As a recent subscriber to Netflix, I can completely understand why movie rental stores are encountering financial problems. For only $8.99 per month you can have access countless mail-in DVD's, as well as select video streaming through your computer, xbox, and other internet devices. When considering it costs about $5 for a regular 5 day rental from Blockbuster, one wonders why anyone would even consider renting from blockbuster when you can get anywhere from 8-12 rentals a month from Netflix instead of the price of 2 at Blockbuster.
And with the recent news that Netflix has signed a deal with HBO and Showtime to stream their television series. This means that Netflix users can have access to HBO and Showtime Series for $8.99 a month pus the movie viewing benefits, where some subscribers to HBO and Showtime pay $10-15 a month for each of these channels. With just those figures, one can see that although Netflix and HBO teamed up for this partnership, Netflix also has the ability to damage their customer base in the coming years. However, the one caveat in the deal is that HBO doesn't release many of their original series for streaming until 90 days after they air.
With 15 million subscribers and growing, Netflix along with Redbox have combined to completely change the movie rental industry. And with the efficiency and information exchange required to operate this business models, it is easy to see that innovative information technology is required for these business models to be successful. This is just one of the many industries that have been revamped by technology in the 21st century, and many companies in different industries under the same pressures as Blockbuster better take notice and adapt if they expect to avoid a Chapter 11 bankruptcy.
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