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The Biz Doc, Tom Ellsworth dives into case study #7 How Blockbuster Flopped. This week you will hear a lesson on how a Blockbuster literally, missed out on adapting to the digital era and how eventually Netflix took over and now dominates the digital video space. How did this happen to a dominant company? Find out in this weeks case study.
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About Tom Ellsworth: THOMAS N. ELLSWORTH, is an experienced CEO / COO and entrepreneur. He has been disrupting industries and driving consumer shifts through Venture-backed companies in technology, software, publishing and mobile that have generated exits totaling over $1B. Watch the interview with Patrick Bet-David:
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About Blockbuster: Blockbuster LLC, known as Blockbuster, was an American-based provider of home movie and video game rental services through video rental shops, DVD-by-mail, streaming, video on demand, and cinema theater.
About Netflix: Netflix Inc. is an American multinational entertainment company founded on August 29, 1997, in Scotts Valley, California, by Reed Hastings and Marc Randolph. It specializes in and provides streaming media and video on demand online and DVD by mail.
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blockbuster became dead because they didn't have any forward thinkers. they didn't look towards the future and how to innovate it. Cant believe they turned your wonderful idea
Love your content. i am curious about FIT BIT
One of the best channels there is. And you make it so intriguing. Got my motivation!
Blockbuster died because they had let their business become too dependent upon revenues from late fees. A dependence that bred belligerence toward their customers. A belligerence that spring loaded desires by their customers to depart to something else as soon as possible.
A friend of mine in the late 90s called Blockbuster's business practices the "Mulcting Business Model." "Not much different," he added, "than depending upon fines, parking tickets, and speed traps for revenue. They're going to hit an iceberg one day, and sink fast."
An American citizen, not US subject.
If I were drawing graphs, I would get a projector to put the image on the board and trace it. :O
Im hooked on your videos. Its a really good tool to learn what to look for in management in a company.
DAMN
This is a good case study in how the top management "Elitists" don't get middle-America whom are their average customers. It seems they were lacking common sense.
great takeaway regarding entrenched thinking and flexibility. this is my new mantra. Thank you
13:48 Blockbusters management was full of Blockheads
I miss the Blockbuster experience Used to love browsing Blockbuster for video games. old movies, and new releases. Was cool to be able to test a videogame and system by renting. I know Netflix is cheaper but there was something special about chilling at a movie rental store.
The real irony is I learned about Netflix through a coupon offered at the Blockbuster checkout counter.
TOM!!! u did not mention the BB & ENRON partnership in all this!!!!!!!!!!!
These Case Studies need their own channel. Don’t fit with the others.
Thank you
PURE GOLD
you left off redbox as a competitor too
Tom these are some good videos. Keep it up.
I remember those popcorn buckets they had that you could put in the microwave. My mom would always get me candy and snacks when we went to Blockbuster
Didn’t dish buy them? Also, didn’t redbox contribute to their demise?
I remember when I thought to myself blockbuster was gonna go digital and crush netflix boy I was wrong they didn't even try. Netflix won for two reasons "No late fees" and instant viewing of movies with out leaving your house. It was genius. Now my wife and I are enjoying Ozark season 2 which is an amazing Netflix original
the greatest lesson in staying ahead of the curve. if they would of invested online watching and streaming early, they would of saved their service.
Recently found this channel, i found that i absolutely know nothing after watching these videos, i need to go back to school!, really big thanks Tom.
Another factor that contributed to Blockbuster's problems was their policy not to carry Adult Movies in their stores. Those movies account for a huge amount of revenue in rental stores with even better margins, as in the 90's and early 2000's Adult VHS movies were cheaper than mainstream movie VHS titles. Thus, stores could make money faster off adult movies than Hollywood movies. Even Netflix hasn't tapped that market which is why there are still video store chains in existence. Family Video is one example of a chain in my area that has a large number of locations and each location still has an adult section. Even with adult entertainment available online, I think many older customers are still nervous about using online services for adult entertainment and their viewing history getting hacked and exposed.
i heard that Reid Hastings thing was a lie.
Oddly absent from this video is discussion of Redbox. Redbox has shown very effectively that people are still interested in not just physical media (compared to streaming), but an ala carte local rental. You have to wonder if early on Blockbuster changed their pricing structure to do away with due dates and late fees, just charge a flat fee per day, keep it as many days as you'd like, we'll just keep charging your credit card every day, and after so many days, it's yours, keep it, if they would have lost nearly as much business to Netflix as they did. Also have to wonder what would have happened if they leveraged the considerable assets to merge the two business models, offer both an ala carte daily rental and a subscription service, give people on the subscription the flexibility to receive either new movies by mail or pick them up in store, they would have dominated the market. And, they would still have the flexibility themselves to phase out the stores and move towards a more automated system (like what Redbox uses) as technology progressed, though that might not be necessary, because it is plausible that they could justify charging more and still be competitive with people who value that experience of actually browsing the store and interacting with the employees (say what you will about the Netflix recommendation algorithm, it doesn't come close to competing with the recommendation of an employee who has actually seen the movie and has more to go off of than the keywords in a database). Plus, never underestimate the selling power of nostalgia. There is essentially almost nothing you can do at a Disney park that you can't do at any other large amusement park, and yet Disney is able to charge a whole lot more, because people are willing to pay for the nostalgia, so I wouldn't write off Blockbuster being able to do the same thing, selling the nostalgic experience of going to the rental store (of course, with an improved pricing model and additional services to supplement).
Blockbuster actually had a streaming service for a brief period, but they required a subscription with direct tv instead of offering a standalone service.
Even if Blockbuster had combined with Netflix there would have been another competitor pricing n the horizon. A comp. similar to Netflix with no stores to maintain and lower overhead than Blockbuster/Netflix combined.v
Very informative
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This is exactly lkke the story of sega
Only the paranoid survive.