Netflix1. Blockbuster has managed to create a strong position in the traditional video rental industry due to several factors. It was originally based on the idea that “movie rental was largely an impulsive decision.” That being said, the assumption was that consumers would want the most recent versions. In order to respond to this, Blockbuster has grown rapidly to expand geographically and increase its share in existing markets. Blockbuster's size has become its biggest source of advantage. By being the biggest actor, he could build a film library with enough prints to serve the public so they can find what they want. Although the rise of DVDs made it cheaper to own a library, revenue sharing made it virtually unnecessary. Blockbuster's size and influence allowed it to obtain more favorable terms than other stores, especially independent ones, could match. The costs, while lower for everyone, were even lower for Blockbuster. Large chains, like Blockbuster, could now guarantee that a new movie was in stock because they could afford to buy enough copies of a title. This crowded out competitors and left Blockbuster in first place. Even if this mainly contributed to ousting the independents. Additionally, the idea that Blockbuster could guarantee that new movies would be in stock was a source of differentiation. There was no reason to venture to another store if Blockbuster was guaranteed to have it. So by having low costs, competitive pricing due to those costs, and a large library, Blockbuster was able to outperform its competitors. Since some of these items are also valid for Hollywood Video, it's no surprise that this store still exists. Although Blockbuster's initial size and influence allowed it to maintain the leading position.2. Netflix changed the rules of the game by changing the way things were done. It wasn't a physical store. Stocks of individual stores were not liable. And it wasn't beholden to customer traffic like Blockbuster was. It could offer more movies more conveniently at a lower price for consumers. These are its competitive advantages. The monthly rate is low enough that it won't be difficult to rent enough movies to make it cheaper than Blockbuster..