Blockbuster and New Media

How Technology and New Media have Changed the Way Blockbuster

Does Business

IMC 498-24: Entertainment Marketing Monday, November 16, 2009

Stephen Davis and Melissa Lopardo

Blockbuster’s Competition

On-Demand iTunes Netflix Redbox (kiosk) Mom-&-Pop video stores

Blockbuster’s Plan of Attack

Store Closings Divesting its Foreign Operations Renew Focus on North American

Business and Digital Future

Source: AOL Finance, Blockbuster INC Profile

http://finance.aol.com/company/blockbuster-inc-class-a/bbi/nys/overview

THE PRICE$

Blockbuster• Store rental $4.89 for new release• Mail plan ranges from $4.99 to $34.99 per mo.

for as many as 3 dvd’s Redbox• One dollar per day up to 25 days• After 25 days customer can keep dvdNetflix• $4.99-$47.99 monthly for as many as 8 dvd’s• No late fees

Source: Chicago Tribune

The way movies are rented from Redbox, NetFlix and Blockbuster differ as much as the

way they are priced

Netflix Plan

“We named the company Netflix, not DVD’s by Mail, because we knew we would eventually deliver movies over the Internet. DVD’s will be around for a long time, but we are building for the day they are not.” – Reed Hastings, CEO, NFLX

NetFlix Fun Facts

• Created due to a $40 late fee for movie Apollo 13

• Spends $600 million per year at USPS

• Has patent on business model which reduces imitation by competitors

• As broadband becomes more prevalent and

cost of set-top boxes decreases, VOD is expected to gain ground in entertainment market

Source: Forbes Magazine

Netflix Focus 2009

Exclusively on subscription segment ofinternet delivered content

source Netflix Annual Report

BlockBuster Focus 2009 Online subscribers

deals with free in-store rentals

Rewards program to enhance customer loyalty towards stores

Source Blockbuster Annual Report

BlockBuster FutureTent-Pole-Title Program

A major focus is bringing customers more copies of big box office titles to rent or to buy and is supported with marketing message in the store.

Example- Indiana Jones-themed car Marco Andretti drove in Indy 500. Show car was featured at local events at BB stores before hitting track at Indy 500 in May 2008

Soucre Blockbuster Annual Report

Some movies streamed instantly:

• Instantly watch online on your PC or Mac

• Instantly watch right on your TV via a Netflix ready device.

• Choose from a growing library of movies & TV episodes.

As a bonus to your DVDs by mail,some movies streaming to your TVover the Internet!

Source Netflix Press Kit

NETFLIX FUTURE

Blockbuster Operations

Stores- Domestic stores generally open 365 days a year, with daily hours 10 am-10pm. As of Jan. 2009 4,585 stores in U.S.

Mail- offer 90 thousand movie titles, no due dates and option of video-game rentals beginning in 2009

Vending- used to expand physical distribution of media entertainment, continue to test solutions to offer convenience to customers

BlockBuster Digital Delivery Movielink, LLC- offered on

Blockbuster website, movie downloading business with one of the largest libraries of digital content for both rental and sale. Allows for capitalizing on film downloading market and additional choices for customer needs.   Blockbuster In store

Mail NETFLIX

Monthly price per number of DVDsout at a time

1 DVD $11.99 $8.99 $8.99

2 DVDs $16.99 $13.99 $13.99

3 DVDs $19.99 $16.99 $16.99

Reed Hastings-Netflix CEO

Never underestimate the competition: We erroneously concluded that Blockbuster (BBI, Fortune 500) probably wasn't going to launch a competitive effort when they hadn't by 2003. Then, in 2004, they did. We thought, well, they won't put much money behind it. Over the past four years they've invested more than $500 million against us.

Source : Forbes Magazine Jan. 2009

BBI Stock

HIGH 2002 $28.60LOW 2009 .82

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NFLX- MOST RECENT STOCK PRICE $59.33 /last Friday

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STOCK PRICES

PARTNERSHIPS 2009

NFLX & MICROSOFT

MICROSOFT AND SONY BEGAN OFFERING XBOX CONSOLE OWNERS VIDEO-WATCHING SERVICES– THROUGH A PARTNERSHIP WITH NETFLIX

SONY, WITH THE PS3, BEGAN OFFERING ACCESS TO NETFLIX

BBI & SONIC SOLUTIONS

Provides “know how” to bring movie downloads and rental services to devices and to extend business to media players, set-top boxes and internet ready tv’s