Is525 Term Paper

From Oil & Gas to DVD’s and Kiosks:

The Technological Transformation of Blockbuster Entertainment.

Joseph Malone, Jr.

IS535 Managerial Applications of Information Technology

Professor Stephanie McDonell

December 11, 2010

According to (Angel Investors, 2000) Blockbuster Inc. is a leader in the field of video and video disk rental. With approximately 27 percent of the U.S. market share, Blockbuster operates about 6,500 video stores, serving more than 87 million customers in the United States, its territories, and 25 other nations. Founded in the mid-1980s as an alternative to small, local operations with limited video rental selection, the company grew quickly into a nationwide chain, with other interests in the entertainment industry as well, including music retailing. In 1994, Blockbuster became a wholly owned subsidiary of Viacom Inc., allowing Viacom the financial resources to proceed with its bid for Paramount Communications. Viacom retained total control of Blockbuster until its 1999 initial public offering of 31 million shares (about 18 percent) of Blockbuster’s stock. In the late 1990’s, Blockbuster faced challenges brought about by new ownership, increased competition, and a relatively soft market for videos. Nevertheless, the company has coped admirably by refocusing its efforts on its core video rental business. In 1999, Blockbuster boasted a store within a ten-minute drive of virtually every major neighborhood in the United States and strove to guarantee the availability of new video releases in most markets. However, starting early to mid 2000’s, new competition entered the market that provided an alternative and more convenient way of providing video rental and sales. This forced Blockbuster to reevaluate their business model and leverage information technology to be more competitive.

The Beginning

Blockbuster traces its history to the formation of Cook Data Services, Inc. in 1982. Cook Data Services was founded by David...