Manual Netflixed: The Epic Battle for Americas Eyeballs

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Carl Icahn is a fairly major figure in the Blockbuster story. It failed because of too much debt and changes in the industry. It had too many stores, Netflix created a better business model, and then Redbox kiosks and the whole digital phenomenon eliminated the need for consumers to go to a separate DVD store. Things might have turned out differently.

Will Netflix Go the Way of Blockbuster?

Before reading this book, I wondered whether the shift to internet streaming of videos played a role in the disruption of Blockbuster - streaming products from Netflix and iTunes. But those streaming products were released in early , and by that stage Blockbuster was on the road to bankruptcy.

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The book tells a good story about the founding of Netflix. Reed Hastings and his co-founder Marc Randolph looked at bringing the video rental market online. You ship it there and then someone ships it back. The five inch disks looked exactly like compact disks.

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Then they test-mailed one to Hastings house and it arrived unscathed a day or two later. Movie studios tried to sue video rental companies to curtail their operations. Home video sales and rental started in , when Magnetic Video founder Andre Blay convinced 20th Century Fox to license fifty titles to him to sell directly to consumers….

Mom-and-pop retailers bought copies of the pricey videos from Blay and started their own home video rental businesses. As the prices of players dropped, video clubs sprang up across the country. The U. Supreme Court ruled that a U. Home video rental was here to stay.

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San Jose post office officials even allowed Jim Cook, head of Netflix operations, to dump trays of DVDs into its sorters, day after day, to watch what happened. Keating describes scaling up server operations in the pre-AWS days. Netflix came up with an interesting growth tactic to acquire customers.

By including a Netflix coupon in the box a DVD manufacturer could promise consumers access to a library of more than one thousand titles. Hastings had sold a previous company, Pure Atria, and had made a lot of money. Blockbuster Online launched in The person running it was Shane Evangelist. The project hit roadblock after bureaucratic roadblock.

Every department wanted to put its spin on it, or held it up with deal-breaking conditions. Manpower was stretched in every department, as Blockbuster rushed to meet to-market deadlines on retail, gaming, and trading programs that their CEO wanted to test. Keating writes about an attitude of benign neglect that Blockbuster took towards Blockbuster Online. Carl Icahn had bought up a number of Blockbuster shares and he started to try to influence Blockbuster management.

The first tussle was over acquiring another video rental chain, Hollywood Video. In the end Blockbuster, under pressure from Icahn, did raise its bid, but still lost the deal, because Hollywood Video thought a merger with Blockbuster may not be accepted by the regulators.


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Icahn ended up winning some seats on the board at a proxy battle. For the sake of the company, Antioco and Icahn papered over their differences, and in public at least appeared to be pulling in the same direction. The executive team at Netflix had remained mum in the press about the proxy battle, but they watched it delightedly as the mounting feud with Icahn distracted Antioco from his fight with Netflix. Place Laurier. St-Georges de Beauce.

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