Question

Need assistance responding to this DB post in personal opinion in 100 words

One of the industries that has been broadly affected by the internet is the entertainment industry. There are likely dozens if not hundreds of examples of where an organization was either presented an opportunity or a threat due to the internet, but for this example, I would like to focus on a business that was threatened by the internet to the point where it actually had to file for bankruptcy. The business organization that I am referring to is Blockbuster Video. Blockbuster Video was a movie and video game rental company, that utilized a membership model service where by members could rent movies (originally VHS, then DVDs, then lastly Blu-rays) for a specified time. Originally this had to be done by physically going to one of their brick-and-mortar locations, but as services like the internet-based Netflix began to enter the entertainment market, and offer services where the customer could actually have a DVD/Blu-ray sent to their home, Blockbuster began to offer that same service as well. As digital streaming became more prevalent through Netflix as well as several other competitors, Blockbuster could simply no longer compete. Using the Strategic Dimensions of the Internet, we can see where Blockbuster really lost its competitive advantage, the most prevalent of the dimensions at work in this example would be that of the Internet as a distribution channel. As the ability to have movies in a digital format became a reality, the internet provided a perfect and almost instantaneous distribution channel, where by the services offered by Blockbuster became obsolete.

Answer 1

Ans

The case can be analyzed from the perspective of Porter's five forces model of industry analysis. The two most relevant forces applicable in this case are:

Competitive Rivalry: Blockbuster was very focussed on the action of its competitor Netflix and started doing home delivery of discs when Netflix started it. However it was not preparing itself for the change in technology and the threat that was emanating from it. This has been covered in Threat of Substitutes

Threat of substitutes: Internet streaming of movies became possible due to rising speed of internet and its access through mobile devices and tablets. Netflix made a quick pivot based on this new technology and changed their business model. Blockbuster was slow to react to this threat and by the time Blockbuster realized the threat there were enough barriers to entry that Netflix had built in terms of exclusive partnerships and building technology capability that was impossible for Blockbuster to replicate. Thus blockbuster had to file for bankruptcy.