1. How would you characterize the differences between Blockbuster's and Netflix's business models?

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Blockbuster rented VHS video cassettes through retail stores by a pay as you go business model. Blockbuster’s shelves prominently displayed hit and newest movies. It offered a better experience and lower prices as compared to other stores. Sales force made a suggestion to the customer about the movies that they recommend. Substantial revenue also came from selling merchandise and charging late fee to delayed rental return. They focused on increasing the number of stores for business growth. Netflix was a subscription based DVD rental company, with distribution centres instead of retail outlets. DVDs arrived at your home by ordering on their website. Later they added an online subscription based entertainment model. Netflix’s proprietary recommendation system supported customers in selection of their next movie by analysing their preferences. The customer acquisition cost was high. Netflix's website had various important functions like ordering, subscribing and unsubscribing, “queue” feature to build a list. New movies contributed to about 30% of rentals revenue and existing or small studio productions contributed to 70%, having a broader variety of movies to select from.

keosha answered 6 months ago

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