Netflix and Disruptive Innovation Essay

Words: 1981
Pages: 8

Who is the king of the movie rental industry? Is it Blockbuster, Redbox or Netflix? Blockbuster was the king of VHS rental with their brick and mortar stores for more than 20 years. Netflix was the first to market with the idea of shipping DVDs directly to consumer’s homes but are now focusing their resources and attention to online streaming. Netflix is slowly getting out of the DVD and Blu-ray rental game by raising the prices of their DVDs and Blu-rays. Netflix is spending more money to increase the size of their online library for streaming. The two companies that are battling it out to be the king of the rental industry are Redbox, a company owned by Coinstar Inc., and Blockbuster. This paper will focus on how
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Companies like Blockbuster were distributing their movies from brick and mortar stores that stayed open normal retail hours. Redbox held an advantage because customers could pick a movie up 24 hours a day, 365 days a year.
In another interview with Clayton Christensen, he references the impact a company can have on the market place when he talks about a tax Software, QuickBooks, which was developed by Intuit. The software was easier to use and had less features than the other software in the marketplace. Within two years QuickBooks went from 0% market share to 80% market share. (Eucner, January, 1 2011, p.13)
People flock to Redbox day and night to rent their movies while Blockbuster continues to struggle, and is closing their brick and mortar stores in huge numbers and had to file for bankruptcy. Blockbuster has had a hard time adjusting to an industry that was once a growth industry when their first store opened in 1985 by David Cook to an industry that is very mature and volatile (Wooldridge, Matulich, Riddick, January,1 2007, p. 1). According to Gleason from the Wall Street Journal, Dish Network bought Blockbuster out of Bankruptcy and will close 500 of the remaining 1500 stores in the first two quarters of 2012 (Gleason, February, 24 2012 ).