NETFLIX vs BLOCKBUSTER

Madhava nurmawan

Netflix, the world’s largest streaming service, worth almost 150 billion USD Despite the many controversies that could slow its roll, from the ‘Cuties’ scandal to the racial issue surrounding ‘Queen Cleopatra’ that keep arising, Netflix won’t stop growing In fact, despite its absolute turmoil towards May 2022, it kept on growing. For now, Netflix has become an unstoppable beast, scouring for the next horizon to conquer

The reason I believe this ‘David vs Goliath’ esque tale grabbed my attention was the pure irony of one of Netflix’s newest hit shows, that they have been bombarding their viewers with, ‘Blockbuster’ Now, despite the less than stellar reviews and the show being canceled after one season, it is quite notable in my opinion to see how Netflix managed to fully produce a ‘Blockbuster’ show, when they were willing to submit to them in their infancy.

We’ve reached an era of at least 3 generations not knowing what Blockbuster even is or does, so I find it best to explain what was the blueprints to one of the most successful innovations to date. Blockbuster was a franchise of home video rental shops which evolved into a market of videogames, delivery and more. So imagine your local DVD shop but instead, it was a huge franchise worth 8 4 billion USD

Netflix took the idea of a movie rental and put a spin on it. After Reed Hastings received a late fee on a movie rental, he had a thought. His idea was to increase the convenience of renting films by having a system which would allow their customers to go to their website and rent a film without late fees Along with that, they would ship within 1 business day, so needless to say these were hefty promises for a startup.

But these promises were necessary as they had to take down their ‘Goliath’ in Blockbuster. Yet in 2000, with an ever-growing customer base, they were still making net losses of 57.4 million USD. So Netflix took a drastic measure and did the unthinkable, in a last plea to hang on to any form of success, they gave in to Blockbuster. But that September in Dallas, the course of actions taken could have changed the entire face of entertainment and much more

Rural California, Netflix has their first corporate retreat only to be informed that their request has been approved but their meeting with Blockbuster they had waited months for was the next day at 11:30 in a completely different state. While the walls looked to be crumbling in, Reed Hastings realised that both he and Marc Randolph would have to fly at 5 am the very next day due to being currently involved in a retreat This would end up costing around 20000 USD as Reed Hastings threw his last hail mary.

Hastings and Randolph were astonished by the sheer vastness of the headquarters and Randolph was taken aback at Antioco’s footwear It seemed so lavish to him and exclaimed that it looked like it cost more than his own car. When they got to the negotiation, Hastings proposed to “join forces,” only to be met with a response of "The dot-com hysteria is completely overblown " They would then get into a heavy debate on the sustainability of Netflix Ed Stead then asked how much Hastings and Randolph would be willing to sell for When Hastings said “fifty million,” things went quickly downhill. Randolph noticed that Antioco was trying not to laugh. The deal fell through

3 years later Netflix broke even and started making a profit Blockbuster would also try this format a year later upon seeing its success Hastings described the 2004-2007 saga as intense but noted “Really, if they started 2 years earlier they probably would have won”

The reason why the saga ended in 2007 was this very final move, the start of the Netflix we all know today Integrating films through use of streaming was meant to just be a perk for their subscribers, but this model would be exactly what they needed to beat Blockbuster Due to the unproven nature of streaming at the time, Netflix landed a big time contract with Starz for what is relatively cheap in hindsight. They would end up expanding year by year and would reach more and more countries.

Around this time in late 2010, Blockbuster would get delisted from the New York Stock Exchange as they had filed for bankruptcy. They were 1 billion USD in debt and filed a Chapter 11 bankruptcy. Chapter 11 bankruptcy allows the debtor to keep their power and duties along with being able to borrow new money but must propose a plan to change the current organisation.

2011 saw the invention of ‘Netflix Originals’ to combat the loss they had from a fallout with Starz It is obvious that this concept was a rousing success, especially after ‘Squid Games’ with one season alone managed to pull in 900 million USD This continued expansion has reached a point where Netflix is now worth around 150 billion USD.

Now in the modern day, there is one last Blockbuster in Bend, Oregon. It is safe to say who are the true victors of this story, quite the satisfactory ending for the underdogs who got ridiculed to pull through.

Bibliography

Andreeva, N. (2022, December 16). “blockbuster” canceled by Netflix after one season. Deadline. https://deadline.com/2022/12/blockbuster-canceled-netflix-randall-park1235192820/

Zetlin, M (2019, September 20) Blockbuster could have bought Netflix for $50 million, but the CEO thought it was a joke Inc https://www inc com/minda-zetlin/netflix-blockbustermeeting-marc-randolph-reed-hastings-john-antioco.html

Jain, S. (2023, March 31). The history of netflix- founding, model, timeline, milestones (2023 updated) VdoCipher Blog https://www vdocipher com/blog/2017/06/netflix-revolution-part1- history/#:~:text=Netflix%20was%20founded%20in%201997,now%20has%20millions%20of %20subscribers

Fritz, B (2010, September 23) Blockbuster files for Chapter 11 bankruptcy, sets plan to reorganize Los Angeles Times https://www latimes com/archives/blogs/company-townblog/story/2010-09-23/blockbuster-files-for-chapter-11-bankruptcy-sets-plan-toreorganize#:~:text=After%20struggling%20with%20nearly%20%241,11%20bankruptcy%20p rotection%20on%20Thursday