
A Look Back at Why Blockbuster Really Failed and Why It Didn't Have To (2014) - anairs
https://www.forbes.com/sites/gregsatell/2014/09/05/a-look-back-at-why-blockbuster-really-failed-and-why-it-didnt-have-to/#552a986c1d64
======
pmoriarty
Blockbuster used to have a really crappy selection of mostly mainstream
movies, but often it was one of the closest video rental stores around, as
they seemed to be everywhere. They also censored and cut their movies, which
was really annoying. I don't know what their agenda was on that front, and why
they couldn't just let mature adults watch the full films.

My friends and I used to much prefer going to independent video rental stores,
which had a much better selection and did not cut or censor their films, but
we'd often have to go pretty far to reach them.

Then Netflix DVD came around, and that had a pretty good selection.. maybe not
as good as some of the best independent movie rental stores, but wider in some
ways, and overall good enough so that the added convenience of getting DVDs
delivered to my door and being able to return them by merely dropping them in
the mailbox whenever I felt like it made me stick with Netflix and never step
foot in a brick and mortar movie rental store again. I had meant to try
Greencine, as it supposedly had an even better selection of obscure movies,
but I never got around to it, and then it went out of business.

Then came Netflix streaming, with a crappy selection comparable to the crappy
selection Blockbuster had in the bad old days.

I've stayed with Netflix DVD service because of their far better selection,
but most people these days don't seem to know that Netflix even has a DVD
service (not very surprising as Netflix doesn't even advertise its presence on
netflix.com and you have to go to dvd.netflix.com to reach it).

Many of them rarely realize how crappy the selection of Netflix streaming is,
as they've been brought up on a diet of crap, and are only vaguely aware that
there's a whole world of fantastic movies out there beyond Hollywood
blockbusters and TV shows.

~~~
bmer
> Many of them rarely realize how crappy the selection of Netflix streaming
> is, as they've been brought up on a diet of crap, and are only vaguely aware
> that there's a whole world of fantastic movies out there beyond Hollywood
> blockbusters and TV shows.

I like science fiction and well done period dramas (i.e. historical fiction or
alternative history). I am not really into high-brow art movies, as I don't
really have the education to get them. Is there really a wide world beyond
Hollywood for the type of movies I enjoy? If yes, how does one go about
exploring this world?

~~~
pmoriarty
I don't know about period dramas, as I'm not really in to that genre, but I am
very much in to scifi and there are plenty of great scifi films that aren't on
Netflix streaming.

As to how one find them, I have a number of strategies:

First and best is to find people who share your taste and ask them for
recommendations.

Second, find other films by the directors and writers who's films you like.

Third, read reviewers, forums, blogs, and magazines that talk about your
favorite genre of films.

Fourth, try doing web searches for more than one of your favorite films at a
time. If you get lucky, you might find them all on a list of great movies and
go from there.

Fifth, there used to be a website called YMDB (if I'm remembering right),
which used to let you put in your top 20 films and match you up with others
who had similar tastes, and then you could see what other movies they liked.
Unfortunately, it's no longer around, and I'm not sure if there are any other
services like it these days.

Sixth, find lists of great movies and watch as many of them as possible.

Seventh, go to movie clubs and art house cinema houses and watch what they
show or maybe talk to some of the people there and see what they can recommend
given your taste in films.

Eighth, read some books on film.

Ninth, listen to directors' commentaries on the movies you like, and read
interviews with them. They'll often mention films and directors that
influenced them. Watch those.

Tenth, rate all the movies you've seen on dvd.netflix.com and then look at
what they recommend based on your ratings.

------
schnevets
In the same year that Reed Hastings was laughed out of the conference room,
Blockbuster announced a partnership with Enron for Videos on Demand.
[https://www.forbes.com/2000/07/20/mu4.html#545092873541](https://www.forbes.com/2000/07/20/mu4.html#545092873541)

The partnership lasted a single year. I wonder which event happened first? If
they met with Enron first, it seems the morale is to move fast and never
underestimate what the future holds. If they met with Netflix first, I'd say
it's don't be as skeptical to the big guys as you are to the startup.

~~~
stephengillie
It seems so bizarre - a rental company would stream video, through an energy
company's fiber optic cables. Didn't this seem incongruous to anyone at the
time?

[https://youtu.be/5sMXR7rK40U?t=6m8s](https://youtu.be/5sMXR7rK40U?t=6m8s)

~~~
mjcl
The idea of “Enron Broadband” seemed ridiculous to me at the time.

~~~
martinald
Enron didn't have any last mile broadband capability. How did this deal get
done?

~~~
filmgirlcw
The same way all of Enron's deals got done. Lies about capabilities/offerings
and then shady accounting to cover up reality.

~~~
stephengillie
Another video talks about Enron using mark-to-market bookkeeping to record
$100 million in revenue from the 20-year deal.

[https://youtu.be/hwollZoVmUc?t=4m44s](https://youtu.be/hwollZoVmUc?t=4m44s)

~~~
filmgirlcw
Yup, which was their MO. Skilling insisted the company move to mark-to-market
accounting, something not common with non-financial companies (and for good
reason), which meant marking down the perceived value of the contract and then
later, not bothering to update for the loss.

------
Animats
The author harps on "networks" too much. In general, brick and mortar retail
sectors which can be done better on line have tanked. From Sears to Radio
Shack to Toys-R-Us, that's happened. Malls in general are hurting badly.

~~~
beamatronic
Oddly one of the big San Jose malls (Valley Fair) is currently undergoing a
huge renovation and expansion.

~~~
ghaff
It's very uneven. Upscale malls are generally doing pretty well. Then there's
the nearest mall near me which sports such luminaries as Sears and JC Penneys
as anchor stores (plus the Toys R US which recently closed). It's not...
great. There are a few stores in the same general complex that seem to be
doing fine but the mall itself is moribund.

~~~
jcadam
I have to go to the mall here in Melbourne, FL for work clothes. The
standalone clothing stores mostly sell stuff targeted at tourists and
snowbirds (beachwear, Hawaiian shirts, etc.).

Bah, maybe I should get a job that lets me wear Hawaiian shirts to work
everyday.

~~~
beamatronic
For sure you can do that in Hawaii. It’s actually quite awesome.

------
sonnyblarney
I don't think that social influence critical masses were really a factor here.

Blockbuster was brick and mortar, and 'on demand from home at $10 a month' is
going to kill that business on the basic fundamentals.

There's no special science here.

Blockbuster executives were fools - not so much to 'not see it coming' (few
did) - but to not react when the writing was on the wall.

Video streaming might be hard but it's not rocket Science, and a _lot_ of
people still wanted to rent videos.

Using the massive installed base, stores, and gazillions of customers to
launch an 'on demand' service that was 'pretty good' might have snuffed
Netflix.

After all - Netflix had to make the switch from DVDs.

I worked at BlackBerry and saw kind of the same thing - sitting on the Titanic
watching the iceberg get closer ... not at all alone in my concern, however
the large ship was unable to change course.

Especially as Netflix was just getting into streaming, and however we can
point fingers, the fact remains that Blockbuster had all the opportunity and
advantage, it was squandered.

~~~
amyjess
> Blockbuster was brick and mortar, and 'on demand from home at $10 a month'
> is going to kill that business on the basic fundamentals.

That doesn't explain why Redbox managed to thrive though.

~~~
JoeAltmaier
Sure it does. While Redbox is a physical presence, its overhead is negligible.
And for those whom $10/mo isn't an option because, no $150/mo internet to base
it on (not everybody can afford expensive internet connections) Redbox is an
option.

------
forkLding
Article is a bit vague and oversimplified. So Netflix won because of network
effects? and Blockbuster didn't have network effects? Blockbuster is bigger
than Netflix when Netflix was a startup and simple ripples in Blockbuster
could have generated a much bigger effect than Netflix in terms of Facebook
posts or Twitter messages.

Network effects don't happen because people want them to happen, network
effects benefit in marketing is really just really good service that turns
into lots of word-of-mouth that is spread super-fast throughout the internet
whereas traditionally it would just spread in your traditional community. You
can build for network effects but that doesn't mean you can get that effect.

~~~
ghaff
There are different network effects/economies of scale that end up getting
conflated.

There are often benefits to size like brand recognition, better pricing from
suppliers, amortization of R&D, etc. Apple is a poster child.

There are network effects where having more users actually helps to make a
better product through increased data etc. (This is increasingly true with
products that rely on ML and large data sets in various ways.)

And then there are the eBay-type (or telephone system historically) network
effects. If your auction site only has a handful of sellers (or a handful of
buyers), it's more or less useless no matter how wonderful it is by other
metrics.

------
Paperweight
My girlfriend runs an independent video rental store. I've been thinking of
ways to implement a streaming service for our extensive collection of physical
DVDs from the store to customers in the local area, perhaps to a proprietary
TV box. I have the skills to do this.

Does anybody here know if this has ever been done, or is legal? I'm in BC,
Canada.

~~~
jstarfish
Technical execution is the easy part, but legally speaking, you might fare
much better by just offering to physically deliver movies on demand.

~~~
Pete_D
Reminds me of a promotion I saw a few years ago where some pizza chain had
paired up with a video rental place. You ordered a DVD with your pizza and
they were delivered together.

~~~
Paperweight
Our store did that a few years ago, too. Skip the Dishes is widely available
in our town now, and we're surrounded by restaurants, but I haven't asked them
if they'll deliver DVDs yet.

------
xrd
If you ever come to Portland, visit movie madness and grab a video: Save Movie
Madness, via @Kickstarter
[https://www.kickstarter.com/projects/hollywoodtheatre/save-m...](https://www.kickstarter.com/projects/hollywoodtheatre/save-
movie-madness)

------
gscott
They have not totally failed. There is one store left in Bend Oregon
[http://www.sandiegouniontribune.com/entertainment/ny-news-
bl...](http://www.sandiegouniontribune.com/entertainment/ny-news-blockbuster-
video-down-to-one-store-20180712-story.html)

------
phobosdeimos
Video rental stores and physical media was destined to go the way of the dodo
as soon as uncapped broadband hit in the early 2000s. And now there's
unlimited data over 4G networks. I am 30+ too but lets not overindulge in
nostalgia. I have access to a vast library of entertainment 24/7.

------
rainbowmverse
Business Wars did a series on Netflix and Blockbuster at its launch:
[https://wondery.com/shows/business-wars/](https://wondery.com/shows/business-
wars/)

Both entertaining and enlightening.

------
wnissen
Blockbuster was also servicing US$1 billion in debt after being spun off from
Viacom.

~~~
scarface74
Netflix currently has $4.8 billion in debt and another $15 billion of
streaming content obligations.
([https://www.polygon.com/2017/8/15/16151944/netflix-disney-
de...](https://www.polygon.com/2017/8/15/16151944/netflix-disney-debt))

------
jackconnor
"Antioco was, in fact, a very competent executive—many considered him a retail
genius"...yet he made incredibly obvious mistakes to prop up a business with a
flawed business model. I fail to see any of the genius, he seems like another
corporate idiot in a suit, to me.

~~~
RandallBrown
Antioco tried launching a dvd by mail and streaming service around the same
time Netflix did. They were behind, but not _that_ far. The problem seems to
be this

> While he convinced the board to back his plan, one of his lieutenants, Jim
> Keyes, led a rear guard action.

Had they actually listened to Antioco, they may have survived.

I subscribed to Blockbuster Online because I could return things to the store
and get movies faster than Netflix. Everything about it was equal or better
(except maybe the name.)

Then it all sorta fell apart on Blockbuster and I've been a happy Netflix
subscriber for more than a decade.

~~~
scarface74
Has there ever been a successful large scale pivot by an American technology
company that wasn’t founder led? All of the successful FAANG companies
successfully managed transistions led by thier founders. Even though
Microsoft’s recent turn around wasn’t founder led, I don’t think the current
CEO could have done it without Bill Gates’ support.

~~~
filmgirlcw
Intel?

The company has massive problems now, but many of the larger scale pivots in
its history were not the work of Moore or Noyce. Now, we can debate whether
Andy Grove counts (and I tend to say no, because though not technically a
founder, he was employee number 3 and there from the day the company was
incorporated), but looking at someone like Paul Otellini, who most definitely
helped turn the company around, I think that's a good example.

Otellini missed mobile, a massive, massive problem -- but I don't think there
is any evidence to suggest that Grove would've necessarily done better. It's
hard to say.

And if we want to go further back, I would argue that IBM was never led by its
founders. Watson wasn't a founder; he came into what became IBM as a hired
manager. One could argue his son was "more" of a founder because he grew up
seeped into the culture of what IBM became and he definitely helped lead the
company to greatness.

But subsequent CEOs like Frank Cary and Louis Gerstner really did the big
turnarounds and pivots.

------
rglover
Read it. Internalize it. Profit from it.

[https://www.amazon.com/dp/B0036S4B2G/ref=dp-kindle-
redirect?...](https://www.amazon.com/dp/B0036S4B2G/ref=dp-kindle-
redirect?_encoding=UTF8&btkr=1)

