3. I think that Blockbuster has developed successful solutions to their problems. I have been a customer of both Netflix and Blockbuster Online and I actually preferred Blockbuster. The ability to trade in movies in the store really seals the deal for me. Everyone has that weekend night when they really want to watch a movie but they don't have it. It is so easy to take a watched movie to the nearest Blockbuster and pick up the one that you really want to watch. No more waiting for a couple days until it is delivered.
The only difficulty that may arise from the Blockbuster system is if there are no Blockbuster video stores nearby. This could make it more difficult to entice people with the trade in feature and ultimately make it the same program that Netflix offers.
4. Netflix has been incredibly successful over the past couple years. Fiscal '06, '07, and '08 have all seen increasing net income. Being the pioneer of the industry helps their business because when people think of online video rental, Netflix automatically comes to mind. Their business model is very effective and has really put Blockbuster in a reactive state, trying to find and way to maintain pace. The addition of streaming video for internet and XBOX360 users has also helped contend with Blockbuster's store trade in program. Netflix has their bases covered and seems to have a clear direction with how they want their business to grow.
5. I really see the success of both companies hinging on one factor: can the Blockbuster video stores become profitable. If the Blockbuster video store can become profitable they will have one thing that Netflix cannot offer. As long as they hold on to that one aspect of business that Netflix can't touch and make smart business decisions, they will win the war. Sure Netflix has become synonomous with internet video rental, but Blockbuster has been associated with video rental for decades before Netflix was even created.
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