Netflix vs. Blockbuster vs. Video-on-DemandStrategic Issues in the Case Founded in 1999, Netflix is ​​an online DVD rental service whose strategy and market success were predicated on providing a large selection of DVDs, an easy way to choose movies, and fast, free delivery by regular mail. The company's strategic intent was to become the largest and most influential film supplier in the world. The company's goal was to make it much easier for customers to select and rent movies and eliminate the hassle of pickup and return. Its strategy incorporates customer convenience and a wide choice of entertainment options. Netflix provides extensive information to its customers to help them make good selections and identify movies they may want to rent from the company's extensive library. Netflix's growth strategy included three main strategic issues. First, Netflix has continued to pursue its reputation for innovation and maintain the high level of service quality expected by its customers. Second, Netflix intended to leverage its preeminent position in the industry to lead the transition to high-definition DVDs and, eventually, digital downloads of movies over the Internet. Third, Netflix has focused on rapidly expanding its subscriber base to maintain its market leadership and realize economies of scale that will reduce costs. Netflix's strategy was to create a blue ocean of uncontested market space within the video rental industry, an industry dominated by Blockbuster. for over 20 years. Blockbuster was the global market leader in the videocassette, DVD and video game rental industry, gaining about 40% of a share of the $13 billion industry. Blockbuster generated the majority of its revenue from rentals at owned and franchised physical stores in the United States and internationally. As of 2004, it was still renting and selling videocassettes, but revenue from renting and selling VCR tapes was declining dramatically as an increasing number of households were converting from VCRs to DVD players. In that year, Blockbuster earned more than half of its revenue from DVD rentals, while the remainder of its revenues were generated from DVD sales and the rental and sale of video games and video cassettes. In 2002, Blockbuster announced its strategic vision to become the one-stop source for movies and games in both the rental and sales markets. However, from 1999 to 2005 Blockbuster was a struggling company, with stagnant sales revenue and reported net losses in six of those seven years..