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How Blockbuster Could Have Owned Netflix
schnell writes "Your age probably determines whether you think of Blockbuster Video as a fond memory or a dinosaur predestined for extinction. While the last Blockbuster rental at the last remaining Blockbuster video store took place last week, Variety retells a now-classic story of how Blockbuster could have bought Netflix for a song, but didn't because it failed to take the new DVD-by-mail and video streaming markets seriously. Who is next to join Blockbuster, Polaroid, Borders and Best Buy on the ash heap of superseded retail business models?"
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I remember when netflix first started out, it took blockbuster YEARS to FINALLY get a dvd by mail system, and it was still overpriced as hell.
They continued to make moves acting as a monopoly, refusing to believe they could ever have any competition.
This was a fatal mistake.
Some business people look inwards to optimize their existing business in search of profits. Others look at how the market around them changes. Changing ones business model is stressful and not something everyone can do.
Besides, as an investor, I'd rather put my money where I think the market is going. If management keeps changing focus, I never know what I'm pursuing. Let the Blockbusters of the world rise and fall. I'll buy in or cash out of the trends as I see them.
Have gnu, will travel.
Followed shortly thereafter by the USPS, unless Amazon just outright buys them.
They'd have tried to shoe-horn late fees into Netflix. That's where all Blockbuster's money came from. Renting videos was just a loss leader for late fees. They didn't take Netflix seriously because they didn't have late fees and Blockbuster didn't see how anyone could make money just renting videos.
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
Polaroid is already gone. For the last few years, ever since they stopped making instant film, Polaroid has been nothing more than a brand name to be licensed out (presumably, to attract folks who still have fond memories of instant film.) For example, all those cheap portable Polaroid-brand DVD players are made by somebody else. That's in contrast to Best Buy, which is a real corporation, and Borders, which is at least a division of a real corporation, Barnes & Noble.
Like being raped with late fees?
If Blockbuster had bought Netflix, I would have cancelled my account immediately.
:wq
Hey, its a little too soon to talk about Borders that way. Some of us are still in mourning.
You Google it, like subby could have before making such claims.
It's not dead yet.
http://blogs.wsj.com/moneybeat/2013/11/11/best-buy-sp-500s-best-performer-getting-still-more-praise/
They are not out of the woods, but things like price matching amazon have helped a lot. I've personally not bought from Best Buy in a long time, but recently after buying something on Amazon I checked how much it would of cost at Best Buy and realized for a little more I could of had it that day for about the same price.
Polaroid? Borders? That's old news.
How could Blockbuster have eaten Netflix's Breakfast, Lunch, and Dinner? Easy: take all the same risks Netflix took, invest more capital (which Blockbuster had at the time), and abandon their proven business models earlier than they did.
The buggy whip makers could have beaten AC/Delco to the punch if they only followed this same crystal ball strategy.
What everybody forgets is: Pets.com et. al. Sure, they look silly today, but there was a time that they attracted investment dollars that Netflix didn't get.
"I'm not dead."
...
"What?"
"Nothing. There's your ninepence."
"I'm not dead."
"'Ere, he says he's not dead."
"Yes he is."
"I'm not."
"He isn't."
"Well, he will be soon, he's very ill."
"I'm getting better."
"No you're not, you'll be stone dead in a moment."
"I feel fine!"
Do not look into laser with remaining eye.
It was Mom-n-Pop video stores that were the shiznit, The king of them all was Kim's Mediapolis in Morningside Heights in NYC, which arranged films by director. Blockbuster was never more than an annoying lowest-common-denominator experience designed by mediocre MBAs. May they rot in hell.
....Just wishful thinking. I can't wait...
If Blockbuster had purchased them, they never would have made the leap to delivering over the Internet.
Your age probably determines whether you think of Blockbuster Video as a fond memory or a dinosaur predestined for extinction
Does it? Does it really, schnell?
You must live in a very simple world where everyone 30 and up are useless has-beens who should just hurry up and die while the teens are the master race of digital natives. I wish my world was quite that simple.
This type of drek belongs on reddit.
They could have killed/bought redbox and netflix easily. But the Executives at Blockbuster are still too stupid to realize that they had to change models. I guarantee they still deny they did anything wrong.
If you are only looking at next quarter, then as an executive you are a complete and utter moron.
Do not look at laser with remaining good eye.
...for me when they claimed they could not stop the computer from charging a fine to my credit card when I returned a movie 2 hours late. I cut my BB card in half in front of the cashier. Circa 2002.
Blockbuster fell into the same myopic hole as Sears did in the 90s. At the start of the Internet boom, Sears had everything in place to be what Amazon is - they already had a full catalog service that delivered by mail and also had in-store pickup. A simple "order from" website would have been all that was needed as the rest of the infrastructure was already in place. Instead, Amazon owned that space and Sears is struggling to remain relevant.
Folks automatically assume that if Blockbuster bought Netflix that Blockbuster would be sitting on top of the streaming video world. More likely Blockbuster would have either killed the business either intentionally or through incompetence. When you have an entrenched management team that only understands one way of doing business and whose careers are based on a traditional distribution model, you will find that they don't adapt well to a new distribution model. My bet is that a new competitor would have eaten Blockbuster/Netflix' lunch.
Odds are Blockbuster was better off not making the purchase.
See my journal for slashdot ID's by year. Mine created in 2005. http://slashdot.org/journal/289875/slashdot-ids-by-year
I bought a bunch of stuff when it was 70% off
I won't miss Best Buy much. Polaroid has a future, have you seen their tablets?
The company that Ed Land created ceased to exist years ago. The only thing of i that remains is the brand name, just like Commedore. Speaking of which the latest holder of that, Commedore USA purveyer of curren tech in redressed old boxes seems to have gone dark.
The next retail model to go belly up are GameStops and the like. When Steam is fully up and running there will be no reason to buy your own copy any more, which means the lucrative secondary market many game stores rely on for profit margins will go away.
Incidentally when Steam is fully transitioned to Linux it will have an effect on prevalence of MS in the home, too.
Do what you can, with what you have, where you are.
I think the big shopping mall anchor stores (Macy's, JC Penney, etc) are all likely to fail in the next 20 years.
Department stores have one big advantage over online stores: fitting rooms.
I hear this argument every time for companies that fail to shift to a new market reality. Examples are Xerox (with their PARC stuff), Polariod, Blackberry, IBM back in the day, record companies, etc. That's a complete misreading of the issue. It isn't about having some misguided sense of humor, its about fear.
The problem entrenched companies have is that while they have a market that they dominate that is acting as the company gravy-train, all the incentives in the world are acting upon them to protect that gravy train. This works well for them with normal competitors, but if someone finds a way to undermine the entire system (eg: online distribution for music), no matter how inevitable the coming change may be, it is a direct attack on their gravy train, and they will attack it back. If they tried to do the same thing themselves, at best they'd only cannibalize their own sales. What good is that?
Yes, it may be short-sighted. But we are a short-sighted species. A company's employees don't take their salary "in the long run", and their families don't eat "in the long run" either.
Likewise, when streaming video became a ubiquitous thing, it should have been obvious that video disc rental was going away.
Going away, not quite gone away. Streaming releases on Netflix, as I understand it, happen several months after the DVD release. Streaming is still impractical among people who can't yet move out of an area where nobody offers cable or fiber Internet. And how well is streaming doing in Europe and Australia/New Zealand, which have fewer potential customers per country and per language market than anglophone North America?
about polaroid....
fuji still makes a bundle selling instax. seen it in shops in the past year(in asia, in eu had to order from ebay).
(my sister wanted an instant camera for her wedding.. so bought the instax, since per picture cost with it was much much more sensible than what the cost would have been with the repro polaroids).
world was created 5 seconds before this post as it is.
Divx was the beginning of the end for CC.
In other words, the world would be just like it is now, but with a different brand name on a website. No more or less movies would be available to consumer, and there would be no more or less net jobs.
I can't think of one meaningful thing it would have actually changed.
Not participating in a change directly does not preclude one from anticipating its inevitability.
Sleep is for the weak.
No, I don't know how. But then again, neither do they. They won't even see it coming.
.
Prisencolinensinainciusol. Ol Rait!
"Your age probably determines whether you think of Blockbuster Video as a fond memory or a dinosaur predestined for extinction."
How about neither? When they came into town, the locally owned ma & pop video rental that had been around since the dawn of home video rentals closed almost immediately.
to read. If you wanted to read old stuff, then you should have been shopping at a used bookstore. They are good for the older titles and often have a broad selection. But Borders was a nice place to find a new book to read.
Best Buy got rid of the C level staff that were associated with the old CEO/founder. The new CEO made a number of hard choices and focused on the fundamentals. That has lead to a significant recovery. The stock price has more than tripled and they are one of the best performing companies on the S&P500 right now.
Major point, the online pick-up is now part of check out area and not customer service. For years I hated using online pick-up because without fail I would be stuck waiting behind someone making the financial transaction of the century. I used to use Circuit City pick-up all the time because it was always ready when I got their. I found it less frustrating to use Amazon and wait the extra day instead of waiting in line. So it's a great change.
They making some good changes to the loyalty program. It's one of the easier ways of getting money back on purchasing rarely discounted Apple Hardware.
They got out of some really badly done deals internationally. The Cellphone Warehouse deal for UK expansion gave Cellphone Warehouse a cut of BB's US cell sales.
Certainly there is risk for them. If all the changes don't turn into great numbers for the holidays it could spell disaster. We'll know in a couple months.
My favorite used bookstore is also a better new bookstore than Borders. It's in Santa Cruz, where I no longer live, and it's called Logos. The Borders moved in within a stone's throw, but obviously was defeated.
Sadly, I can think of few other examples. Location, location, location...
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
As with movies, the quality of extras varies greatly. Simple goof reels and dry technical descriptions are one thing, but when they take the time to find real stories in the process it's a whole different world. On a movie you truly like, a good commentary and collection of extras videos can be as enjoyable as the movie itself.
Different apparel manufacturers have different ideas of what a "large" is, especially from one country to another.
How could they have possibly known that people would prefer to stream videos directly from their couch rather than leave the house into whatever nasty weather was waiting for them outside and drive all the way out to a store full of loud and misbehaving children only to find that every movie worth watching had already been rented?
Don't get me wrong, I have plenty of fond memories of renting movies and video games from Blockbuster. But they had nearly two decades to prepare for the transition to digital and they dragged their heels every step of the way. Anyone who understood technology knew that the transition to digital was inevitable, so it's not like there was a lot of risk in investing in that direction. Even if you argued that the transition did not seem inevitable at the time, smart executives would have prepared for it anyway just to hedge their bets. Since Blockbuster fumbled on every count, it's hard to feel that bad for them.
The problem is that some businesses think that they are entitled to a given business model and way of getting money. These companies are the ones that will inevitably fail because they can't take the risk of killing their own cash cow. History is littered with examples from Kodak to Polaroid and so on.
What I don't see though is people willing to site companies that are willing to sacrifice their sacred cows and look for news ways of doing things. I'm going to cite IBM which was once so synonymous with making personal computers that they were the very standard (PC or Mac - PC was /their/ thing) for the entire rest of the industry. Nowadays IBM is a software and services company that makes servers and mainframes primarily as a means by which to sell their services. Another company is Amazon which famously used to be a book company in it's earliest years before branching out into just about everything else. Amazon has also publicly committed to avoiding fat margins to force his business to be lean and competitive.
Entitlement gets you a footnote in the history books, refusing to be entitled keeps you in the Wall Street Journal. There is nothing more dangerous to a business than entitlements for they engender complacency and complacency engenders competitors to take your place.
Because what I remember was that anything you ordered took weeks to show up.(This was back in the 80s) It took so long most of the time I had already bought it locally at another store. After doing that a few times I didn't bother ordering anything from Sears since it was a waste of effort.
Did you know 80 to 90% of the moderators on slashdot wouldn't recognize a troll even if one dragged them under a bridge.
Netflix has WAYYYYYY more movie selection than Blockbuster.
Here is my story. I rented two DVDs from a local chain on the weekend. Only got to see one movie. $4/each. Forgot to bring them with me and got hit with $4/each in late fees. I was out $16. I realized for $4 more I could of owned the movie.
Then I saw a $19.99 Netflix add "No Late Fees", and I tried it. I later bought stock at $10-$15. Best financial move EVER!!!!
A few years ago I received $10 Blockbuster gift card. I went and spent over an hour and a half trying to pick two movies to rent. Wasted so much time I didn't even get to see a movie that night. Ever new movie they had was either out of stock, or I had seen it already.
In the end I bought a used copy of "I, Robot". It was a bad model. That on demand streaming killed.
> Who is next to join Blockbuster, Polaroid, Borders and Best Buy on the ash heap of superseded retail business models?"
I'd say the Microsoft OS and office suite divisions. They're still trying to maintain these as major revenue streams at a time when these things are commonly free.
I think Microsoft as a company will continue to exist, but as a smaller, device oriented company.
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
That Blockbuster was doomed. As soon as online video became a reality you could slowly see traffic at Blockbuster stores dwindling down to nothing. It's funny though, the industry is littered with companies that saw a glimpse of the future and chose to ignore it, companies like Kodak, Blockbuster, etc.
Best Buy is still in business. You can bash them as much as you want, but they do still exist and they do still operate stores. You can tell me about how much cheaper you can get what you want from Amazon and how much you hate the cashiers at you local store, but that doesn't really matter. They are still in business because people still want to buy things in person, and some of those items aren't carried at WalMart.
They still have a few years to go, if they continue to not figure out what they need to change to be relevant with younger consumers. They have at least a few years because it will take that long for online merchants to figure out a way to get their products to people more quickly without charging too much for shipping. There will always be consumers who want their items today, and there will be retailers to fill that niche. It might not be Best Buy in the future, but there will be someone.
Damn_registrars has no butt-hole. Damn_registrars has no use for a butt-hole.
It's a misconception to believe that a successful business under a particular name is in the best interest of the owners of any company. Often when a company is approaching its twilight, it makes more sense to run it into the ground and sell off the assets. Remember, the actual workers and benefits to society do not matter the least bit in American business. All that matters is maximizing the profits to the owners or share holders.
The only thing worse than a Democrat is a Republican.
I stopped in a Blockbusters the other day to see if their "going out of business" sale was any good and was severely disappointed. Like, 10% off retail for new DVDs.
Now, Borders, THAT was a going-out-of-business sale. Like 70%-90% off new books and ridiculously priced blu-rays (I was getting titles I actually wanted for like a few bucks each).
Um... The reports of my death have been greatly exaggerated!
- Amazon is now collecting taxes, which was one of their advantages over box stores.
- Amazon is moving towards Sunday delivery using USPS, which is an advantage that box stores have had (i.e. open on Sundays)
- Best Buy is now matching online prices, including Amazon, Frys, etc.
- Best Buy returns can be completed the same day
The linked article about Best Buy in the original post mentions Costco, Target, and Walmart as direct competitors. However, it's been my experience that Best Buy, at least in my area, has had similar if not better pricing than all of these. I bought a new Plasma TV and A/V Receiver a year ago, I checked out Costco, Best Buy, Amazon, etc. and ended up buying from Best Buy, simply because they had the best price.
Granted, Best Buy has implemented a number of different strategies to maintain profitability and not all have succeeded. However, to say that the retail store is a dead business model is a tad short sighted. People still like to see, touch, experience stuff before buying. If the price is the same, whether you buy from a web store or a retail store, most people will happily buy directly from the retail store since they are already there.
In my opinion, grouping Best Buy in with Polaroid, Borders, and Blockbuster shows more about the poster's bias than reality.
In no way am I defending Best Buy. My point is simply that the physical retail model is not going to die any time soon. Streaming video is what killed Blockbuster because the product (i.e. movie) could be delivered instantly. In the future, we will have maker bots in our homes (equivalent to streaming). This is what will eventually kill retail stores.
Keep in mind that at the time, it was anything but clear that Netflix would survive... let alone prosper. The same for Redbox. Hindsight is always 20/20.
Blockbuster days didn't become numbered until RedBox arrived. Why go to the BlockBuster 4 miles away to pay $5 for a rental when you could easily go down the street to the nearest RedBox machine and get that same rental for $1.
I agree too much credit is being given to Netflix.
These comments are my own and do not necessarily reflect the views or opinions of my employer or colleagues...
Why spend $5 to rent a DVD from some big, overpriced store with annoying employees, when I can walk up to a big vending machine and rent the same video for $1?
Because Redbox gets the movies 28 days late, and some movies are especially time-sensitive, especially holiday-themed movies. Or because the movie is no longer a new release and therefore no longer in Redbox.
For example, here in the Pacific Northwest we have Fred Meyer, which is essentially Sears with a grocery store attached.
And here in Indiana we have Meijer, which is essentially Fred Meyer with the serial numbers filed off.
# I started using usenet back in 98
on dial-up I may add the speed was not so great
and if you missed a segment you'd get quite irate
ooo-a ooo-a
I'm up till dawn, oh!
ooo-a ooo-a ...
Downloading porno
Internet killed the video store.
Internet killed the video store.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Unknown Lamer is a young lad. If you go back far enough your age determines whether you think of Blockbuster as a vicious predator that drove all the mom and pop video stores (along with their extensive libraries) out of business, as a fond memory, or a dinosaur predestined for extinction. I sing no songs of lament for Blockbuster and their hideous storefronts that blighted retail locations across the country. Good riddance.
While working at Enron Broadband Services in 2000, we had partnered with Blockbuster to create a video on demand service, and had all the main/regional CLEC/ILECs as partners to provide last mile connectivity. We were able to stream better than VHS, but slightly worse than DVD quality video over a 1Mbps Internet connection that required you to have a set top box. We had successfully demonstrated the technology in the lab and were going into the first run trials to beta customer homes when Blockbuster pulled the plug. So they could have beat Netflix to the punch by bypassing the DVD rental business entirely and going straight to VOD, but they decided not to. Also, a little known fact is that it was the pro-forma $150 million Enron booked as earning on that VOD project before it ever hit a customer home that brought increased scrutiny to their financials before they ultimately went out of business a year later.
Remember the Alamo, and God Bless Texas...
Good riddance Blockbuster, hope you rot in hell with all the late fees you chiseled from us.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
How can the topic of "Memories of Blockbuster" not be full of rants about their censorship? Well, "censorship" is maybe too harsh a word, but they rented out butchered versions of movies. If you were into horror (especially slasher/gore sub-genres) Blockbuster was unusable and you got ripped off, every time. (If you were already very familiar with the name Peter Jackson before those LotR movies, then you know what I'm talkin' about.)
It wasn't even late fees that drove me to their competitors; it was something as simple and easy as integrity. And considering the kind of trash I'm into, it's a pretty fucking low bar, when someone like me says you don't have integrity.
Fuck Blockbuster. I hope their owners die homeless and starving, their children sold into the sex slave trade.
"Believe me!" -- Donald Trump
They are fantastic cameras to keep in a car in case of an accident. Extremely durable. I'd seen them used in fleet vehicles for years. Kept in cars year-round, through the 100+ degree summers and sub-freezing winters. Mine always worked. I had one for years until Polaroid 600 film went away.
Yeah, nowadays many folks have camera phones. But not all. And this is a cheap, durable, reliable way to have a camera in the car at all times.
They partnered with Enron for bandwidth and content delivery. Rip.
It's a big toy store where everything is slightly more expensive then elsewhere.
They have a baby section though, I think that gets all the business, but the rest of the place is usually dead.
I wish they would expand into more adult stuff.
Not sex toys (they couldn't possibly compete anyway) but high-end geek stuff like Anime figurines etc. The stuff you see at comic book stores.
Sig. Sig. Sputnik
And I think it would help for people to see how much their lifestyle is costing them. Smoker? Drunk? Obese? Eat fast food ten times a week?
Wow - this idea is made of awesome. Yes, the biggest problem with the medical industry is the complete inability to determine up front how much anything major will cost, but I had never thought of this aspect of it before. A little "monthly lifestyle cost estimator" would be an eye opener.
Socialism: a lie told by totalitarians and believed by fools.
Actually, you're seeing them two years late. The movie first comes out in theaters. Then 52 weeks later it comes out on DVD. Then 4 weeks later, after the holiday, it hits Redbox and Netflix. Over the next 48 weeks it has already disappeared from Redbox, making it an $8 rental for the month if you aren't already a Netflix subscriber.
The corporate stores may all be closed, but there are some franchises that live on in Alaska and Texas. Zombie Blockbusters
> by Aerokii (1001189) Forget it, your UID is too high.
> (1001189) your UID is too high.
> 1001189
mfw: http://alltheragefaces.com/face/fuck-that-bitch-yao-pff
http://soylentnews.org/~tibman
An article about a service failing and no comments about whether Netcraft confirms it or not? Slashdot, you've changed.
God invented whiskey so the Irish would not rule the world.
Are you the same guy that brought up Hop like 5 times on the other Blockbuster thread?
I bring up holiday movies because their release windows form an easily understood counterexample to the business model of Redbox and Netflix. It affects movies other than Hop; I bring up that particular example because I followed it most closely. I bring things up in several articles because different people read comments to different articles, and I feel a desire to inform them all, at least until I happen upon someone who solves a particular use case. For example, I brought up live sports in articles about switching from cable TV to Netflix or Amazon Prime or Hulu until someone recommended Buffalo Wild Wings as an alternative.
Just buy the damn thing already.
A relative did end up buying it, but that's beside the point. By making more movies holiday-themed, a studio can build urgency to see them in theaters before they disappear into the vault for a year.
Netflix nor Redbox has the movie selection Blockbuster did
Netflix has a vastly superior mail order selection. With Blockbuster you were limited to what the individual stores you could get to could stock and shelve. Netflix is effectively unlimited as having a single copy of the movie anywhere in the country ensures you will get it eventually.
but the movie is new to ME, so what difference does it make?
The later you see a movie, the harder it is to avoid spoilers.
I wouldn't be surprised if games no longer came on disk by the next gen.
Good luck pushing a 30 GB game over a satellite connection with a 10 GB/mo cap.
Not the last remaining store. The franchise stores are still open ....
This is not news.
Exactly; that 20-year thing is extreme hyperbole. Blockbuster's business model wasn't threatened at all until Netflix came about, and wasn't in in really serious turmoil until online video-on-demand services became popular.
It's better this way. Blockbuster is an old-fashioned corporation that doesn't give a fuck, and their demise proves that. Netflix is down to earth and knows its customer base. Blockbuster's failure was because they're business model was outdated.
...they went out of business. I've been waiting for this for fifteen years! That's what you get for charging me that $1.50 late fee in 1998, suckers!!! Hahahaha!!! Where's your god now!?!?
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