Blockbuster Video Company

Introduction

Scenario-type planning is an approach used to evaluate various scenarios to aid in predicting and planning the future. It aids in the dynamic response to future unknown events. Scenario-type planning can also be described as the process of thinking and planning for future events by developing a resilient, effective and responsive solution. It is used to plan for future events such as changes in economic conditions, social attitudes, and political environments. The long-term demands and needs and an external view of what can and cannot be controlled are critical in scenario-type planning. Scenario-type planning is useful in projecting and promoting innovation activities. The scenario-type planning process is more beneficial when an innovation is very disruptive to an organization’s activities and processes. This approach provides possibilities for creating multiple alternatives to reasonable future scenarios and makes it possible to analyze them in-depth. It also considers the driving forces and alternatives that may influence the dynamics of future scenarios.

Scenario-type planning

Blockbuster Video is an example of a company that failed to use scenario-type planning and adjust to new technologies by relying only on standard forecasting techniques. In 1999, Blockbuster was among the earliest video chains renting videos on DVD (Digital Versatile Disc).  In the same year, the company predicted that it would have 3,800 video stores selling 200 DVD titles in the US and about 1,000 video stores internationally. By 2004, it had grown exponentially and more than 9,000 stores worldwide. However, in 2010, Blockbuster filed for bankruptcy. Currently, Blockbuster has only one store in the US. What could have happened to such a successful company?

Blockbuster had several changes in its leadership that had significant consequences on its eventual outcome (Almeida, 2011). Netflix, a streaming service used widely today, approached Blockbuster for a merger. The terms were Blockbuster would buy Netflix for 50 million and allow Netflix to run the online services. Blockbuster rejected the offer and wasn’t interested in online services. It also underestimated Netflix’s online services and didn’t consider it as a threat to its market.. When Netflix and Redbox dominated the market and threatened Blockbuster’s position in the market, the company decided to make changes and invest in online services. After a few months, the company experienced a change in leadership and reverted to the ‘old’ business model, which eventually led to its demise.

Blockbuster failed due to its inability to adapt to social and technological change (Davis & Higgins, 2013). The market was no longer interested in renting DVDs and cassette videos. People were enjoying the streaming services Netflix provided. Blockbuster believed its business model was solid, and people would still come physically to rent DVDs. It also thought that people would not be interested in the subscription program. Late fees contributed a significant amount to Blockbuster’s revenue (Edgar, 2010). Netflix did not charge late fees since they offered a subscription service where customers could keep their movies for free. Blockbuster’s attempt to remove late fees to adapt and catch up with Netflix had devastating consequences since it began losing money rapidly. The company’s revenue relied on its outdated business model and could not adapt to social and technological change. It could not afford to change its business model since it would have to be rebuilt from the ground up.  

Social and technological forces influenced Blockbuster’s decision to neglect scenario-type planning. It is difficult to predict social trends because they are highly unstable. The coronavirus pandemic, for example, had significant consequences for businesses since it was difficult to prepare for such a scenario. Lockdown restrictions led to a change in social trends since people had to use streaming services to access and watch movies. Many companies were not ready for such a quick social change and had to increase their bandwidths accordingly. Similarly, Blockbuster was not prepared for the shift in preference. The company earned large amounts of money from penalizing its customers for late fees. Customers were growing tired of these charges. Blockbuster thought customers loved walking into stores to pick up movies and snacks. However, customers preferred watching movies and eating snacks at their homes. Blockbuster’s failure to predict and prepare for social change led to many customers switching to alternative companies that met their needs.

Technological forces also contributed to Blockbuster’s demise. As a retailer, Blockbuster did not have the resources or capabilities to change its structure and become an online company. The company had already created an online presence through its website but it was not used for renting DVDs or selling merchandise. Blockbuster was a traditional brick-and-mortar business specializing in selling and renting DVDs in its physical stores (Gershon, 2013). When other online companies such as Netflix offered to provide movies online, they were unwilling to try the new technology. Blockbuster also failed to provide video-on-demand services like their competitors. It also decided against using internet-based subscription services. The failure to embrace new technology was a significant strategic failure that eventually led to their demise.

I will use a six-step process in scenario-type planning to prepare for future efforts. The process enables planners to handle social, economic, and technological changes and their impacts. The steps are:

·         Make predictions of future scenarios through brainstorming and identify their driving forces.

·         Analyze the driving forces and consequences of the predictions.

·         Arrange the driving forces based on their importance and uncertainty.

·         Create a scenario matrix based on their importance and uncertainty. Identify the available options and the requirements to prepare for the scenarios.

·         Analyze the scenarios and their implications.

·         Update policies and strategies accordingly.

Conclusion

Industries and organizations should embrace scenario-type planning in planning and preparing for future innovations. Scenario-type planning is useful in evaluating new technologies in different scenarios to better plan for the future.  It can be used to manage and mitigate the negative impacts of change. Blockbuster and the newspaper industry neglected using proper scenario-type planning and failed to adapt to change to continue being competitive. Companies can remain relevant by maintaining a positive climate that facilitates creativity, innovation, and agility. Change is prevalent in the modern world, and it is important to be well prepared. Scenario-type planning is thus an effective way of preparing for future unknown events. Companies should also embrace new ideas and capitalize on them to maintain their competitive advantage. 

 

References

Almeida, J. (2011). Blockbuster. The Fall of a Giant.

https://repositorio.ucp.pt/bitstream/10400.14/8236/3/Blockbuster%20Inc..pdf

Davis, T., & Higgins, J. (2013). A Blockbuster Failure: How an Outdated Business Model Destroyed a Giant.

https://ir.law.utk.edu/cgi/viewcontent.cgi?article=1010&context=utk_studlawbankruptcy

Edgar, B. (2010). Scenario Planning as a Tool to Promote Innovation in Regional Development Context.

Gershon, R. A. (2013). Innovation Failure: A Case Study Analysis of Eastman Kodak and Blockbuster Inc. In Media management and economics research in a transmedia environment (pp. 62-84). Routledge.

https://www.taylorfrancis.com/chapters/edit/10.4324/9780203538326-13/innovation-failure-case-study-analysis-eastman-kodak-blockbuster-inc-richard-gershon

Comments

Post a Comment

Popular posts from this blog

  Web Request       Goddie Robins   Introduction I shall boot up my laptop and connect to an Ethernet connection through the Ethernet switches to the school router. The school router connects to an internet service provider (ISP) which provides DNS services to the school. Therefore, the DNS servers are located on the ISP’s network. The DHCP server is running on the school’s router. When I plug in the Ethernet cable, I cannot access any webpage since I lack an IP address. Therefore, the school’s network will first run its DHCP server to generate an IP address for my device.   Web Request My laptop’s operating system will generate a DHCP request and add the request to the UDP segment that contains the DHCP server and client. The UDP message is encapsulated in an IP datagram containing the source IP address (0.0.0.0) since his device has not been allocated an IP address. Still, I cannot access the network. The IP datagram that contains the DH...
Read more
Image
  Phishing Phishing is a form of social engineering attack that aims at encouraging internet users to reveal sensitive information such as bank login credentials and credit card numbers through websites that appear legitimate. Attackers, in this case, pretend to be companies or acquaintances that send messages containing links to phishing websites. Ollmann (2004) conducted a survey that revealed 57 million internet users received phishing emails in the United States and 2 million victims were compromised. Another survey revealed that there were 1,862 data breaches in 2021, with each breach costing businesses an average of $4.65 million (Fowler, 2022). This study discusses the types of phishing attacks, their implications, challenges and ways of identifying and preventing them. Phishing attacks in the airline, education and healthcare sectors in the United States led to losses of about US$100 million (Sadiq et al., 2021). Attackers used email phishing to steal workers’ login ...
Read more
Image
  Group decision-making methods The Delphi technique is appropriate when a group consensus is required when making a group decision (Dagher, 2021). It involves gathering all the ideas generated and compiling them for the group leader to break them down into a smaller list. The choices are condensed until a decision is made. The brainstorming technique provides an open environment where group members can express ideas to raise potential ideas and solutions. Group members are encouraged to provide any idea that comes to mind; there are no good or bad ideas. In the nominal group technique (NGT), the moderator records ideas gathered during a brainstorming session. Group members share their ideas with the moderator, discussing each idea to gather information. Ideas are then assigned priority scores and are pursued according to these scores. Comparison The Delphi technique is used to collect, organize, review, and revise group members' ideas. It involves generating a group deci...
Read more