Netflix1. Blockbuster has managed to create a strong position in the traditional video rental industry thanks to a couple of factors. It was initially based on the idea that “renting movies was largely an impulsive decision.” That being the case, the assumption was that consumers would want the latest versions. To address this, Blockbuster has grown rapidly to expand geographically and increase share in existing markets. Blockbuster's size has become its main source of advantage. Being the biggest actor, he could build a film library with enough prints to serve the public so that they can find what they want. While the advent of DVDs has made it cheaper to get a library, revenue sharing has made it mostly irrelevant. Blockbuster's size and weight allowed it to secure more favorable terms that other stores, especially independent ones, could not match. The costs, while lower for everyone, were even lower for Blockbuster. Large chains, such as Blockbuster, could now guarantee the availability of a new film because they could afford to purchase enough copies of a title. This pushed out competitors and left Blockbuster in the leading position. Although this contributed above all to driving out the independents. Additionally, the idea that Blockbuster could guarantee the availability of new films was a source of differentiation. There was no reason to venture to another store if Blockbuster was guaranteed to have it. Therefore, by having low costs, competitive pricing due to those costs, and having a large library, Blockbuster has been able to outperform its rivals. Since some of these elements also apply to Hollywood Video, it's no surprise that that store is still around as well. Although Blockbuster's initial size and weight allowed it to maintain its leading position.2. Netflix changed the rules of the game by changing the way things were done. It wasn't a physical store. The inventories of particular stores were not taken into account. And it wasn't tied to customer traffic like Blockbuster was. It could offer more movies more conveniently at a cheaper price for consumers. These are its competitive advantages. The monthly fee is low enough that it's not difficult to rent enough movies to make it cheaper than Blockbuster.