Blockbuster vs. Netflix: Which Will Win Out?

Question 1.
Blockbuster has emerged as a video rental business in 1985, and until 2004 its business model has been to open up as many "brick-and-mortar" stores across the country as possible.Until online movie rental companies started coming into play in the late 1990s, Blockbuster's business model proved to be very successful: according to the case study, Blockbuster possessed a 40% market share of the video rental industry in 2004.
Question 2.
Several industry and technology forces have challenged Blockbuster's business model. First, the appearance of other players with a different business model has created competition in the industry. Netflix came out with a dramatically different concept in 1998 by offering an online subsciption service for a low monthly fee, with no late penalties and by delivering movies directly to the customers via mail. The expansion of Internet and related technologies has also caused other companies, such as Movielink, to get into the downloading business and take away even more customers from Blockbuster. Users can download a movie onto their computers and watch it on the computer or re-route it to the TV screen with the use of special cables. With the development of these technologies Blockbuster is now facing several problems. It has to find a way to retain existing customers as well as keep attracting new ones. Blockbuster decided to eliminate all late fees and also created its own online rental service that is integrated with its stores. A Blockbuster customer can order a movie through the online service, receive it in the mail and then return it either in the mail or to any Blockbuster store. If the customer chooses the latter option, he can also rent a movie from a store free of charge.
Question 4.
I think Netflix has been very successful at its strategy and business model. It has been in business since 1998 and had more than 3 million subscribers by 2005. It offers a simple, convenient and fast way to rent movies and return them at any time. When a movie is received at the distribution center, a new movie from the customer's "wish list" is sent out. In my opinion, however, Netflix will have to get into the movie downloading segment to remain competitive in the future.