BLOCKBUSTER DISRUPTED OR DISRUPTOR Asper Consulting Group Emily

BLOCKBUSTER: DISRUPTED OR DISRUPTOR? Asper Consulting Group Emily Sanders Matt Borgford Tanis Brako Carlos Kan

WHY BLOCKBUSTER? Blockbuster is a great example of a company that did not adapt to disruption in their industry, eventually becoming obsolete. Introduction Analysis Alternatives Critique Recommendati on

KEY ISSUE How should Blockbuster react to disruptors in their industry? Introduction Analysis Alternatives Critique Recommendati on

RECOMMENDATION Acquire Netflix to adapt to changing consumer and technological trends Introduction Analysis Alternatives Critique Recommendati on

WHO IS BLOCKBUSTER? Video rental service Sell complementary products Has subscriptions for repeat movie watchers Blockbuster is in the business of providing an experience to it’s customers Introduction Analysis Alternatives Critique Recommendati on

VALUE PROPOSITION To entertain and delight customers with a wide variety of available options. Introduction Analysis Alternatives Critique Recommendati on

CORE COMPETENCIES Introduction Physical Stores Store Operations Great Movie Selection In-Store Experience Analysis Alternatives Critique Recommendati on

THE CONSUMER All Ages Adapt to trends Current Looking for entertainme nt Introduction Analysis Value Experience Alternatives Critique Recommendati on

THE CONSUMER All Ages Adapt to trends Current Adoption to technology Looking for entertainme nt Value Experience Blockbuster did not adapt to the customers changing needs and eventually went bankrupt Introduction Analysis Alternatives Critique Recommendati on

WHO IS NETFLIX? Started as mail order subscription • Went direct to consumer New Technology • Leveraged online streaming Created Standalone rental boxes • Located in high traffic areas Netflix was adaptive in it’s model to reach consumers Introduction Analysis Alternatives Critique Recommendati on

NETFLIX TIMELINE Mail Order Subscription Introduction Created standalone rental boxes Analysis Approach Blockbuster Alternatives Started Online Streaming Critique Adapted to consumer trends Recommendati on

NETFLIX TIMELINE Mail Order Subscription Created standalone rental boxes Approach Blockbuster Started Online Streaming Adapted to consumer trends Netflix was better at adapting to consumer trends Introduction Analysis Alternatives Critique Recommendati on

WHAT SHOULD BLOCKBUSTER HAVE DONE? Introduction Analysis Alternatives Critique Recommendati on

ALTERNATIVES Status Quo • Stay the course and ignore the disruptor • Ex: What happened Introduction Analysis Develop streaming platform • Build an online streaming platform • Ex: Blockbuster Online Alternatives Acquire Netflix • Acquire an existing online streaming company • Ex: Acquire Netflix Critique Recommendati on

ALTERNATIVE 1 Pro Status Quo Stay true to course and ignore the disruptor. Consumer Trends Cost effective Innovation Risk Averse Introduction Analysis Alternatives Erode customer base Critique Recommendati on

ALTERNATIVE 2 Pro Develop streaming platform Build an online streaming platform. Capital Intensive Control Ex: Blockbuster online Introduction Analysis Con Quality Alternatives risky Speed Critique Recommendati on

ALTERNATIVE 3 Pro Acquire Netflix Acquire existing online streaming company. Resources New Revenue Stream Speed Introduction Analysis Con Alternatives Integration Capital intensive Critique Recommendati on

DECISION CRITERIA Stay true to your value proposition Value Proposition Adapt to changing consumer and technological trends Core Competenc y Adaptability Ensure profitability and growth Introduction Analysis Play to your strengths Financial Health Alternatives Critique Recommendati on

ADAPTABILITY Develop Streaming Platform Improves consumer experience Meets changing consumer trends Introduction Analysis Status Quo Acquire Netflix Does not meet consumer trends Improves consumer experience Meets changing consumer trends Not adaptable to technology changes Alternatives Critique Recommendati on

VALUE PROPOSITION To entertain and delight customers with a wide variety of available options. Develop Online Streaming Platform • Meets Status Quo • Meets Acquire Netflix • Meets Introduction Analysis Alternatives Critique Recommendati on

CORE COMPETENCY Physical Stores Store Operations Develop Online Streaming Platform • Meets Acquire Netflix • Meets Analysis In-Store Experience • Does not meet Status Quo Introduction Great Movie Selection Alternatives Critique Recommendati on

STATUS QUO: FINANCIAL HEALTH Revenue 1200 Profitability 25% 20% 15% 10% 5% 0% -5% -10% -15. 00% -15% -20% 20. 00% 1000 15. 00% 800 8. 00% 600 0. 00% 400 200 0 1 Introduction 2 Analysis 3 Alternatives 4 5 Critique Recommendati on

DEVELOP ONLINE STREAMING: FINANCIAL HEALTH 25% 1000 20% Revenue 1200 Profitability 800 15% 600 10% 400 200 5% 0 0% 1 Introduction 2 Analysis 3 Alternatives 4 5 Critique Recommendati on

ACQUIRE NETFLIX: FINANCIAL HEALTH 2500 Revenue 30% Profitability 25. 00% 25% 2000 21. 00% 20. 00% 1500 18. 00% 20% 18. 00% 15% 1000 10% 500 5% 0 0% 1 Introduction 2 Analysis 3 Alternatives 4 5 Critique Recommendati on

RISK OF EACH ALTERNATIVES Status Quo • Lack of innovation to improve customer experience Introduction Analysis Develop streaming platform • Slow growth and reduction of market share to competition Alternatives Acquire Netflix • Capital intensive for acquisition and integration of platforms Recommendati Critique on

RECOMMENDATION Status Quo “what they did” Develop streaming platform i. e. Blockbuster online Acquire Streaming cia. i. e. Netflix Value Proposition Core Competencies Financial health Adaptability Introduction Analysis Alternatives Critique Recommendati on

RECOMMENDATION Acquire Netflix to adapt to changing consumer and technological trends Introduction Analysis Alternatives Critique Recommendati on

APPENDICE

CUSTOMER BASE Status Quo 1 2 Develop Online Platform 3 Purchase Netflix 4 5