Reflecting on Blockbuster closing this week reminded me of a favorite quote from Jon Kabat-Zinn, " You can't stop the waves, but you can learn to surf.
Facebook Twitter LinkedIn Email. What caused the collapse of Blockbuster? Are you willing to change?
Change is hard. Change Management. Subscribe for Updates. Get It Now! Search this site on Google Search Google. Privacy Policy. Judging by the success of its merchandise sales, the company has no other option but to explore other retail avenues as soon as possible. And the best way to do so is through the sale of key electronics that are found in most rooms of the home. Netflix isn't Blockbuster's only competition. Instead, the company is faced with competition from cable companies and satellite providers that allow users to download movies on-demand, Netflix hardware that lets users download movies directly to the box and watch movies on their HDTV, and streaming movies from services like Amazon and Hulu.
And while Blockbuster is well on its way to developing a set-top box with LG that will let users stream movies to their HDTVs and will use Movielink to fend off any competitors in the movie downloading space, it has fewer competitors in the video game rental business.
In that case, it needs only to compete with GameFly, a service that rents video games by mail. The comparative lack of competition in the video game rental space is most simply attributed to the fact that video games can't be streamed and downloading them and making them work on a console isn't easy.
Realizing that, Blockbuster needs to do more to push its video game rentals and make it an equally important aspect of its business model. Although this too may be threatened in time as console makers offer an increasing number of games online; while this generation of consoles generally supports only "arcade" games and extra downloadable content, Microsoft is already showing what's possible by offering older Xbox games as full downloads.
By pushing video games even harder, Blockbuster can significantly increase revenue on video game rentals and possibly even movie rentals; more traffic in-store means more opportunities for people to find movies worth watching.
The company used to offer free video game rental with most of its movie-by-mail plans, though this program was scaled back dramatically a couple years back. While it might be expensive, that sort of combo can also be quite attractive. Ironically, the business that's making Blockbuster irrelevant is also the business that's keeping it alive.
And although it needs to ensure that it's a major player in the future by spending research and development funds on HD downloads and film streaming, it can become a more viable company by sticking to its core competencies and doing everything it can to exploit those and turn a profit.
And by doing so, more investors will be willing to trust Blockbuster management and help increase the company's cash flow, which can then be utilized for its future development.
You must login or create an account to comment. Skip to main content Once the leader in rentals and the place where practically everyone found time to stop after work and pick up a few movies, Blockbuster is now a shadow of its former self.
Industries change. In order to grow, you need to keep a pulse on the ever-evolving needs and preferences of your customers so you can make changes to your model accordingly.
The company was too busy making money in their video stores to imagine a time when people would no longer want or need them. At one point they even opened up rental kiosks, a little bit like a vending machine, but all of these attempts were based on either outdated technology or outdated business models, whereas Netflix at the time, they did the opposite; they streamlined, they were able to see the future of video rentals and then innovate for that future.
This applies to products and services as well as to marketing strategies. Believe it or not, marketing channels have a shelf life. So even if you learn how to dominate a specific channel , you need to remember that all channels, no matter how popular they are today, could someday fade into oblivion…just like brick-and-mortar Blockbuster locations did.
Even when the company was offered a buyout deal early on, it declined, believing that its previous business revenue model would work just as well in the new wave of movie watching as it had in the past. As David Reiss explains:. As well as their pricing structure reflecting this, their profit also relied on something their customers hated — late fees. Whereas Netflix developed a business model that simplified the video-renting process, making it more enjoyable for customers, Blockbuster only thought about maximizing their own returns.
Shortly after this modernization effort, Antioco was ousted by the board after the changes were made. First, we marched into Blockbuster. While Blockbuster and its new boss, John Antioco, focused on brick-and-mortar video stores, technological innovations meant that competition was on the rise. In a deal that saw Enron do most of the work, a robust video-on-demand platform was successfully built and tested with customers.
But it soon became clear to Enron that Blockbuster was so focused on its lucrative video stores that it had little time or commitment for the video-on-demand business. As a result, in , Blockbuster walked away from the first major development of wide-scale movie streaming. Within a few years, Netflix and other competitors began to eat into Blockbuster's profits, not by undercutting it, but by reimagining video rental in the digital age.
Commercial: There's a better way to rent movies. Go to Netflix. Keep them as long as you want, without late fees. Then, when you're done, look: prepaid envelopes. Return one and they'll send you another movie from your list. All the movies you want, 20 bucks a month, and no late fees.
Kim: It took Blockbuster almost five years to introduce its own DVD-by-mail service and even longer to scrap late fees. Kim: By that time, Netflix had amassed almost 3 million customers, had no store overheads, and was preparing to launch its revolutionary streaming service.
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