movie rental business case study
DESCRIPTION
TRANSCRIPT
#TechDummies ISTM 654.32
Movie Rental BusinessBlockbuster, Netflix, Redbox
1 I
2006200320001994199119881985 1997
Ayelet Awad | Frank Fisher | Paul Gonzalez Blake Kuchar | Wes Sullivan
BY: #techdummies
2010
2014
#TechDummies ISTM 654.322 I
RoleMovie Rental Business
CEOJim Keyes
#TechDummies ISTM 654.323 I
Case SummaryMovie Rental Business
Blockbuster’s B&M = Unsustainable operating costs
Netflix (Subscription) & Redbox (Kiosks) = lean operating costs
Blockbuster remained unresponsive until it was too late
#TechDummies ISTM 654.324 I
Critical IssueMovie Rental Business
How does Blockbuster survive?
#TechDummies ISTM 654.325 I
MetricsMovie Rental Business
1. Financial Health 1. Level of Investment 1. Adaptability a. Debt/Asset Ratio a. Implementation Cost a. People Low: < 40% Low: < 50MM Low: < 5,000 High: >= 40% High: >= 50MM High: >= 5,000 b. Operating Profit Margin b. Timeframe b.Technology investment Low: < 15% Low: < 1 Year Low: < 3MM High: >= 15% High: >= 1 Year High: >=3MM
#TechDummies ISTM 654.326 I
WeightsMovie Rental Business
Adaptability25%
Financial Health 35%
Level of Investment40%
#TechDummies ISTM 654.327 I
ScorecardMovie Rental Business
Metrics
Description Financial Health Level of Investment Adaptability Total
Option 1 Option 2 Option 3 Option 4
Weighted Scores
Description 35% 40% 25% 100%
Option 1
Option 2
Option 3
Option 4
#TechDummies ISTM 654.328 I
Potential SolutionsMovie Rental Business
#TechDummies ISTM 654.329 I
ScorecardMovie Rental Business
Metrics
Description Financial Health Level of Investment Adaptability Total
VOD (Partner with Cable Provider) 2 4 3 9.00Pizza & Movie Rental 3 1 2 6.00Electronic Sell Through Platform 4 2 3 9.00Blockbuster Electronics 1 1 2 4.00
Weighted Scores
Description 35% 40% 25% 100%
VOD (Partner with Cable Provider) 0.7 1.6 0.75 3.05Pizza & Movie Rental 1.05 0.4 0.5 1.95Electronic Sell Through Platform 1.4 0.8 0.75 2.95Blockbuster Electronics 0.35 0.4 0.5 1.25
Optimal Solution: Partner with Cable Provider to provide Blockbuster-branded VOD services.• Leverage Studio relationships to deliver new release & catalog content• B&M to pure digital distribution• Lean Operating Costs (liquidate all retail stores)
#TechDummies ISTM 654.3210 I
Implementation TimeframeMovie Rental Business
Liquidate all stores during Chapter 11• 6 Months• KPMG• 75MM+
Operationalize & Go Live!• 1 Month
System Integration• 1.5 Months• IBM• 2MM
Build Infrastructure• 3 Months• KPMG• 4.5MM
Reduction in Overhead Cost Highly Convenient Low Marketing Cost
Value?
#TechDummies ISTM 654.3211 I
Risk & MitigationMovie Rental Business
Weak to Small Content Library Strong Studio Partnerships
Dependence on Cable Provider Partner with multiple Cable Providers
User Adoption Intuitive Interface & Functionality
Long Term Studio Acceptance Appealing Revenue Model
#TechDummies ISTM 654.3212 I
ControlsMovie Rental Business
Project Implementation Team to manage timeline & budget
Any software or hardware cost variance over 5% must be approved by steering committe
Weekly project status meetings using a RAG process
Use project management software to track and report status, progress, issues.
Weekly project scorecards to monitor employee efficacy
Hire & train a technology team to operate an maintain the VOD structure
Team is responsible for maintaining 99.99% SLA uptime
Create runbook to resolve critical system issues
Reward cable partners for reaching monthly VOD sale targets
Use monitoring dashboard to proactively address system issues
Project Operational
• RED: requires a full assessment before project can continue
• Amber: requires proper communication to the board and careful progress monitoring
• Green: indicates no issues & project is on-time
• Weekly automatic outage reports that monitor uptime
• Real time alerts to notify engineers of system issues
#TechDummies ISTM 654.3213 I
Movie Rental BusinessBlockbuster, Netflix, Redbox
Questions?