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Blockbuster Could Have Bought Netflix for $50M (inc.com)
62 points by GordonS 31 days ago | hide | past | web | favorite | 74 comments



It still would have been a bad deal, because there is no way that Blockbuster would have given them the freedom and the funding necessary to execute their pivot from a DVD-by-mail service to a streaming video service.


Blockbuster did put lots of money into developing streaming technology and absolutely saw it as the future. But they were too early and gained no traction. By the time the moment arrived they no longer had the money and energy. But overal I agree Netflix wouldn't have been Netflix if it had sold out early.


> But they were too early and gained no traction

As I understand the history of Blockbuster, the CEO was actually winning against Netflix.

It was obviously costly fight (needed lots of investment).

The Blockbuster CEO met his performance goal and was expecting hefty bonus but Carl Icahn, a board member and big Blockbuster shareholder, torpedoed the bonus award.

CEO quit. The next CEO reduced spending in dvd-by-mail and online streaming and Netflix won.

https://www.businesswire.com/news/home/20110318006089/en/Hap...

So you could say that Blockbuster lost because Carl Icahn is an idiot and single-handedly destroyed Blockbuster.

There's no indication that they lost because they were "too early". In fact, their online product was "pay-per-view" while Netflix was "all-you-can-eat" https://www.cnet.com/news/netflix-vs-blockbuster-whats-the-b...


Too early can be, when bandwidth was slow and download cap were small. Downloading was discouraging


Also, the main other party in the 2000ish Blockbuster streaming service was Enron. So it probably would have collapsed or fallen into troubled times and been acquired, no matter what.


Enron was also trying to create bandwidth commodities that traded the same as energy, which was typical of Enron. Create a market, make use of the market and double dip on profits.

https://www.wired.com/2001/11/enron-a-bandwidth-bloodbath/


I'd love a list of all the too-earlys ..


My favorite is Microsoft Terra which was designed mostly to show off their SQL database. THey had no idea about the power of personal data that Google would exploit much later with Google Earth.


Ah well, very similarly DEC made altavista to show off so never thought of it as a product. Then Google came.


Really? I had no idea Altavista was from DEC.

In school in sweden we actually had a computer class where they taught us to use altavista. This was before Google blew up.


altavista history is "fun"

https://digital.com/about/altavista/


I can only remember the conman who claimed he could do broadband over dialup. https://web.archive.org/web/20170320224412/http://jacksonvil... but statistically they must have thrown money at someone who wasn't a crook, mustn't they?


Six Degrees: Facebook met LinkedIn in 1997.


oh yeah .. indeed too early


Friendster?


The irony(maybe?) here is that DVD-by-mail is the ONLY way I can watch 99% of the movies out there. Streaming services are shit in comparison. They win in convenience, but barely.


Well. the only legal way. Piracy has by far the best selection and (with modern automated piracy tools) the best convenience. Price? A Saturday afternoon to setup the Piracy Trinity (sonarr, radarr, plex) and maybe 1 hour a month for maintenance and a $5 VPN subscription.


However, the Netflix DVD back catalog is effectively falling out of availability. Disks for low-volume movies are obviously not being replenished as they get lost, scratched, etc. I'm seriously thinking of just dropping my Netflix DVD-by-mail subscription at this point and "putting" the money into my disk purchase budget.


I'm not sure they can replace all of them. They are dependent on someone selling the DVDs.


That's doubtless true in some cases, but lots of the permanently no date available disks in my Netflix queue are readily available for sale new. Netflix just doesn't really care about the DVD rental business at this point.


I'm mostly doing the same, but letting the DVD mail ride until it's not economical. Right now, it's still rocking.


The high quality unpopular movies don’t make it on anyone’s radar to negotiate streaming rights. The high quality popular movies are too valuable to offer to Netflix for a price they would be willing to pay.

I like Amazon’s pay-per-watch system much better.


But even that doesn't have EVERYTHING. It's very rare, that I don't find even the most obscure stuff available on Netflix DVD service. I'm a huge film fanatic, and $20 for roughly 3 movies a week is a steal. Streaming service video/audio quality just isn't on par with a Blu-Ray disk. The audio is often horrendous, which I understand most don't care about as long as they can see the picture on their $175 4K TV from Costco.

Also, I wish their old distributions points would open back up, used to be next day turn around and Saturday :( I honestly don't know what I would turn to if the service went away.


Yeah, I’m not as much of a film buff as you. Pay to rent on Amazon does the job for me except about once a year when I order a disc.


I wonder if the answer to this is adopting the mechanical royalty model from the music industry. Anyone can stream the movie but a royalty must be paid.


Why not? Netflix itself thought that Blockbuster's 2007 'Total Access' program was going to drive Netflix into bankruptcy: https://twitter.com/modestproposal1/status/11551477854670233...


Yep would have been aol/time warner all over again.


If you will look hard enough, you can find FOMO in so many different things.

If you were lucky enough to purchase 100 shares of McDonald's when it was at $22.50 on its IPO date, you would have spent $2,250. Based on McDonald's closing stock price on October 28, 2018, the investment would be worth $12.89 million.

We can also talk about Bitcoin but I think you got my point


A colleague was big on Bitcoin in mid-late 2009. I declared it to be stupid and didn't bother. By the time I realized that was a mistake it was too late, the days of normal people mining coins was long gone.

I've convinced myself that I'd have lost my wallet long before it became valuable anyways. It helps me sleep at night.


I tried out the WWW when it was ~1000 pages mostly at CERN, and was unimpressed... These things happen.

The thing with Bitcoin is that we were right -- it is stupid. But that didn't stop the early adopters from making lots of money. That's highly annoying.


Were you right? Only time will tell. I'd expect more humility from someone who just admitted to having been horribly wrong about webpages being a big hit... on a webpage.


Yes OP were right. Bitcoin could never scale to the point of being used for every transaction. Thats a different thing than realizing it would have a bubble with massive profit potential.


"I can calculate the motion of heavenly bodies, but not the madness of people."

- Isaac Newton on the South Sea Company Bubble.


Never heard about Lightning Network I guess?


"Used for every transaction" is a high bar; I suppose USD and the gold dinar have both failed, oh well.

If we used a more reasonable metric, like "will bitcoins being worth significantly more in ten years than they are today," OP may well be wrong. You can think I'm crazy for saying that, but neither of us can really know at the moment.


USD works as currency because it has a pretty stable and small rate of deflation, a property that the fed tries to maintain. It works to trade value and gives a subtle nudge to promote trading.

Bitcoin had the mission statement of being a currency, which it has failed at. It's instead a highly volatile (and potentially highly profitable) investment.

So someone could be right that Bitcoin would not succeed (at being a useful currency) and still have been wrong to not buy in (they should have gotten in when the getting was good for the very reason it would fail to be a currency).

But it was and is more like gambling and less like "mattress money".


Haha, I had a similar experience back in the day! Online services such as Compuserve and AOL were popular, and I was with Compuserve. I heard about the web and loaded a few pages in Navigator - I was disappointed; Compuserve seemed way easier to use, had a lot more content, and was much richer in media.

I chortled, shook my head and went back to Compuserve.

How monumentally wrong I was!


Think of all the other things you also declared to be stupid and didn’t bother with, that turned out to be stupid and would have cost you a bunch if time or money.

People always say, “if you had bought Microsoft at IPO....” For some reason they never say “if you had bought Enron at IPO....”


If it makes you feel any better there were a lot of alt-currencies around that time. Many were marketed as being untraceable to avoid government interference and taxation. And many were used for laundering, drugs, and childporn.

Around that time I was aware of bitcoin but I was paid for some dev work once in e-coins and had the hardest time converting that to cash, which is how I paid rent. And while it made up a small part of my compensation I thought it was ridiculous. Something tinfoil hat wearers cooked up.

It's easy to say it bitcoin was going to be big, in hindsight. I used one of their early ATMs to pay for pizza. At the time it was trading for ~$2. I didn't think much of it until years later when it got a meteoric rise.


I can only laugh when I think about mining bitcoin when it was ~$15. I could get 0.1 BTC per day out of my GPU. Not much then, but if I had managed to hold it to today that's $1000 per day. I didn't hold it, obviously, but it's insane to think about. I feel like I missed out, I can't imagine what it's like for the people who mined thousands of BTC a day on a laptop CPU in the very early days and then forgot about it.


Or you would have sold it the moment your holdings had any real value. 99% of all people would have done this. You need a very uncommon «speculator’s» or «investor’s» mindset to be this deep into _anything_ as an individual.

If you buy any single asset with the idea that it might increase 10x to 10000x in value, any degree of success will put you in a position where continuing to own it is in direct violation of a «sensible» investment policy.


Yeah, the main issue with listening to all the FOMO here is how many people automatically assume they would've held the investment from then until now without selling it at any point. The best shot most people had at that fantasy is to've bought a bunch of Bitcoin, lose the hard drive, and somehow find it again.


"The value of the first bitcoin transactions were negotiated by individuals on the bitcoin forum with one notable transaction of 10,000 BTC used to indirectly purchase two pizzas delivered by Papa John's."

https://en.wikipedia.org/wiki/History_of_bitcoin

EDIT: 10,000 BTC in USD is currently $100,375,000


> Randolph writes that he'd been closely watching Antioco during this conversation. Throughout, the Blockbuster CEO appeared as a polished professional, leaning in and nodding and giving every indication of someone who was listening attentively. Now Randolph observed as an odd expression crossed Antioco's face, turning up the corner of his mouth. It lasted only a moment, he writes. "But as soon as I saw it, I knew what was happening: John Antioco was struggling not to laugh."

Great article but it seems unnecessary to accuse Antioco of being arrogant just because he turned up the corner of his mouth for a moment. There are tons of investors who pass up on great investment opportunities every year. Most of them aren't arrogant, they are simply normal people who don't have the benefit of perfect hindsight.


And more to the point, success in business is determined just as much by blind luck as anything else. If Antioco had sprung on Netflix, who knows how many other things he might've sprung on too? And even assuming Netflix worked out, who's to say the other investments wouldn't have killed Blockbuster in the process anyway?

This whole genre of articles confuses me. Is the message be open to new things? Is it about other investors feeling regret for things they've passed on, or worry about the things they didn't? I don't understand this at all.


> This whole genre of articles confuses me. Is the message be open to new things? Is it about other investors feeling regret for things they've passed on, or worry about the things they didn't? I don't understand this at all.

Myth-making, mythologising. The genre is "business, but written as adventure/thriller" I guess? Comes across as attempts to imply that it's all epistemological. It's just turning things into a good story though, you're maybe reading too much into it? (Although every one of these I've read seems to go something like:

"I should have been terrified. But I was calm, I knew what I had to do. My whole life had been building up to this meeting with Corpocorp.

The team was gearing up for the battle that lay behind those huge frosted glass doors. I looked at them, and tears pricked at the corners of my eyes. 'Goddamn' I thought, 'this is the best bunch of guys ever put together for business purposes', and my heart swelled with manly pride.

Joe Spiff had been my first hire. He was the best money talker I'd ever met. I looked at him now, laser focussed on the dollar bill held between his fingers. This was his routine, I'd seen him do it a hundred times. He'd sit and stare at that bill for ten minutes, unblinking, not moving a muscle. Then he'd just...crush it between his fingertips, quick as a flash.

Lawyerman Pete was [contd.]")


Yep, we’d probably be reading about how stupid Blockbuster was for buying Netflix when it was Moovster that kicked everyone’s ass.


I was part of an e-commerce company selling DVDs in the mid 90s, watching: Amazon enter the space, a bedroom porn operation start to rise in the adult dvd mailing market, and Netflix getting a start. We were ripping the movie trailers off the DVDs and encoding them, streaming them on the product page. All we had to do was rip the whole movie and make licensing deals with the studios we were sourcing our products from, and BAM, we coulda been Netflix too.


I hear that’s not far off from what these streaming services do in reality.


Check out the podcast "Business Wars" by Wondery. They have an 8-episode miniseries on Netflix vs. Blockbuster that I really enjoyed and highly recommend. It includes this story, as well as some of the other competitive developments that, as crazy as it sounds now, at the time almost looked like they would bring a victory to Blockbuster.


My wife, when we first met in the mid-90s, used to get DVDs at Blockbuster and always returned them late and paid the late fees with no complaints, which were huge. The first time I went with her to return some they took her money and then told her she was no longer allowed to rent them there anymore.

She was pretty bummed out about that but I was shocked by how much their late fees were and explained to the manager that my wife was paying them way more than their customers who returned them on time and they may want to reconsider. Her response was about as snotty as can be. She said something like "We need them back on time for our good customers". We left laughing because that just seemed crazy and we knew she'd be saving literally $100s per month.

But I was puzzled about why they'd do that. It made no sense at all to me. She was giving them a lot more money each month than their "good customers" which I thought should have put her at the top of that list. And the manager, who was so rude, clearly got a sadistic joy out of telling people "No more DVDs for you!" like the "Soup Nazi" on Seinfield.

Before we'd met I'd never even been in a Blockbuster so that was my only real experience with them and I remember well thinking their customers would flee like rats from a sinking ship when a viable alternative came out.

As soon as I heard of it we bought a Roku and ditched our "Dish" satellite service and after using it I knew Blockbuster was going to take a big hit from that little black box. It was just a few years later I read they were going out of business. By then I'd seen people lined up at "Redbox" dispensers and the Blockbuster where we lived had already closed up.

I have to admit that seeing Blockbuster die like that warmed my soul like a bowl of good hot soup


I think the problem here is that you are assuming that the amount that your wife was paying made up for the lost sales of unhappy customers when titles aren't available. The math is not revenue for someone else to rent at normal rate vs. the revenue for your wife to hold onto the title, but rather the revenue from a customer that keeps coming back vs. the late cost revenue minus the the lost cost customer revenue.


Having seen the rates for late rentals, I think your parent comment is "more" right. Unless blockbuster was running such a tight ship that a single rental's delay would upset the applecart ... but I remember waiting for DVDs and cassettes and unless you hit the sweet spot (a few weeks after the release, or maybe just on the first day of release), there was always a wait and/or the associated frustration.


I have no doubt they had customers complain, but I have reasonable doubts they spent as much money at blockbuster as my wife did, and money coming in is what's really important.

All businesses have customers that complain. Some people make it a point to always complain, but they're generally a small percent of the total. Cater to them and you'll have a small, shrinking, and constantly complaining customer base, and that's what happened to Blockbuster.

Redbox is what really put the nails in their coffin lid though. You could rent a DVD and if you didn't return it you bought it for a still very low "used" price and never had to deal with any snotty customer service people.


I could have stuck with my little bitcoin experiment in 2011.


Thank you.

I have about a dozen different "If only" moments in my tech life, from turning down job offers to not making tech experiments into real businesses (Twitter and Docker, parking payments by mobile and a really good enterprise marketing system)

I regret them all because I think they all definitely would have made me bajillions. including leaving running a bitcoin miner machine in the corner of my office instead of turning it into a build server.

But frankly I probably would not be a billionaire by now had I done any or even all of those great ideas in hindsight

It won't stop me trying for the next one, but it will mean if I duck out with even a small win it's a big triumph


The only salve I have to apply for my missed bitcoin burn is the absolute reality that I would have unloaded a thousand of them as soon as they got to be worth a couple of bucks. That would have been way worse.


I think the part in this article where John Antioco is perceived as arrogant is a little misguided. It's important to remember that a natural gas pipeline company based in Houston was vying to put Blockbuster out of business with their own "Broadband" unit, and it indeed was laughable.

And we all know what happened to Enron.


GameStop is a very interesting stock bet right now. It could easily go to route of Blockbuster (most obvious route), but it could do so many things to not be another crappy retail experience. Not confident they will turn it around but there's certainly an opportunity for a brick-and-mortar game shop done right.


With GameStop's several year history of bad public opinion and what appears to be decaying market share, I wouldn't bet on it. The current management is clearly willing to accept the status quo and won't take the actions necessary it "turn it around."

New management could signal that good changes are coming, but it could also signal that specialists have been brought in to carve the assets up before bankruptcy. I'd say it's far more likely that GameStop ends up like Blockbuster and Sears, even if they potentially could turn things around.


If they had the ability to turn it around, they would have... years ago. Unless they get a new CEO/leadership and take radical shifts in strategy, I don't see anything happening.


Yeah, and we could've all bought bitcoins for pennies when we first learned about them. The biggest barrier to understanding past decisionmakers is that we know how it turns out and they didn't.


And Yahoo could have bought Google for even less. I would love to hear from the people who turned these kind of deals down


Me too. Although the thing is it probably made sense at the time. Also, it's far from guaranteed that Yahoo would have made a success of Google, or Blockbuster of Netflix, so whilst there can be an entertaining schadenfreude to stories like this it's not something you can take too seriously.


This is the crux of it - if Google had asked me to be employee number one there is a very good chance Brin and Page would have gone back to academia.


Didn’t they have the chance to buy Facebook for 1B too but they reduced their offer at the last minute and Zuckeberg said no? I’m convinced the people at Yahoo didn’t know what they were doing and both Google and Facebook would fail spectacularly within Yahoo.


I remember Microsoft bought a stake in Facebook at 15B valuation or something.

I didn't know much about funding then (I still don't) but I thought how much money that put in was more important than the valuation. I can too invest $1 in Facebook at $100B valuation I thought. To me the point was not to earn dividends but to have Zuckerberg's ear and hopefully have a say in how Facebook is run.


It would make for an interesting website: the what-if of Silicon Valley. Another famous one is that Sun could have bought Apple. It was in the intermission between Steve years.


Oooooo, I think I'll throw a site up for submissions with that premise this week. Great idea!


"The Innovator's Dilemma."

It's been the downfall of many a commercial empire.


Lycos could have bought Google for 700k. If you bought a share of Home Depot in 1982 you’d be a millionaire. Can’t think of a more banal form of what-if-ism than looking back at missed market opportunities.


You could easily be a millionaire multiple times over working a normal job for 38 years too.


Yep!!


Tried to post the same thing a couple of days ago [0], but no discussion happened.

[0]: https://news.ycombinator.com/item?id=21010244




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