Introduction

The first Blockbuster store, an American-based chain of DVD and video game rental, opened in Dallas, Texas in 1985. In the following two decades Blockbuster experienced a high popularity and tremendous growth, including well known advertising campaigns during the Super Bowl. Blockbuster became a multi-billion dollar company with over 6,500 stores in the U.S. and 17 countries worldwide, and the world leader for video renting. During this time, Blockbuster scored high on customer satisfaction rankings and introduced user-based innovations, for example “special weekend packs” and “no-late-fees” pricing options. However smaller rivals like Netflix and Redbox recognized what Blockbuster had failed to - that customers’ expectations were changing. Although Blockbuster conducted regular customer surveys and market tests, they were not aware that due to new technological possibilities, customers would demand more convenience, service, and value in the future. While Netflix and Redbox successfully identified these upcoming needs and provided solutions, Blockbuster failed to do so and saw significant revenue losses over the past years. Blockbuster became a laggard, and finally filed for bankruptcy on September 23, 2010