Although it may not come as a shock to anyone, [Blockbuster has finally packed it][Blockbuster[ in and filed for bankruptcy.
Blockbuster, which employs about 25,000 people, has been closing stores as it grapples with competition from Netflix, Coinstar unit Redbox and others that deliver movie rentals digitally.
It’s been evident for several years now that their retail chain has been declining in popularity, no doubt in favour to more convenient online services like Netflix.
I can only put Blockbusters recent struggles along the same lines as huge newspapers of old who have been trying desperately to transition from an old business model to a new one involving web 2.0. The main problem I see is that it is exponentially tougher for a brick and mortar business like Blockbuster to make the kind of massive sweeping changes that they would have needed to make to stay competitive. The unfortunate thing is these kinds of huge companies built on old business models tend to be run by people that just don’t have what it takes to draw the line and say, we’re going to tear this business down and built it back up again stronger.
I can’t help but reminisce the days pre-broadband and pre-Netflix where the only choice you had for renting a movie was to get in your car and drive the to the closest rental store. Problem is, those days are gone now. Many people are now preferring to subscribe to the various choices of a la carte rental services to get their latest movie/tv show fixes.
I’m wondering though, could Blockbuster have been saved? Although they have had various failed efforts of trying to offer movie rentals via an online rental service, it was too little too late. What they needed was strong vision and leadership to really cut the fat from it’s retail heavy chain and start offering a seriously enticing digital subscription service, a la Netflix. Clearly, the founders of Netflix had great vision and embraced the Internet and thus became a success, however Blockbuster jumped onboard far too late in the game. If they had the balls 5+ years ago they would have taken the risk and cut the retail chains by at least 50% and developed something competitive to Netflix. When I say competitive to Netflix, I mean everything in the sense of the word. They should have adopted a pricing structure that people were willing to pay for, as well as offer a great software solution for all major hardware devices and set top boxes. Something with a beautiful UI and great UX. Something that your 75 year old grandmother who never owned a computer before would be able to navigate without cracking open a 500 page manual. So in short, going on my newspaper business analogy, a half assed attempt to transition your old business model to a new modern one comes at a price. A price involving giving way to new thinking and strategies and realizing the importance of the web. I’m looking at you Rupert Murdoch.
According to the Wikipedia article:
Blockbuster had over 4,000 U.S. stores, of which it planned to close between 810 and 960, while planning to open as many as 10,000 video rental kiosks by mid-2010.
See? This is what ‘m talking about. They had planned to close far less retail outlets than they really needed to. What else is stupid? a brain dead move of opening kiosks.
Why didn’t they pool all available talent and resources they had into building a truly competitive and equality sustainable digital subscription service? Oh ya, they lacked balls.