Movie Rental Business: Blockbuster Netflix and Redbox Harvard Case Solution & Analysis

Jim Keyes, general manager Dallas Blockbuster Inc, is facing the biggest challenge of his career. In March 2010, Keyes met with Hollywood studios, trying to negotiate better terms for a $ 1 billion product Blockbuster bought last year. In recent years, the share of the Blockbuster video rental market has been declining sharply in the face of competitors, such as an inexpensive, convenient Redbox vending machines, mail order and video-on-demand service Netflix. While Blockbuster's market capitalization fell 47 percent to $ 62 million in 2009, Netflix has jumped to 55 percent to $ 3.9 billion that year. The only hope for Blockbuster, Casey saw was to shift its business model primarily of brick-and-mortar physical DVD rentals to increase digital and mail-order delivery of video. In favor of Keyes, the studio was more than willing to give him that help. Hollywood wanted to see win the Blockbuster video rental wars. Consumers are still made frequent buying DVD-ROM drive in their stores, purchases, which were much more profitable for studios than renting is left main activity in Blockbuster. Blockbuster, efforts were made to ensure that its business model is more flexible, but the results were disappointing, and the debt continued to grow. By the end of 2009 the company's debt rose to $ 856 million, its share of the $ 6.5 billion video rental business has fallen to 27 percent, and its revenues were down 23 percent to $ 4.1 billion. "Hide
by Sunil Chopra, Murali Veeraiyan Source: Kellogg School Management 21 pages. Publication Date: October 12, 2010. Prod. #: KEL616-PDF-ENG

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