Blockbuster and Technological Substitution - Essay Example

?Running head: Information Technology for Business Innovation Number: Due Blockbuster and Technological Substitution Blockbuster is an American based company that offers video games and home video rental services initially through video rental shops but later adopted use of such distribution channels as DVD-by-mail, kiosks and streaming video on demand. At around 2009, the company faced stiff competition from other video rental companies such as Netflix and by the year 2010, it actually filed a bankruptcy and was later won by a company called Dish Network at an auction How has Blockbuster used technology better market to its global customers? As far as technology is concerned, there have been great advances in the movie industry and any company needs to stay abreast with these technologies in order to thrive. Blockbuster has, as stated earlier, used such technologies as streaming video on demand, kiosks and DVD-by-mail to distribute it products. There are various technologies that the company has put in place to ensure that it reaches its global customers as far as marketing and distribution are concerned. To start with, the company offers DVDs on a mail platform whereby movies are send to the consumers on request by mail and on a rental basis. For this technology, consumers request for movies of their preference or the ones they wish to rent and put them in a queue. The company then sends the ordered movies as soon as they become available. The movies are actually send in a postage paid envelope and come with a postage paid return envelope so what the consumers do is to watch the movies, put them into the accompanied postage paid envelopes and drop them in them mail then wait for their next ordered movie to be delivered. The only disadvantage of this technology is that customers can not be able to exchange the movies immediately after they watch them. Due to the fact that its customers are distributed globally, another disadvantage may be the high cost of delivery as compared to online method (Hayes 2005). Secondly, the company uses an online streaming technology whereby customers log on to the service which is based on a pay as you access plan then they can access movies of their tastes. As if this is not enough, the company offers free movies on a trial basis or after activating the media players then afterwards one has to pay to watch the subsequent movies. In 2003, blockbuster eventually launched their rental subscription program which allowed members to rent an unlimited number of movies during the duration of their subscription without the worry of any late fees. Basically, majority of the movies cost from $2.00 to $ 3.00. Examples of the online streaming services offered by blockbuster include; Vudu and Amazon on demand. It also has contracts with some movie distributors in order to receive movies quickly than the Netflix or their other competitors, Redbox; this betters its customers since it has locations globally. It also strongly emphasizes on new releases which means that their customers always receive the latest products in the market. The company also offers Blu-ray disks which offer advanced features like high definition and storage capacity as compared to DVDs. Has Blockbusters approach been successful? Although blockbuster tried to offer all its services at a friendly manner such as free movies on trial basis and home delivery of their products, it has still not been that successful. This is because it is faced by a lot of competition from its competitors such as the Netflix, movie gallery, and Hasting Entertainment and Red box. When it comes to online streaming for example, a company like Netflix out did Blockbuster by the fact that its payment plan was friendlier than that of Blockbuster. To be more precise, the company (Netflix) offers unlimited online streaming at the cost of $7.99 per month which is reasonable far much cheaper than Blockbuster’s $ 2.00 to $ 3.00 for every movie. The deal offered by Netflix is even made better by a situation whereby a consumer has fast internet connection and the facility that can display high definition graphics. Secondly, the idea of movie rental services is generally becoming outdated as far as meeting the customer demands is concerned and also with the view of emerging technologies. Experts in the movie industry have actually pointed out that DVD rental services is on a steep decline on the face of technologies like internet Protocol Television (IPTV) and video-on demand that are gaining ground at a high rate. The reason behind their popularity is that they offer greater conveniences to customers in terms of what they need and when they need it. Another factor that has contributed to Blockbuster’s failure is the combined effect of the competing technologies and companies. For example, although Pay per View (PPV) may not be able to offer some features offered by movie rental services such as a wider selection, ability to rewind and fast-forward, and immediate viewing, when combined with another technology like Personal Video Recorder (PVR), the effect becomes more pronounced and they gather the potential to mimic services offered by Blockbuster. A consumer can for example be able to access a movie on a PPV basis and watch it using a PVR technology and this will enable him/her Lastly, another factor that may have contributed to the company’s failure is poor leadership; changes in the CEOs of the company was a likely contributor to its failure in that each CEO came with a contradicting strategy which meant that the company did not have a sense of direction and therefore it was difficult for it to succeed. For example, one of the company’s CEO Bill Fields, in the early 1990s began repositioning the company from a rental to a retail format. After some time and probably what was a likelihood of its failure, Fields resigned his position in 1997 which was taken over by John Antioco. The latter CEO on the other hand reviewed the company and declared that the company needed to be redirected back to its basics. This confusion experienced by the company was wastage of time and other resources and was a possible contributor to its failure (Hayes 2005). Since 2005, what other technologies have been developed for this market that Blockbuster has or should consider? Battling financial losses, fierce competition from a growing array of competitors and layoffs, Blockbuster is betting its survival on a slew of new technologies tailor made to make it more convenient for consumers to watch movies wherever and however they may want. From DVD rental kiosks to streaming video over the Internet to TVs and cell phones, from downloading movies to memory cards at a store, Blockbuster is trotting out a stream of new ideas. There has been great advances in the movie industry as earlier stated some which the company has already adopted and others which it’s yet to adopt. One of the technologies Blockbuster has used since the year 2005 is Blu-rays. A Blu-ray Disk normally abbreviated (BD) is basically an optical storage disk which is similar to DVDs and CDs in terms of size but differs in the storage capacity in that its storage capacity ranges from 25 GB up to even 128 Gb for BDs with quadruple layers. Basically, a normal feature-length video BD contains two layers. One of the main application of BD is as a medium for video material like feature films. This is because besides its hardware specifications, BDs are associated with a set of different media formats. This media formats allow both audio and video materials to be stored with greater definition than in DVDs. Another technology used by Blockbuster since the year 2005 is online movie rental services. In this technology, Blockbuster allows users to log on and access movies online. One of the conveniences offered by blockbuster over its main competitor- Netflix is that it made newly released movies available earlier. To add on this, it went ahead to provide membership to its consistent customers. The membership allowed such customers to receive special offers such as one free game or movie per week. On the other hand, there are other emergent technologies that blockbuster has not adopted which I believe would add value to its services if well incorporated. To start with, Blockbuster has not made use of the Digital cinema technology. This technology basically refers to the use of digital technology in the capture, distribute and projection of motion pictures. A movie can for example be distributed using hard drives, satellites or even optical disks like Blu-ray Disks and DVDs then projected using a digital projector instead of the usual film projectors. This is one of the current technologies in the film industry which need to be embraced by any company-Blockbuster included otherwise it will be left behind technology wise. In fact, according to screen digest, worldwide cinema screens will have converted into digital by the year 2012. Video on Demand (VOD) is another technology that has not been exploited by Blockbuster. VOD is an interactive television technology that allows consumers subscribed to view program on a real time basis or download the programs and watch them later at their convenient time (Hayes 2005). The VOD service can be delivered via the internet to personal computers (PCs), portable computers like laptops or even high-end cellular phones. Alternatively, consumers can use a standard TV receiver along with a set-top box to access the service. The only limitation with this technology is that it requires high internet connectivity because in cases whereby customers demand several programs on a continuous basis, the amount of data associated in terms of capacity can overwhelm the network sources. This results into long download periods which may inconvenience customers. Blockbuster can lias with providers of VOD for such services advertising, release etc. Finally, blockbuster can make use of the home delivery technology. According to the case study, this is a sustaining technology which is a variation of the delivery technique sued by Blockbuster. It is one of the delivery technique used by Netflix and one of the minor threats facing the company. What challenges do you see with implementing the technologies you suggested in question #3? As a matter of fact, coming up with the ideas of implementing the technology is just the minor part of the deal. The main challenge is the actual implementation of the technologies. According to my own point of view, there are various challenges that the company might face. To start with, the film industry is undergoing rapid technological advancement. It therefore becomes difficult for a company to keep in touch with these technologies. In order to stay abreast with the advancing technologies, a company like Blockbuster needs to have good expertise that can monitor the changes in technology at a distance and implement them first for the company to enjoy the benefits associated. This means that time must be saved to avoid technological obsolesce and hence keep updated. Another challenge in implementing these technologies may be lack of adequate finances. Conversion here means that the company may need to acquire other necessary facilities. For example, a technology like VOD demands high internet connectivity as stated earlier. The infrastructural components necessary to facilitate this service along with many other requirements demands for huge amounts of money which the company might not have. Thirdly, as much as many companies are working towards embracing technology in the operations, I see a negative impact of this approach in that users may tend to misuse the opportunities associated with online services. In the case of VOD for example, the technology allows users to access free movies on a trial basis, some customers may emphasize on the ‘trial basis’ and never purchase a movie. It’s also possible for users with advanced skills in computer programming and software to circumvent the procedures laid down by the company to earn income. They can for example find a way of watching movies online without paying. Lastly, there is need for good leadership in the implementation of these technologies. In the recorded history of Blockbuster, there have been rapid changes of the company’s CEOs which might become a risk to the success of the implantation process. To add on this there is need for the upper management to stick to their strategies to avoid contradiction Reference Hayes, T. A. 2005, Blockbuster and Technological Substitution: Case Study Analysis. Read More