Accounting

This memorandum will analyze the competitive environment that Blockbuster and Netflix face. The two firms will be compared through their vertical statements and ratio analysis. This memorandum will use Blockbuster's and Netflix's most recent 10Ks (2010) to analyze these two firms.

Competitive Environment

Blockbuster's main business activities are providing both in-store and online movie rentals, in-store game rentals, in-store retail products, and online movie downloads. Blockbuster tries to offer customers a value-priced entertainment experience with the depth of a specialty retailer with a local neighborhood convenience. Netflix's core business activities are offering DVD rentals through their website and sending these DVDs through the U.S. Postal Service. Netflix allows for their subscribers to watch unlimited movies and TV episodes streamed to their TV's and computers through the internet. Overall, Netflix tries to grow a large subscription business consisting of streaming and DVD-by-mail content.

Blockbuster tries to create revenues through following their business plan of controlling costs, maximizing asset portfolio, improving profitability, and develop their core rental offering. They generate revenues through multiple distribution channels such as their stores, by-mail, vending machines, kiosks, and through online. Netflix generates revenues by operating in the subscription segment of the in-home entertainment video market. The expanded their DVD-by-mail distribution model to include streaming content over the Internet. They offer the DVD rentals and streaming through the Internet for one low monthly price. This is how they primarily generate their revenues. Both Blockbuster and Netflix do not charge late fees.

A large majority of Blockbuster's business operations are done domestically as they have 4,018 stores operating under the Blockbuster brand in the United States. However, a great portion of Blockbuster's revenues are generated around the globe....