It has been asked how a company like Blockbuster Video could be loosing significant market share to new coming companies like Netflix? To this question I would like to say that I see the above question as being very ambiguous to the long-term relationship Blockbuster has developed with their clientele. It is obvious that Netflix has momentum, which may not end anytime in the near future but in the long term; I would have to argue another point, which is entirely related to our discussion. I will argue that a new company with a highly specialized business objective will not be able to have a lasting affect on a huge company with extremely useful resources like Blockbuster due to the fact that Netflix is still young -which causes problems in the long term- they are highly specialized -which keeps them from being able to change and adapt to current market trends- and lastly while Netflix is not a service oriented company -which takes away from peoples ability to create a long term relationship with them- they will not be appreciated like a service oriented company like Blockbuster. However, for the sake of arguing lets speculate as to the effects of Netflix’s steep rise to power in the movie rental industry and how it affects the long term relationship Blockbuster has built with their clientele.
First of all Blockbuster is a well-diversified company with nothing but potential. The Blockbuster movie rental company is a multi-billion-dollar company, which is not about to settle down anytime soon. Last year, Blockbuster made $6 billion in revenue, which by far exceeds any other movie rental company. If you are saying that they are loosing ground you would be right, but not completely. Out of their 6000 stores they only closed about 150 of them-not bad considering-. Yes, they do have debt and financial obligations, which destroyed their stock value. But, they are still bringing in a lot of money. This equates to long-term market position in many ways.
Netflix is a highly specialized company only dealing with one aspect of movie rentals. Even with steep competition in that one particular section of the movie rental industry, I do not see it as being likely that a highly specialized company like Netflix would be able to knock a diversified company like Blockbuster out of commission based on the fact that they have done extremely well during their first few years of production. I do however, think it's a very real possibility that because of Netflix’s momentum compiled with their ability to adapt to an ever-changing market they will continue to grow and possibly destroy Blockbusters chances at dominating all angles of the movie rental industry. However, in my opinion, Netflix has not proved themselves in any long-term market scenarios, which makes them vulnerable.
Vulnerability comes in many faces. For example, Netflix has not had any management problems, which will happen. They have not had to acquire debt, which is inevitable, and they have not lived through any recessions, which eventually will complicate their glory boy days of beginning existence. While they are still vulnerable they are also neglecting one major aspect of major market strategy.
It is a commonly understood marketing principle that in order to sell a product to the largest share of people possible, one needs to cater to as many general needs as possible. In my opinion, this battle between online movie renting combating the mix of online movie renting coupled with the option to rent movies from a person at a store is a fairly obvious one. People have different needs, which require multiple ways to fulfill those needs. While some people have no preference as to whether they would rather communicate with a knowledgeable professional about their potential purchase, others will always prefer face-to-face contact when making a selection. I personally could care less about how I receive my movies (actually I prefer the computer but for argument's sake I would say that they are both just as inconvenient. On one hand, I have to wait in lines on the other hand, I have to wait for the movie.).
Because there are disadvantages to both systems, one has to make a judgment as to overall value, which in my opinion equates to the amount of options one is given. Not only do I think little about how I receive my movies. I think little about personal contact, time I am able to keep my movie rental, as well as price. While all of these issues play a role in my decision, none of them alone keep me from going to one source, as opposed to another. Because of Netflix’s lack of options, Blockbuster simply has more reasons to be visited.
Even though Netflix has momentum, who is to say that Blockbuster can’t do the same thing if not better then Netflix? Blockbuster recently started a campaign, which delivers movies to ones door while at the same time, giving clients of opportunity to return those movies to the store while receiving a complementary in store DVD rental in return. This campaign gives Blockbuster an opportunity to utilize their in-store functions while at the same time providing convenience that Netflix may never be capable of. In this case scenario convenience is on the side of Blockbuster.
No comments:
Post a Comment