Blockbuster

1. The Product: According to the company's 10-K filing with the U.S Securities and Exchange Commissions, Blockbuster Incorporated is a public company. Its stock is traded on the New York Stock Exchange. This company was founded in Dallas, Texas in 1985. Since 1985, it has become the world's leading providers of videos, Digital Video Discs and video games, with worldwide revenues of more than $6 billion in calendar year 2004. Approximately 80 percent of Blockbuster's revenues are generated in the United States, where this company has more than 48 million member accounts. By December 31, 2004 Blockbuster had approximately 9,100 stores in the United States and more than 3,200 stores located in 24 other countries including one located in the Middle East in Israel (Blockbuster 10-K).

2. The New Channel Requirement: The Blockbuster business model satisfies the challenge that it must be a product that does not currently exist in Egypt to the extent that there are no other retailers of movies, DVDs and video games that have developed the business model used by Blockbuster. Rather than simply purchasing a limited number of games, movies and DVDs at whatever discount retailers receive for buying in bulk, Blockbuster has developed a profit sharing program with their suppliers. The key to this arrangement involves the fact that Blockbuster does not pay for all of the movies and games it acquires. Instead, it pays the suppliers a percentage of the rental fee. As a result of wha

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The more than $6 billion in revenues reported by Blockbuster in 2004 does not include revenues of franchisees. It simply includes the various forms of payment made by the franchisees to Blockbuster (Company Information). Under the U.S. franchising program, Blockbuster grants the franchisee the right to develop one or a larger number of stores in a defined geographic area. Blockbuster generally charges the franchisee a development fee, a franchise fee, continuing royalty fees, service fees and monthly payments for maintenance of proprietary software. In addition, from time to time Blockbuster provides optional programs and product and support services to franchisees. The company requires franchisees to contribute funds for national advertising and marketing programs and also require that franchisees spend an additional amount for local advertising. 4. The New Channel: The new channel would offer Egyptian customers access to newer movies and games recently released by the studios or the game manufacturers. The new channel in Egypt might incorporate some of the enhancements being introduced in the United States stores including no late fees and unlimited rentals during a specific period of time using a monthly rental pass.

Category: Business - B