gauge customers’ tastes. This recommendation system will become one of the pillars of Netflix’s success.

To distance itself from its competitors (cable channels, mainly), the platform also relies on the quality of its programming: an agreement was made with Paramount, Lionsgate and Metro Goldwyn Mayer studios in 2010 … then Netflix finally decided, in 2013, to produce its own “original creations. Finally, the fact that Netflix offers original creations and constantly renews itself is a huge advantage since customers have access to series and movies that they will not find anywhere else.

To conclude, Netflix kept up with emerging trends and adapted to consumers needs and wants. Technology has grown tremendously since the start

Buoyed by the success of the series “House of Cards” and “Orange is the New Black”, but also by its recommendation system that targets ever more finely the desires of users to offer them what corresponds to them (to the point of personalizing the illustrative images of the films according to the preferences of each), Netflix sees its number of subscribers soar.

3. What could Disrupted have done and why did they not succeed?
i just need to answer the last question.