Kindly find attached the image and answer The monthly fees were as low as US$4.99 and postagefees were waived for the return as well. For US$19.95 aBlockbuster is a long-established player in the videorental business and has been in the industry since1985. Back then, the industry was mostly small-timevendors distributed throughout a neighborhood withina few city blocks. By 2005, Blockbuster soon became agiant and had the coverage of 25 countries and a totalof 9,100 stores worldwide. This success is enjoyed byonly a few companies in any industry. At that time, VHSsystems and VCRS were most popular. CD and DVDmonth, Netflix customers could access thousands ofmovie titles without ever having to leave home.Kegan Research LLC predicted that online movie rentalswere to reach US$3 billion by 2009. The technologythat Netflix used, coupled with the subscription model,would really give it a huge share of the potential market.Blockbuster, threatened by the presence of a newcompetitor, quickly launched its own subscriptiontechnologies were slowly gaining popularity but werereally a novelty. Blockbuster rental stores worldwidewere equipped with point-of-sale systems and bar codescanners to simplify inventory management and totrack sales patterns to improve marketing decisions.By 2004, Blockbuster had 40% control of the U.S.video rental market, which was estimated betweenUS$7 billion and $9 billion per annum. Its annual videosales reached an unprecedented US$16 billion.service called the Movie Pass and another servicecalled the Game Pass that both had no late fees.Blockbuster chose to remain both online and intraditional brick and mortar. Although Blockbuster hada great distribution network, the setback was increasingoperating costs over time at physical stores and theloss of late penalty fees that were slowly eating into itsrevenue stream.In 1998, there was another competitor emerging with abusiness model never seen before. The company wasNetflix Inc. Its core-value proposition was conveniencefor the video-rental customers by using the internetto facilitate order placements and payments. Deliverywas entrusted to standard shipping services, whichincluded the postal service. The proposed businessmodel also eliminated the need for a physical storelike Blockbuster. Users could log on online and createa wish list of movies they wanted to rent. They paid amonthly fee and would have Netflix mail the movies tothem. Customers could receive up to three movies atany time, and they could keep them for as long as theyliked without penalty charges.Meanwhile, Netflix's customer base had grownenormously and a new threat was quickly emerging.Cable companies worked with renowned moviestudios to sell movies via a Video on Demand (VOD)model that allowed customers to watch movies foronly 24 hours. This worked well for customers who hadcable services. Also, iTunes had proved that peoplewere willing to buy copyrighted material via digitallylegal downloads for US$0.99 per download for a song.Tivo later introduced a digital video recorder combinedwith VOD capabilities. Also, the potential of Googleacquiring YouTube soon created a new threat that wasnever envisaged.gonQuestionsa) What is the business model that made Netflix superior to Blockbuster?b) Describe the technological forces that challenged the Blockbuster model.c) Did the new business model create any opportunities for Blockbuster?d) Was Blockbuster's decision hasty when it decided to maintain both online as well as thebrick-and-mortar platform?e) Do you think Tivo and YouTube could emerge as potential threats? Why?AuthorDr. Saravanan Muthaiyah, Professor, Faculty of Management, Research Institutefor Digital Enterprise (RIDE), Multimedia University, 63100 Cyberjaya, Malaysia.02018 M Seravanan Muthaiyah, Multimedia University. Alrights reservedLearn more at CIMAGLOBAL.comG 2018 Associarion of internarional Certiied Profeasional Accoutants. Al righra reserved. CIMA and The Chanered institure of Management Acccunta are ademerks of The CharteredInstrute of Management Acccuntarts and are regctered in the United Kingdomand other countries. The Globe Designisa trademark owned by the Asscoationof International CertifiedProfessional Acoountama and licansed to CIMA 1810-860

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