Netflix and Blockbuster Case Study

Parameter

Netflix

Blockbuster

Business Models

Viewed Movie watching as part of daily entertainment

Based on impulse purchases, idea of “Movie Night”

Value Proposition

Selection and Convenience

Movie right away- through convenient location of stores

Distribution

• Virtual stores – delivery and returns through US Postal Service
• no shelf space needed, huge selection of titles

• Brick and Mortar stores situated in high traffic and crowded areas
• lesser selection of titles due to limited shelf space in each store

Pricing Policy

• Unlimited rentals (Subscription based)
• No late fees

• Pay-per-rental
• Late fees charged (represented 10% of their revenue)

Inventory Management

• Focused and pushed the rare titles (long tail)
• National Inventory

• Stocked stores with the fast moving best selling titles (short head)
• Inventory managed locally

Review System

Reviews of Movies displayed to help in selection

No reviews

Recommendation System

Survey for the new user and sophisticated algorithms to suggest the customers relevant movie titles

Recommendation by the sales staff at stores, no efforts on personalization