When Blockbuster first came out with their online movie rental service it was a joke compared to Netflix. I tried it out for several weeks and was sorely disappointed and quickly switched back.

What was Blockbuster's problem? Well, aside from the rental site being technologically inferior, the movies not being updated when they are released (on DVD, let alone in the theater) and poor customer service, Blockbuster Online had no reason for being. Essentially, they had no Unique Value Proposition. Blockbuster could not convince me, and many others, that their service was worth using over their primary rival, Netflix.

A few weeks ago Blockbuster convinced me to switch back. What changed? In short, Blockbuster Online found its UVP (Unique Value Proposition).

By finding their UVP, now called as "Total Access," Blockbuster was able to completely revamp site and create a user interface that is actually superior to Netflix's. It also forced them to step up their game in getting movies updated on time as well as provide better customer service. But couldn't all of these things have been done without the new UVP? Yep, they could have, but the UVP gave them a reason to step up their game. It helped them figure out how best to meet their customers needs.

But Blockbuster's UVP has almost zero to do with all of that stuff mentioned above. Those are just side effects of a business that knows how to meet its audience's needs.

Carve out a new and compelling opportunity

Smartly, Blockbuster figured out how to leverage their offline properties for their online rental service, namely the local Blockbuster Video store. Instead of putting your movie back in the mail to be shipped back, you can now take your movie, which you received in the mail, directly to the local Blockbuster store. Who cares, right? Wrong. When you return a movie you received in the mail to the local store, you can exchange it for another movie immediately and free. In a few days, your next movie will be shipped to you from the online service, despite the fact that you already have another movie in your hand.

What does this mean for me, an avid movie watcher? I can watch more movies via Blockbuster online than I can with Netflix for essentially the same price. Or I can pay less with Blockbuster and watch the same number of movies. With Netflix, they won't ship the next movie until they've received one back via the mail. That's at least a two or three day wait. A single trip to Blockbuster gets me another movie if I have my online rental ready to return.

By doing this, Blockbuster is able to effectively compete against Netflix on Netflix's turf. And they've done it by using, what some might have argued was a quickly-becoming-outdated way of renting movies (the video store). Blockbuster's Total Access not only leverages an advantage where Netflix has none (no offline presence) their UVP also creates a strategic advantage for Blockbuster where Netflix once dominated.

And who knows, Blockbuster very well may have saved the video rental store from becoming obsolete.

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