Blockbuster: Losing the plot(daindunston.com)
daindunston.com
Blockbuster: Losing the plot
http://daindunston.com/blockbuster-losing-the-plot/
10 comments
Though your "biggest problem" might tie in with mine, I saw Blockbuster's biggest problem being that they didn't realize how much their customer loathed them. All it took was someone, anyone to come along and offer an alternative the model of:
1. Go to a physical store.
2. Pick out your second or third tier choice, because all copies of the one you want are gone.
3. Pray you don't forget to bring it back on time.
Customers hated them, and it would appear that Blockbuster hated them back. Maybe it didn't have to be Netflix, but someone was going to come along eventually and pull off an alternative that has no late fees, always has what you want, and you don't have to drive there. Could have been Redbox. You still have to drive there, sometimes the kiosk is out (in which case the web or app can tell you not to bother to get in the car), but at least if you're late it's only another dollar.
Blockbuster tried to fake it, but it still came off as the same weaselly company with the same weaselly fine print ("no late fees" comes to mind). Hollywood kind of tried, and they seemed a little more sincere, but it was still the doomed physical model.
Customers hated them, and it would appear that Blockbuster hated them back. Maybe it didn't have to be Netflix, but someone was going to come along eventually and pull off an alternative that has no late fees, always has what you want, and you don't have to drive there. Could have been Redbox. You still have to drive there, sometimes the kiosk is out (in which case the web or app can tell you not to bother to get in the car), but at least if you're late it's only another dollar.
Blockbuster tried to fake it, but it still came off as the same weaselly company with the same weaselly fine print ("no late fees" comes to mind). Hollywood kind of tried, and they seemed a little more sincere, but it was still the doomed physical model.
I would say the problems Blockbuster had mirrored the problems the author of the article implied, but for different reasons.
Retailers think of technology as a pure cost center: The products on their shelves are what the customers want; having the physical location and the right products in your inventory are enough. Technology is for operational things like cash registers and warehouse systems, and you don't upgrade any of them before your business plan says so.
Entertainment companies have to think differently about technology. Their product is intellectual property, and as technology evolves, so do the way customers interact with their product. This is nothing new - entertainment companies have had to adapt to FM radio, broadcast TV, color TV, cable TV, HD video, VHS, DVD, etc. But distribution has always been tightly controlled, and technology is a key component of this. So entertainment companies in general are pretty forward-looking in a technology sense - at least moreso than retailers.
In retail, the general customer interaction hasn't changed in a long time (or rather, in 1998 it hadn't changed fundamentally since the advent of credit cards). So the thought that technology could revolutionize the customer experience hadn't even crossed their minds. They had DVDs and VHS tapes - physical goods that they sold. But the product in entertainment is NOT physical, it's the intellectual property: and the retail guys never understood that. Once the consumers realized that, it was game over, man.
Realistically, there was probably very little Blockbuster could have done to challenge Netflix. Netflix was lean and able to move fast - Blockbuster was tied to an aging and slow-moving brick and mortar retail business. Even if Blockbuster had tried to close all their stores and move to a Netflix model, it's ridiculously hard for a large company to disrupt itself. Politically, you'll have a lot of resistance from within and meddling by the "old guard" to make sure the new "disruptive" product isn't going to be good enough to make them obsolete. There is also just a lot of capital overhead involved in running a retail business - obstacles that Netflix didn't have.
Retailers think of technology as a pure cost center: The products on their shelves are what the customers want; having the physical location and the right products in your inventory are enough. Technology is for operational things like cash registers and warehouse systems, and you don't upgrade any of them before your business plan says so.
Entertainment companies have to think differently about technology. Their product is intellectual property, and as technology evolves, so do the way customers interact with their product. This is nothing new - entertainment companies have had to adapt to FM radio, broadcast TV, color TV, cable TV, HD video, VHS, DVD, etc. But distribution has always been tightly controlled, and technology is a key component of this. So entertainment companies in general are pretty forward-looking in a technology sense - at least moreso than retailers.
In retail, the general customer interaction hasn't changed in a long time (or rather, in 1998 it hadn't changed fundamentally since the advent of credit cards). So the thought that technology could revolutionize the customer experience hadn't even crossed their minds. They had DVDs and VHS tapes - physical goods that they sold. But the product in entertainment is NOT physical, it's the intellectual property: and the retail guys never understood that. Once the consumers realized that, it was game over, man.
Realistically, there was probably very little Blockbuster could have done to challenge Netflix. Netflix was lean and able to move fast - Blockbuster was tied to an aging and slow-moving brick and mortar retail business. Even if Blockbuster had tried to close all their stores and move to a Netflix model, it's ridiculously hard for a large company to disrupt itself. Politically, you'll have a lot of resistance from within and meddling by the "old guard" to make sure the new "disruptive" product isn't going to be good enough to make them obsolete. There is also just a lot of capital overhead involved in running a retail business - obstacles that Netflix didn't have.
> Realistically, there was probably very little Blockbuster could have done to challenge Netflix.
I disagree completely. There's nothing that would have prevented BlockBuster from doing a few really great things:
1. Get customers email address and email them the day before the day of and every day thereafter a DVD is due with options to renew the rental at some kind of reduced rate right in the email, as well as perhaps some kind of option to buy.
2. Implement a "lottery" system. Blockbuster doesn't hold on to inventory forever, so eventually they sell off old rentals. Occasionally give them away. Give them away at a rate which is high enough to keep people renting, but low enough to not decimate profits. Maybe 1:50 or so? And only movies that are getting sold off anyhow. Some people might "game" this system, but they're renting to do so!
3. Make suggestions. BB had my entire friggin rental history for a couple of years and not once did they recommend anything to me that I might like. Could they have thrown in the occasional suggested rental for free with some other rental I was making? Sure. Even better if it was the first disc of the first season of a TV show; I'd be back for all the rest of the discs of all the rest of the seasons.
These all would have required hiring a CXO (customer experience officer) and giving them a lot of budget and authority to do things which seem like they'd hurt the bottom line for the sake of keeping the company afloat. Would it have worked for sure? Maybe, maybe not. But they would have had a better chance of keeping everything afloat.
Trying to sell me overpriced popcorn and whatever was a total joke; I can get that stuff much, much cheaper at the grocery store. Blockbuster isn't a movie theater than can charge outrageous premiums because customers are trapped once they're on the premises.
But Blockbuster didn't do anything to try and turn their ubiquity and huge collection of data into competitive advantage. So they failed.
I disagree completely. There's nothing that would have prevented BlockBuster from doing a few really great things:
1. Get customers email address and email them the day before the day of and every day thereafter a DVD is due with options to renew the rental at some kind of reduced rate right in the email, as well as perhaps some kind of option to buy.
2. Implement a "lottery" system. Blockbuster doesn't hold on to inventory forever, so eventually they sell off old rentals. Occasionally give them away. Give them away at a rate which is high enough to keep people renting, but low enough to not decimate profits. Maybe 1:50 or so? And only movies that are getting sold off anyhow. Some people might "game" this system, but they're renting to do so!
3. Make suggestions. BB had my entire friggin rental history for a couple of years and not once did they recommend anything to me that I might like. Could they have thrown in the occasional suggested rental for free with some other rental I was making? Sure. Even better if it was the first disc of the first season of a TV show; I'd be back for all the rest of the discs of all the rest of the seasons.
These all would have required hiring a CXO (customer experience officer) and giving them a lot of budget and authority to do things which seem like they'd hurt the bottom line for the sake of keeping the company afloat. Would it have worked for sure? Maybe, maybe not. But they would have had a better chance of keeping everything afloat.
Trying to sell me overpriced popcorn and whatever was a total joke; I can get that stuff much, much cheaper at the grocery store. Blockbuster isn't a movie theater than can charge outrageous premiums because customers are trapped once they're on the premises.
But Blockbuster didn't do anything to try and turn their ubiquity and huge collection of data into competitive advantage. So they failed.
None of the things you mention would have been enough to keep Netflix from eating their lunch.
Wow, way to dress an opinion up as fact!
If you watch only a few movies a month, Redbox is more economic than Netflix. If you only watch two movies per month, paying $3-$4 at Blockbuster is on par with Netflix.
Sure Netflix economics are great if you already have broadband, have stopped paying for cable TV, and you hate driving to the places where Redbox has kiosks. But if any of those conditions aren't met, Netflix doesn't look quite as genius.
Redbox "proves" that there is still demand for physical media rentals. Blockbuster had a kiosk at my local grocery store for a while and that meant I could return a movie or rent a new one every trip if I so desired at something like $1.50 a pop. That was pretty compelling.
Even more compelling would have been a store with a couple of people who really knew movies and could recommend things and with a deep, deep back catalog. Cutting the customer-facing square footage in half would allow each and every store to pack damn near every movie ever made in. Yeah it might take a guy a minute or three to head to the back and pull the movie you're looking for, but it could be done.
The ownership of the movies is a model that Netflix SORELY wishes they had at the moment. Netflix is publicly traded. And because they're publicly traded it means they have to file financials. And filing financials means a profit & loss kind of statement. And because Netflix doesn't actually OWN much IP, it means they have to rent or lease it. And that means the studios which own the IP that Netflix desperately needs to stay in business are perfectly informed of Netflix's financials. So they know just how much they can squeeze Netflix for every time a contract negotiation comes up.
Blockbuster would not be in the same position because they would own the catalog. Purchases are expensive, but over any 20 year period they might be cheaper than renting.
If you watch only a few movies a month, Redbox is more economic than Netflix. If you only watch two movies per month, paying $3-$4 at Blockbuster is on par with Netflix.
Sure Netflix economics are great if you already have broadband, have stopped paying for cable TV, and you hate driving to the places where Redbox has kiosks. But if any of those conditions aren't met, Netflix doesn't look quite as genius.
Redbox "proves" that there is still demand for physical media rentals. Blockbuster had a kiosk at my local grocery store for a while and that meant I could return a movie or rent a new one every trip if I so desired at something like $1.50 a pop. That was pretty compelling.
Even more compelling would have been a store with a couple of people who really knew movies and could recommend things and with a deep, deep back catalog. Cutting the customer-facing square footage in half would allow each and every store to pack damn near every movie ever made in. Yeah it might take a guy a minute or three to head to the back and pull the movie you're looking for, but it could be done.
The ownership of the movies is a model that Netflix SORELY wishes they had at the moment. Netflix is publicly traded. And because they're publicly traded it means they have to file financials. And filing financials means a profit & loss kind of statement. And because Netflix doesn't actually OWN much IP, it means they have to rent or lease it. And that means the studios which own the IP that Netflix desperately needs to stay in business are perfectly informed of Netflix's financials. So they know just how much they can squeeze Netflix for every time a contract negotiation comes up.
Blockbuster would not be in the same position because they would own the catalog. Purchases are expensive, but over any 20 year period they might be cheaper than renting.
It's interesting you say that. The very next article on the linked blog talks about Blockbuster Total Access (where you could rent online or in stores) taking a million customers a year from Netflix in 2007. Investor Carl Icahn ended up forcing out the CEO who championed Total Access and the new guy sold the membership list to Netflix for $1.4 billion. Streaming might have still catapulted Netflix past Blockbuster, but it would have been much tougher to sign all those content deals without the steady cash flow from DVD's.
Now it looks like Netflix was inevitable, but it took a few huge blunders by other companies for them to succeed. Remember when Starz basically gave away the rights to thousands of shows and movies (for $30 million/year)? We could just as likely be talking about Viacom Streaming and all those silly things that Netflix did.
Now it looks like Netflix was inevitable, but it took a few huge blunders by other companies for them to succeed. Remember when Starz basically gave away the rights to thousands of shows and movies (for $30 million/year)? We could just as likely be talking about Viacom Streaming and all those silly things that Netflix did.
Agreed. Everyone here saying that nothing could have stopped Netflix from triumphing needs to go read the second article you mention. According to it, seeing Blockbuster's demise as inevitable is a fiction born of hindsight.
http://daindunston.com/blockbuster-the-customer-owns-your-pu...
http://daindunston.com/blockbuster-the-customer-owns-your-pu...
Agreed, BB did not have a rabid fanbase, because of the 2 way loathing you speak of.
Hollywood Video may have been following BB in many ways, but had the opposite attitude toward customer service. In fact that was the differentiator they counted on. Treat people good and they'll always want to come in. Hollywood never stopped treating people good, but people stopped coming in.
Hollywood Video may have been following BB in many ways, but had the opposite attitude toward customer service. In fact that was the differentiator they counted on. Treat people good and they'll always want to come in. Hollywood never stopped treating people good, but people stopped coming in.
Blockbuster had the nostalgia thing going for it. They could have built on that.
It will be interesting to see how Redbox fares in the next few years.
As far as I can tell, Redbox targets a different consumer base from Netflix's. The majority of Redbox machines are placed outside of Safeways, Walgreens, Walmarts, 7-Elevens, and so forth. The sort of customer who rents DVDs from these machines is likely to be of lower socioeconomic status than your typical Netflix subscriber. He or she may not have a cable subscription, may not have high-speed internet access [1], and may deem Netflix's monthly fee to be too expensive. He or she could be a working-class parent, a college student on a tight budget, or maybe a reasonably affluent professional who, for one reason or another, doesn't consume enough entertainment to find Netflix worthwhile. On top of this base, you have a small proportion of ad hoc Redbox usage from people who happen to stop by, see a movie they can't get on Netflix, and check it out. And you have a very small proportion of film buffs who prefer the AV quality of physical media, like Blu-Ray.
Time will tell how long this strategy will work for Redbox. In their favor: their 36,000 kiosks are placed directly in the footpath of hundreds of millions of shoppers every week. (Walmart alone sees over 100M shoppers per week in the US, and 3,700 Walmart stores have Redbox kiosks). Working against them: broadband penetration, Netflix, Amazon, and the steady transition away from physical media.
[1] About a quarter of US households do not have high-speed broadband. That number will shrink over time, obviously, but perhaps not as quickly as we like to think it will.
Time will tell how long this strategy will work for Redbox. In their favor: their 36,000 kiosks are placed directly in the footpath of hundreds of millions of shoppers every week. (Walmart alone sees over 100M shoppers per week in the US, and 3,700 Walmart stores have Redbox kiosks). Working against them: broadband penetration, Netflix, Amazon, and the steady transition away from physical media.
[1] About a quarter of US households do not have high-speed broadband. That number will shrink over time, obviously, but perhaps not as quickly as we like to think it will.
It's actually more than a quarter depending how you define "high-speed broadband". A good number of households in the US are on <6mbps ADSL connections, which realistically aren't fast enough to stream video. Most statistics I've seen show streaming video penetration is closer to 40% of US households.
And you're right about adoption: there are a lot of people in the US who just don't care about the Internet. They will be increasingly less relevant as time goes on (this is already causing social angst at some levels) but they will persist. Usually you don't see 100% adoption of things like this until all the old people die and are replaced in the consumer pool by younger generations (aka generational cyclicality).
And you're right about adoption: there are a lot of people in the US who just don't care about the Internet. They will be increasingly less relevant as time goes on (this is already causing social angst at some levels) but they will persist. Usually you don't see 100% adoption of things like this until all the old people die and are replaced in the consumer pool by younger generations (aka generational cyclicality).
Regarding locality, they experimented with selling local event tickets through their kiosks for a short time, I don't think it lasted too long though and dissapeared quietly. http://www.theverge.com/2012/10/4/3453566/redbox-concert-eve...
I walk by Redboxes fairly frequently and I can say that in my area the customer base is definitely in the lower socioeconomic class.
Redbox seems to get new movies long before Netflix, so that's one thing I'd use it for if they didn't come to Comcast's VOD thing earlier.
Redbox will be fine, at least for as long as physical media hangs on. It's a different use case - an impulse buy for the less technologically adept. As technology adoption of streaming video solutions reaches saturation though, I can see Redbox fading away.
It won't be a spectacular implosion like Blockbuster because they have the benefit of low capital overhead: those kiosks aren't that expensive and the DVDs themselves are basically free (AFAIK Redbox prints copies of them as-needed in exchange for a share of rental revenue to the copyright owners). So they can keep running them as long as the rental revenue covers the maintenance and re-stocking of the kiosks. The kiosks aren't even using valuable real-estate: if you got rid of a Redbox kiosk, I don't know there's anything else you could really put there that would generate a lot of money.
It won't be a spectacular implosion like Blockbuster because they have the benefit of low capital overhead: those kiosks aren't that expensive and the DVDs themselves are basically free (AFAIK Redbox prints copies of them as-needed in exchange for a share of rental revenue to the copyright owners). So they can keep running them as long as the rental revenue covers the maintenance and re-stocking of the kiosks. The kiosks aren't even using valuable real-estate: if you got rid of a Redbox kiosk, I don't know there's anything else you could really put there that would generate a lot of money.
I'm not sure where you mean Redbox prints DVDs. They don't do it in the machine, as popular titles can be "sold out". It was over a week before I could find that last Captain America movie at my nearest Redbox.
No; they print them at their warehouses on an as-needed basis. DVDs get destroyed and lost easily, and they don't cost much to print. Individual machines will still run out if they're not restocked, though.
If it's true, they probably use a system similar to library ebook loans. They have a certain number of licences that can run out, even though there's no technical reason for it. I don't know why copyright owners would do it with Redbox since they get money for each loan.
Yeah, it will. I still use Redbox when they have what they want if I want it in Blu-Ray. iTunes' HD is pretty good, but it's no match for physical media even on my ancient 42" 720p plasma. But I don't know that grabbing a dollar from my wallet once a month is a sustainable business model.
Redbox is giving streaming a whirl, but frankly when I saw Verizon's name attached to it I didn't even bother.
Redbox is giving streaming a whirl, but frankly when I saw Verizon's name attached to it I didn't even bother.
Redbox Instant actually shut down last month: http://venturebeat.com/2014/10/04/redbox-instant-is-shutting...
> The execs at the top (boomers) ignored the new fangled streaming stuff because they didn't use it, didn't understand it, and most of all didn't see the value.
> When you're in a fast moving business, you don't bet everything on what's happening now, you've got to think about what's coming soon...
I work at a telco where the upper management still genuinely believe fax machines are great and we should be increasing the number of copper land lines to homes.
Those two statements rang very, very true for me.
> When you're in a fast moving business, you don't bet everything on what's happening now, you've got to think about what's coming soon...
I work at a telco where the upper management still genuinely believe fax machines are great and we should be increasing the number of copper land lines to homes.
Those two statements rang very, very true for me.
Heh heh. I work for a mobile company that still thinks it's going to soak its customers for things like driving directions and ring tones. As an employee I get all the company apps for free and I still don't use them because they're not as good as what I can get from google for free.
And then there's text messaging. How long did they really think they were going to be able to charge $0.20 for something their customers can do for free?
And then there's text messaging. How long did they really think they were going to be able to charge $0.20 for something their customers can do for free?
> How long did they really think they were going to be able to charge $0.20 for something their customers can do for free?
It is worse than that. When people tell others their preferred way of being contacted they will take convenience and pricing into account. The SMS charges mean they'll prefer other means (eg Facebook messages) which makes their phone number and service less and less relevant. It was a great way of forcing customers to go elsewhere.
It is worse than that. When people tell others their preferred way of being contacted they will take convenience and pricing into account. The SMS charges mean they'll prefer other means (eg Facebook messages) which makes their phone number and service less and less relevant. It was a great way of forcing customers to go elsewhere.
It's taken years for Netflix to figure out how to stand in the wind. Even then, there are titles that are simply not available as streaming. Behind that is the First Sale issue, convoluted as it is - my understanding is that one effect of First Sale is that Netflix limits what it will stream.
I can't imagine Hollywood trying to emulate Blockbuster. Hollywood was actually a decent store. I could find something at Hollywood; I counted and the last 12 times I went to Blockbuster, after 30 minutes of scouring the store ... nothing.
Blockbuster had $1B in debt against estimated $500M in revenue in 2010. I can't help but think that like ClearChannel, Fender Musical Instrument Corp/Guitar Center all that debt is a big problem.
SFAIK, there are still a lot of Redbox out there, and the ones I see are always busy.
I can't imagine Hollywood trying to emulate Blockbuster. Hollywood was actually a decent store. I could find something at Hollywood; I counted and the last 12 times I went to Blockbuster, after 30 minutes of scouring the store ... nothing.
Blockbuster had $1B in debt against estimated $500M in revenue in 2010. I can't help but think that like ClearChannel, Fender Musical Instrument Corp/Guitar Center all that debt is a big problem.
SFAIK, there are still a lot of Redbox out there, and the ones I see are always busy.
The second page of the article (http://daindunston.com/blockbuster-the-customer-owns-your-pu...) paints a fairly convincing picture that Jim Keyes was a disastrous idiot as CEO that basically wrecked the company, and that Carl Icahn was an idiot for ousting the previous CEO and installing Keyes. Is there any evidence to the contrary? It seems so clear cut in the article that I want to question it.
Some supporting evidence in a letter from Blockbuster's shareholders to the company when it filed for bankruptcy.
"Jim Keyes and all involved will be held accountable for their actions that led to this today," former shareholder, Niko Celentano, wrote at the time of the bankruptcy filing. "Jim Keyes and his BOD's have failed all shareholders in their fiduciary responsibilities due to them. Jim Keyes is the main reason Blockbuster is in this position today due to his denial of being in a business model that did not work anymore. If Jim Keyes would have seen the changes that were evolving in this industry in the past few years, Blockbuster would not have been in the courts today filing Chapter 11 bk protection.... Jim Keyes has failed in his job as CEO of Blockbuster and should resign immediately."
From http://www.thestreet.com/story/10886236/1/should-blockbuster....
"Jim Keyes and all involved will be held accountable for their actions that led to this today," former shareholder, Niko Celentano, wrote at the time of the bankruptcy filing. "Jim Keyes and his BOD's have failed all shareholders in their fiduciary responsibilities due to them. Jim Keyes is the main reason Blockbuster is in this position today due to his denial of being in a business model that did not work anymore. If Jim Keyes would have seen the changes that were evolving in this industry in the past few years, Blockbuster would not have been in the courts today filing Chapter 11 bk protection.... Jim Keyes has failed in his job as CEO of Blockbuster and should resign immediately."
From http://www.thestreet.com/story/10886236/1/should-blockbuster....
Armchair investor here, but I get the feeling this is a person looking to blame someone. If it was so obvious that the CEO was incompetent or taking the wrong strategic path, wouldn't you have some better option than to wait for bankruptcy, then complain about how you knew it was going down the toilet all along?
That article, and some other things I skimmed over, allege some more serious malfeasance, but this quote doesn't say "Jim Keyes has lied to us" or "filed fraudulent documents with the SEC" or something like that. I don't know much about fiduciary duty, but this statement doesn't seem to identify specific ways Jeff Keyes failed to execute the duty. He may have made some bad choices over "the past few years", but apparently this investor chose not to bail out. Why shouldn't he share the blame?
That article, and some other things I skimmed over, allege some more serious malfeasance, but this quote doesn't say "Jim Keyes has lied to us" or "filed fraudulent documents with the SEC" or something like that. I don't know much about fiduciary duty, but this statement doesn't seem to identify specific ways Jeff Keyes failed to execute the duty. He may have made some bad choices over "the past few years", but apparently this investor chose not to bail out. Why shouldn't he share the blame?
That painted Keyes as a latter-day Howard Hughes, never leaving his airplane hangar and letting his toenails grow out. Surely no one was surprised when the executives quit? Those toenails are gross! b^)
Seriously though, there seem to be some psychological irregularities in Keyes's behavior. He spends 21 years at 7-11, working his way up to President and CEO, and then he can't enjoy retiring with his millions? Well that's OK, lots of dudes in that position find it interesting to serve on boards or as high-priced consultants. Instead, he bribes a meddlesome private equity guy like Icahn into leadership of a company that was largely built by a former rival exec at 7-11? Jealous much? Usually private equity has to pay a premium to execs, because they're such a pain to work for. (Alternatively, because they disrupt much of the back-scratching pretense at corporate governance seen at publicly traded firms.) This guy must have had the mother of all mid-life crises.
Seriously though, there seem to be some psychological irregularities in Keyes's behavior. He spends 21 years at 7-11, working his way up to President and CEO, and then he can't enjoy retiring with his millions? Well that's OK, lots of dudes in that position find it interesting to serve on boards or as high-priced consultants. Instead, he bribes a meddlesome private equity guy like Icahn into leadership of a company that was largely built by a former rival exec at 7-11? Jealous much? Usually private equity has to pay a premium to execs, because they're such a pain to work for. (Alternatively, because they disrupt much of the back-scratching pretense at corporate governance seen at publicly traded firms.) This guy must have had the mother of all mid-life crises.
I miss Blockbuster, or at least video rental stores. I'm way past the phase of life where owning a collection of movies seems like a good idea, and am tired of companies with their hand in my pocket every month. There was also a sense of occasion- it was a place to go to, everybody got something they wanted, and the family was committed to spending a couple hours together afterward. Browsing the Netflix isn't the same- talk about “managed dissatisfaction"...
I feel this way about all sorts of shopping now. Online shopping of all sorts is very different from physical, in-store shopping. Online there is no tactile element at all, no sense of place and no ability to examine products or be surprised by what you find. I'm not saying it's necessarily better or worse, but I do think it results in buying very different things.
The thing I miss most is book shopping. Particularly for technical books. You can't buy them on any basis but recommendation now because it's not worth it for any book store to carry them.
The thing I miss most is book shopping. Particularly for technical books. You can't buy them on any basis but recommendation now because it's not worth it for any book store to carry them.
I feel the same about certain things, like video or music stores. It was kind of an event in and of itself to get up and go somewhere, maybe with friends or significant others. You could potentially meet new people, discuss movies or music with a total stranger.
"Honey, what do you want to watch?"
Before Netflix: "let's go to the store, see what we could find. Let's stop on the way, get some ice cream." Invariably you also run into someone you know on the way.
After Netflix: "I dunno, just pick something."
I'm not saying I miss Blockbuster or I under-appreciate the convenience of Netflix. I just miss that tiny sense of adventure.
"Honey, what do you want to watch?"
Before Netflix: "let's go to the store, see what we could find. Let's stop on the way, get some ice cream." Invariably you also run into someone you know on the way.
After Netflix: "I dunno, just pick something."
I'm not saying I miss Blockbuster or I under-appreciate the convenience of Netflix. I just miss that tiny sense of adventure.
It's odd, but I feel almost exactly the opposite to you and GP - I hate shopping. I hate having to drive through traffic, I hate looking for something for even five minutes and not finding it, and I hate dealing with people (well, not all people, and hate may be too strong a word, but it follows the other two).
I am hardly ever surprised by what I order online - on the contrary, I know they have it, and I am almost always guaranteed to have good quality. How many brick and mortars have even an agregrate rating of their products listed right next to them? And no brick and mortar can compare with the selection you get online.
The tactile and "sense of place" seem very subjective, especially when you consider that 95% of your time with a product will be spent with it away from where you purchased it.
I'm all for buying locally to keep taxes going to local funding and employing people in my community, but if I go to a brick and mortar and can't find something once, in 5 minutes, I'll never buy it in a brick and mortar again.
I am hardly ever surprised by what I order online - on the contrary, I know they have it, and I am almost always guaranteed to have good quality. How many brick and mortars have even an agregrate rating of their products listed right next to them? And no brick and mortar can compare with the selection you get online.
The tactile and "sense of place" seem very subjective, especially when you consider that 95% of your time with a product will be spent with it away from where you purchased it.
I'm all for buying locally to keep taxes going to local funding and employing people in my community, but if I go to a brick and mortar and can't find something once, in 5 minutes, I'll never buy it in a brick and mortar again.
When I know exactly what I want I hate shopping, but that's pretty rarely true for certain classes of things. When I buy books, videos, etc. I want to be surprised and be able to learn a bit more about it in place. But there is also the "I have it now" instead of "I have it whenever the delivery man can be assed to find my apartment and actually deliver it to me" factor even when I know what I want, and then it's just stores that make it hard for me to buy something that bother me.
> How many brick and mortars have even an agregrate rating of their products listed right next to them?
On this specific point, I have a phone. I don't need (or really want) the store to have this, I can have it any time I want to. When I'm surprised by something in a store, unless it's immediately obvious that it's something that I want and it doesn't suck, there's my phone to tell me if it's a sham.
That said, I went out of my way to point out that I don't think it's better, just different. So yes, it is subjective.
> How many brick and mortars have even an agregrate rating of their products listed right next to them?
On this specific point, I have a phone. I don't need (or really want) the store to have this, I can have it any time I want to. When I'm surprised by something in a store, unless it's immediately obvious that it's something that I want and it doesn't suck, there's my phone to tell me if it's a sham.
That said, I went out of my way to point out that I don't think it's better, just different. So yes, it is subjective.
I'm the same way. Money is scarce. I need to know what I buy is going to work for me, and I can't do that with the 1-3 options at the store.
In Australia video rental stores are still relatively popular, and people generally cite reasons similar to those you articulate
Our Internet is also piss-poor, so streaming generally is not an option.
I'm in Adelaide and the two stores near me have disappeared and maybe one person that I know out of dozens and dozens would ever hire a DVD.
GP comment does resonate with me though; it's kind of sad that we've lost that. It's likely caused by having a single browsing device/screen.
GP comment does resonate with me though; it's kind of sad that we've lost that. It's likely caused by having a single browsing device/screen.
I just data horde as I got sick of how much wasn't available or would just disappear at the whim of an executive.
Hey did you plan on watching Galactica? Sike!
Hey did you plan on watching Galactica? Sike!
> Know what business you are in.
This is the same point Steve Jobs makes in this clip,
https://www.youtube.com/watch?v=ZBma82g3Uag
This is the same point Steve Jobs makes in this clip,
https://www.youtube.com/watch?v=ZBma82g3Uag
I think this was more a perfect storm of problems: Netflix coming on the scene, Blockbuster having terrible customer service/fees, and the wishy-washy corporate leadership.
I always get frustrated when I hear people describe a failure as the result of a "perfect storm," because it lets the people behind the failure off the hook. "Nothing we could have done! Perfect storm!"
The article cites problems with Blockbuster's management that go all the way back to 1996, before Netflix even existed. And if anything, it sounds like the various cadres of corporate leadership weren't "wishy-washy" so much as they were laser-focused on a single idea -- the one-stop retail "7-11 for the mind" concept. It's just that the idea they were focused on was terrible.
The article cites problems with Blockbuster's management that go all the way back to 1996, before Netflix even existed. And if anything, it sounds like the various cadres of corporate leadership weren't "wishy-washy" so much as they were laser-focused on a single idea -- the one-stop retail "7-11 for the mind" concept. It's just that the idea they were focused on was terrible.
The amazing part is that they had a CEO who really understood that and turned Blockbuster around, who was then ousted for stupid political reasons by Icahn and replaced with a fool.
Especially given how he was ousted because Icahn thought he was being given too large of a bonus, and then end up paying him nearly 5x that amount in severance.
For Carl Icahn, who had used the CEO’s compensation as a cause célèbre in his proxy battle, this was a chance to take a stand. He instructed the board not to pay the bonus and informed Antioco that he could take $2 million or nothing. When the dust cleared from the ensuing fur fight, Icahn was holding Antioco’s resignation and a contract requiring him to pay $24 million in severance.
For Carl Icahn, who had used the CEO’s compensation as a cause célèbre in his proxy battle, this was a chance to take a stand. He instructed the board not to pay the bonus and informed Antioco that he could take $2 million or nothing. When the dust cleared from the ensuing fur fight, Icahn was holding Antioco’s resignation and a contract requiring him to pay $24 million in severance.
No, no, no, listen, all of these people knew exactly what they were doing, and made great decisions. They must have done - why would they be CEOs and investors paid telephone number salaries otherwise? You'd have to live in a pretty crazy world for that to be the case!
They are paid what they are because most people can't do it and the work is valuable. Not surprising that there are some people that get in there that don't work out.
I'm not sure there was a way forward for Blockbuster. Netflix and Redbox replaced it's core market with alternatives that were both better and more efficient by an order of magnitude.
A massive nationwide retail chain can't just pivot like a startup can. Blockbuster's retail footprint was massive. It had 9,000 stores. Worse, it had franchise stores which it owed a duty to.
Even if Blockbuster could have had a profitable online rental business, it would have been brought down by the retail failure. It would have gone bankrupt anyway.
A massive nationwide retail chain can't just pivot like a startup can. Blockbuster's retail footprint was massive. It had 9,000 stores. Worse, it had franchise stores which it owed a duty to.
Even if Blockbuster could have had a profitable online rental business, it would have been brought down by the retail failure. It would have gone bankrupt anyway.
Did you read the article? It claims that Blockbuster had Netflix on the ropes with their "Blockbuster Total Access" thing, which was basically Netflix but better due to the physical stores and 10x more customers. Then they decided not to pay the CEO what he was due, he quit, the whole leadership team left, they brought in a new CEO who was terrible, and they abandoned the Total Access plan and were bankrupt within 2 years.
Actually I didn't see the next segment button, so thanks for letting me know.
But Total Access isn't the 800 lbs Gorilla that the author believes it to be. I actually subscribed to total access. It is certainly a cool feature, but I'm not sure it was very profitable. For essentially the same price as netflix, I could also get 2-3 instore rentals a month. All for what blockbuster used to charge for 3-4 rentals total.
But blockbuster could have survived Netflix. What it couldn't survive was netflix, redbox, and instant streams. Netflix took away the heavy movie fans. Redbox took aware the family movie night segment. Blockbuster couldn't survive on 1-1.50 a night, but Redbox could.
But Total Access isn't the 800 lbs Gorilla that the author believes it to be. I actually subscribed to total access. It is certainly a cool feature, but I'm not sure it was very profitable. For essentially the same price as netflix, I could also get 2-3 instore rentals a month. All for what blockbuster used to charge for 3-4 rentals total.
But blockbuster could have survived Netflix. What it couldn't survive was netflix, redbox, and instant streams. Netflix took away the heavy movie fans. Redbox took aware the family movie night segment. Blockbuster couldn't survive on 1-1.50 a night, but Redbox could.
When Total Access came out I remember Blockbuster still had a death stench on it.
I think if you're a dinosaur in any space being devoured from the ankles by smallfry startups, the least you can do is build up some skunkworks projects to protect yourself somehow.
The dinosaurs more often than not try to protect their declining fortunes rather than cannibalise their sales, but often they could be doing both and doing it more effectively.
In this case there was a bit more going on, obviously.
The dinosaurs more often than not try to protect their declining fortunes rather than cannibalise their sales, but often they could be doing both and doing it more effectively.
In this case there was a bit more going on, obviously.
There was no perfect storm for Blockbuster...
They were competitive enough to wipe-out the mom and pop movie rental places that were common before them, but that was about it. They created a monopoly of sorts and then they milked it. The market was hungry for replacement.
It was a long time ago so some of the details are out of focus in my mind, but the one constant I can remember throughout the 6-9 year time span where by my family and I patronized Blockbuster video (wow, like 20 years ago) was that it was quite a bit more pricey than the independent stores we went to before BB crushed them. I know for fact that the local grocer has a video section and charged $1 a video, I want to say Blockbuster charged $4-$5, like in 1992 to 1995, very nearly as much as a movie ticket of the day cost. I'm sure people can tell tons of stories about how terrible they were but it wasn't a great experience and they charged a lot for it.
If you were a real cinemaphile type too, they had what looked like a large collection, but it wasn't as large as it looked, they sometimes had censored versions of movies.
They were competitive enough to wipe-out the mom and pop movie rental places that were common before them, but that was about it. They created a monopoly of sorts and then they milked it. The market was hungry for replacement.
It was a long time ago so some of the details are out of focus in my mind, but the one constant I can remember throughout the 6-9 year time span where by my family and I patronized Blockbuster video (wow, like 20 years ago) was that it was quite a bit more pricey than the independent stores we went to before BB crushed them. I know for fact that the local grocer has a video section and charged $1 a video, I want to say Blockbuster charged $4-$5, like in 1992 to 1995, very nearly as much as a movie ticket of the day cost. I'm sure people can tell tons of stories about how terrible they were but it wasn't a great experience and they charged a lot for it.
If you were a real cinemaphile type too, they had what looked like a large collection, but it wasn't as large as it looked, they sometimes had censored versions of movies.
Took me a few seconds to realise that the article meant USA pissed and not UK pissed
It seems to me there are two components involved in being a successful disruptor:
1. Be competent at what you do. 2. Have your main competitor be grossly incompetent.
What this article and its successor indicate is that Netflix satisfied both of these criteria: when, in 2007, Blockbuster had a fairly sensible Netflix-style plan in place, Carl Icahn instated a new CEO who chose to completely demolish it. Had Blockbuster not done this, it's entirely possible Netflix would have not have had room to grow (as Lyft experienced after Uber launched UberX to muscle out Lyft's not-just-black-car model).
I feel that Hacker Newsies get a little wrapped up in the party line of libertarian economics being the ultimate meritocracy, ignoring that capitalism is essentially just an oligopoly with the meritocratic potential to fail only in the case of gross incompetence (which, incidentally and curiously in practice, happens on a fairly regular basis).
Also, I feel things will work better as we try to structure things in a way that disabuses ourselves of the notion that things are working the way they should. Companies still ask questions in the hiring process under the pretext that their employees should want to perpetuate their current operating procedure. Admitting that things are broken, even slightly, leads to smart, sensible people being cast aside, in favor of those who will blindly go down with the ship. This teaches the workforce to be more lemming-like, in order to be hireable.
1. Be competent at what you do. 2. Have your main competitor be grossly incompetent.
What this article and its successor indicate is that Netflix satisfied both of these criteria: when, in 2007, Blockbuster had a fairly sensible Netflix-style plan in place, Carl Icahn instated a new CEO who chose to completely demolish it. Had Blockbuster not done this, it's entirely possible Netflix would have not have had room to grow (as Lyft experienced after Uber launched UberX to muscle out Lyft's not-just-black-car model).
I feel that Hacker Newsies get a little wrapped up in the party line of libertarian economics being the ultimate meritocracy, ignoring that capitalism is essentially just an oligopoly with the meritocratic potential to fail only in the case of gross incompetence (which, incidentally and curiously in practice, happens on a fairly regular basis).
Also, I feel things will work better as we try to structure things in a way that disabuses ourselves of the notion that things are working the way they should. Companies still ask questions in the hiring process under the pretext that their employees should want to perpetuate their current operating procedure. Admitting that things are broken, even slightly, leads to smart, sensible people being cast aside, in favor of those who will blindly go down with the ship. This teaches the workforce to be more lemming-like, in order to be hireable.
Even if Blockbuster management had done everything right in the stores, the stores would still be dead. The entire video rental store industry is gone in the US.
It doesn't matter what happens to the stores. Their business was entertainment, not stores.
Netflix understood this, and that's why their revenue from streaming is >10x that of the rental side. http://ir.netflix.com/results.cfm
Netflix understood this, and that's why their revenue from streaming is >10x that of the rental side. http://ir.netflix.com/results.cfm
Huh. And here we just had one open up near me, doing great too. They rent videos, make pizza, sell pop. One-stop shopping! Lots of folks I know use it.
I'm surprised they made no mention of how Netflix had an important role in the demise of Blockbuster.
Read the next page: http://daindunston.com/blockbuster-the-customer-owns-your-pu...
Thanks! I didn't even notice the link at the bottom. The second page is about Blockbuster struggling to turn it around, and is actually more interesting than the first.
*Interesting side-note: This is the third article I've read today that mentioned Carl Icahn. That guy has his fingers in everything!
*Interesting side-note: This is the third article I've read today that mentioned Carl Icahn. That guy has his fingers in everything!
I don't miss Blockbuster as much as I miss Tower Records. For a music and book fan it was a true community center. The only problem is that I would inevitably end the book store tour at Borders so I guess too many retailers was a common thread those days.
I spent many years in at Hollywood Video corporate in the late 2000s and saw much of it first hand. Blockbuster didn't understand what was going on and Hollywood was too busy trying to copy Blockbuster. Neither of them saw Netflix as a threat until it was too late.
Just as the article mentions, the VCR revolutionized the viewing experience for Boomers who were used to waiting for something to come on TV. The video chains experienced insane success, and thought they could ride that formula out for decades.
Netflix revolutionized movie entertainment for Gen-X and millennials who were used to and unimpressed by VHS/DVD rental models. The execs at the top (boomers) ignored the new fangled streaming stuff because they didn't use it, didn't understand it, and most of all didn't see the value.
The younger of us working at Hollywood saw the writing on the wall in the early 2000s as Netflix was making it's climb. The even younger folks working at the stores knew it even better. But none of us could convince anyone at the top that it was important, until the late 2000s when they made a half assed attempt to be an "also does" to the then dominant Netflix.
When you're in a fast moving business, you don't bet everything on what's happening now, you've got to think about what's coming soon...