Reference no: EM133462020

Netflix provides rental DVDs through the mail rather than via the brick-and-mortar rental outlets favored by Blockbuster. The founders of Netflix realized that Blockbuster's customers had points of pain; they had to drive to the store, search through rows of movies, often not to find the one they were seeking as it was already rented out, and pay late charges if they forgot to return it on time. Netflix solved these points of pain by mailing the movies (made possible by the DVD format taking over from tapes--a technology discontinuity) directly to the customer. Movies can be kept as long as a consumer wishes with no late charges. When John Antioco, CEO of Blockbuster, first encountered Netflix, he did not see it as a threat, stating, "No one will want to wait three days for a movie." In fact, having a wish list and allowing a subscriber to hold several DVDs simultaneously avoids this supposed disadvantage. And because inventory is stored centrally, a greater selection is possible. The Netflix business model innovation is "dis-ruptive" to Blockbuster, which has invested much in stores and local inventories. Netflix saw the impact of a disruptive technology on its own business through the evolution of broadband networks that can deliver on-demand streamed content and smoothly switched to this new delivery model. Netflix uses its extensive customer behavior database to continually provide a superior service. I It is interesting that Blockbuster did not see Amazon as an analogy to Netf-lix, just as Borders never saw Amazon as a threat until Amazon had taken a major share of the book market.

Entrepreneurs are continually noticing and analyzing points of pain. Practice this in your daily life and challenge yourself to find the business opportunity.