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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 Who is next to join Blockbuster, Polaroid, Borders and Best Buy on the ash heap of superseded retail business models?"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.
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.
If Blockbuster had purchased them, they never would have made the leap to delivering over the Internet.
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.