This week's issue of Fortune sent me on a research expedition. After personally experiencing both Blockbuster and Netflix,

and seeing the effect of Netflix on Blockbuster, and Blockbuster on Netflix, this one struck home - literally. My husband is an avid movie fan, and we switched from Netflix to Blockbuster's all-you-can-view one month price because 1) a Blockbuster opened less than 5 minutes from our house, and 2) my husband likes to see and touch the movies he is considering.

Nonetheless, it was obvious that Netflix's no late fee policy spurred Blockbuster to offer their one-month subscription price, and to make their not-so-honest (ok, let's come out and call it deceitful, as New Jersey's Attorney General says in his lawsuit against them for fraud) "no more late fees" policy (there are no more late fees because they make you BUY the video that's late!) Netflix also triggered the Walmart copycat service as well. Obviously, they had a great thing going, and everyone else wanted a piece of it.

But according to Netflix, the little red envelopes that deliver and return DVDs were never meant to be the end product. They have been aiming at delivering movies over the internet from the beginning - hence the name "Net"-flix. The question was how and with whom.

Enter Tivo, who will be challenging cable's on demand programs, and making companies like Blockbuster obsolete, if they have their way. And from Fortune's article, it seems that their goal is slowly being attained. Blockbuster is slowly sinking, and being forced to change it's business model and emphasis. Great case study for how quickly the market can change, and the pros and cons of the choices you make to contend with the competition. Sometimes it can turn around and bite you...
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