Mergers, Acquisitions and Takeovers Case Study

Blockbuster Acquires Movielink: A Growth Strategy?

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Abstract:
Blockbuster Inc. is a leading global provider of in-home movie and game entertainment. The video rental market has had a transition from store-based video rentals to online video rentals. To tackle the changes, Blockbuster implemented various initiatives to regenerate the activities of the company and enhanced the organisational structure so as to improve profitability. In August 2004, Blockbuster introduced an online DVD rental service in the US to compete with the established market leader, Netflix. In a move to further provide customers with even more convenient access to home entertainment, in August 2007, Blockbuster acquired Movielink - one of the leading movie downloading services. Blockbuster acknowledged that the acquisition was a defensive move to keep up with Netflix in the competitive online video rental market. The case allows for discussion on how this acquisition will give a competitive edge to Blockbuster.

Pedagogical Objectives:

• To understand the potential market for video rentals
• To analyse the market position of Blockbuster in the video rental market
• To analyse the rationale behind the acquisition of Movielink by Blockbuster
• To analyse whether the acquisition would help Blockbuster to improve its revenues in the market.

Keywords : Blockbuster; Video Rental; Online DVD Rental; Movie Download; Mergers,Acquisitions,Alliances Case Study; Growth Strategy; Movielink; Video Rental Market; Acquisition ; Business Model

Contents : 
The Video Rental Market
Online Video Rental Companies
The Blockbuster Business Model
Blockbuster Online Movie Rental Plan
Comparison of Blockbuster Online DVD Rentals and NetFlix.com
Movielink’s Acquisition – The Strategic Rationale
Blockbuster Business
Blockbuster Membership Plans
Projected Figures - 2008 Online DVD Rental Report