by Justin Grensing, Esq., MBA
For countless Americans, a trip to the local Blockbuster in the hopes of renting one of the copies of the latest hit movie to be released on VHS or DVD or to browse older favorites and film classics was a part of the Friday or Saturday night ritual for years.
But as technology and delivery methods evolved, Blockbuster and other video stores started to lose market share to then-mail-delivery-based Netflix as well as DVD rental kiosks before seeing further erosion from video streaming services. As Michelle Lou and Saeed Ahmed write for CNN, the iconic brick-and-mortar movie rental chain is still hanging on. But just barely. After the recent closing of a Blockbuster store in Australia, the Blockbuster in Bend, Oregon became the last one open on earth.
“At its prime in the early 2000s, Blockbuster boasted more than 9,000 stores across the nation,” write Lou and Ahmed. “But the company’s business model soon became stale when Netflix and Redbox started providing on-demand digital services. In 2010, Blockbuster declared bankruptcy and was bought by Dish Network. Soon after, Blockbuster began closing its doors, though some franchise locations tried to stick it out. By April 2017, only 10 Blockbuster stores remained in the US.”
There are a couple of important lessons to be learned from the Blockbuster story.
Failure to Adapt
No business can hope to ride its existing business model indefinitely, because businesses don’t exist in a vacuum. They need to adapt to changing technologies, demographics, competition and customer tastes. As noted above, even Netflix, which carved out a share of Blockbuster’s video market when it launched its mail-delivery DVD model was able to successfully adapt to an online delivery platform. Blockbuster couldn’t move away from brick-and-mortar.
Finding a Niche
Blockbuster and stores like it are likely to never see their heyday return. But the story of the Bend, Oregon store illustrates the potential for small-scale niche opportunities. Quoting store general manager Sandi Harding, Lou and Ahmed write, “The Oregon location has been open for more than 20 years. It offers customers the newest movie releases, but Harding says the classic older titles are the store’s ‘bread and butter.'” Harding added that, while you can go to Redbox and get the new titles, they don’t have the older ones, and Netflix and Redbox don’t have every title either.
Blockbuster will likely end up as a case study in business school texts if it isn’t one already. It’s a great example of a highly-profitable company that failed to adapt to a changing market. But perhaps the credits haven’t started to roll on the chain yet. Between the older and possibly broader selections and the nostalgia, the last Blockbuster on earth may be able to remain a going concern for a bit longer.
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Tags: Blockbuster, changing market demand, disruptive innovation, environmental scanning, market shifts, Strategy