Blockbuster Inc.: Casting a New Movie

This case looks at Blockbuster Video in 2003 as it faces challenges from Wal-Mart and the "movies for sale" channel, Netflix and the on-line service channel, and in the future, Video on Demand. Students have an opportunity to design and consider options for defense of Blockbuster's business. Students identify opportunities to provide value for consumers who will rent to sample and then buy a movie. A discussion of the Netflix model provides ideas for many "value adds" to the base Blockbuster system that can drive frequency among current members. Video on Demand, perhaps the largest long-term threat, facilitates a discussion of the barriers and enablers of new technology diffusion. The case also works beautifully as a discussion piece on complex pricing structures.