Blockbuster kaput? Long ago, it seems.


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It seems that I’m noticing a greater than ever number of once significant retailers closing their doors. Only last month I wrote about Borders and how in my opinion, had they spent half as much effort and resources innovating a unique and memorable Borders customer experience rather than trying to mimic Barnes & Noble, they’d likely be still relevant and even potentially dominant. Today, I’m going to write about Blockbuster, unfortunately in a very similar vein.

I remember the first time I visited a Blockbuster video store. It was years ago, when the video industry was littered with independents renting VHS tapes because at $129 for a movie they were just too expensive for most of us to buy. That was long before the DVD, let alone video on demand and iTunes. I remember walking in with my friends, taking in the seemingly endless number of movies on the shelves and wondering how I’d ever run out of video entertainment again.

That was a lifetime ago, it seems.

I also remember reading the business news about a very experimental strategic partnership announced years ago between a nacent Blockbuster and Enron to create a huge home delivery network for video content, long before the Internet grew sufficiently sophisticated to offer the same for much lower costs and no significant infrastructural investment. Similarly, I remember when the partnership was disbanded, which in hindsight given the strange bedfellows involved and the ultimate disposition of Enron, maybe no harm, no foul.

But think about it. Blockbuster held true to their convictions around video content for rent through their retail storefronts. They, until relatively recently charged a premium price for the rental and even in an era of “no late fees” continued to charge them the moment the movie wasn’t returned as promised.

Ten years ago startups like Netflix came onto the scene and through similar partnerships with movie production companies built their own strategy to flank the huge retail investment Blockbuster made and deliver content direct to consumers and without late fees. Imagine, no stores to wrangle with and I can keep a movie as long as I want without financial reprocussion. Quite something, at least at the time.

Sadly, the once great Blockbuster was sold for scrap yesterday in a New York City bankruptcy auction. Dish Network, one of the leaders in Satelite home entertainment successfully bought the company’s carcus for $300 million or so and plans to position the assets as a retail gateway into their satelite empire. At this point we can only speculate what that really means, but I’d imagine they will use some of the locations as customer service and cross-sell locations.

I pull my hair out in frustration when I think about this. Blockbuster, the once unbeatable category leader was not only beaten by smaller, less capitalized upstarts, but out innovated. Irony will show us that perhaps if Blockbuster chose to advance their own video on demand business like they set out to do with Enron and diminished their reliance on fixed retail assets there would be a very different outcome today.

At least here in the US, there is such a diluge of fibre optic capacity available to the telcos and ISPs that they in essence can light the dark fibre at anytime and boost typical capacity to a sufficient level where every man, woman and child in the country can enjoy robust connectedness and have access to more hosted content than we can shake a stick at. More so, the only bottleneck it seems is economic greed in the media distribution game by those looking to lock in higher-than-necessary license arrangements which could be offset by even larger back-end deals should those companies be forward thinkers. This day is coming, and hopefully soon. When it does, the place that companies like the once mighty Blockbuster will fade into our memories for good, much like record stores have given the new dominant online distribution business that’s grown seemingly overnight for audio entertainment.

It feels like Blockbuster should have seen the coming of their own demise and considered how customer focused innovation could maintain relevance given a growing competitive threat from newer, possibly smarter startups building new business models and growing their own relevance at the expense of the stalwarts. They, it seemed, had begun a death spiral years ago which only accelerated in recent years, with one foot in the grave more than five years ago. Nobody, I’m afraid, should be surprised.

I, for one am a huge believer in digital content delivery to my home. My wife and I enjoy video from Internet sources and frequently bring content into our home from online stores such as Apple’s iTunes which gives me even greater selection than Blockbuster with the immediacy of online, satisfying the “I want it now” syndrome, and does so at a nominal price that’s at parity or below the competition.

While I’ll miss the video store just like I miss the record store, we cannot allow ourselves to grow complacent in our belief that no matter how relevant and innovative we once may have been, innovation cycles are accelerating and competitive differentiation has the shelf-life of milk, it seems. If we choose to rest on our laurels, a competitor we’ve never seen nor heard of will eat our lunch, take our customers, and drive us into irrelevance.

As we emerge from the economic downturn of 2008-2011, we must realize that the time is now to consider innovation, deliver exceptional customer experiences, and create unique and cherished memories for our customers that stand to differentiate us, capture additional customer loyalty and allow us to live another day until we need to do it all over again.



Republished with author's permission from original post.

Marc Mandel
Marc Mandel is a Regional Sales Director at Allegiance, Inc.


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