Blockbuster Video Case Analysis

Blockbuster Video case analysis

David Cook founded Blockbuster video in 1985, opening the first store in Dallas Texas and has grown to become the world's number one video chain. Mr. Cook took the idea of video rental and improved it by creating the video superstore concept. Many family-owned video rental stores could not compete against Blockbuster' stores. Blockbuster stores were highly visible stand-alone structures that appealed to customers. Blockbuster His stores had a wider selection of videos and offered longer hours of operation. He focused on creating a family image for his stores by including a children's section and excluding adult movies. He also made it possible for busy people and people with children the opportunity to view movies for a longer period by starting the 3 day rental period. In 1986, Mr. Cook sold 33% of Blockbuster to h, m & Flynn and in 1987; he decided to leave the company making Mr. Huizenga CEO. Mr. Huizenga had experience growing small companies but no experience in retail, so he hired the best managers who were capable of developing a retail chain. Under Mr. Huizenga's leadership Blockbuster experienced major growth. By 1992, Blockbuster had over 3,000 stores (1,000 franchise and 2,000 company owned). Blockbuster had established 3 operating divisions to manage functional activities. These three divisions cut cost for the company by eliminating the outsourcing of these jobs.

SWOT ANALYSIS

STRENGTHS

One of Blockbuster's greatest strengths is its ability to keep up the change. When video tapes and VCR's were going out of style, Blockbuster quickly moved to DVD rental. Blockbuster will continue to see feel the growth of DVDs. Approximately 80% to 90% of all homes will have DVD players within the next 10 years. They also moved into the video game rental when Sony play station and Nintendo game cube became popular. They formed a relationship with Direct TV to sell satellite dishes in their stores in exchange for a percentage of the sale price and monthly service fee. Brand recognition is another strength for Blockbuster video. Blockbuster is the most recognized video store in the country. When people see the blue and yellow sign they know exactly what it is.

WEAKNESS

One of the major weaknesses for Blockbuster is its dependence on bricks and mortar. Blockbuster was slow to move into the online video rental market as well as the video