Was sad to see the news about Blockbuster — they’re filing for bankruptcy. It’s a Chapter 11 situation so they’ll reorganize, square away a lot of debt, and try again. So, they are not dead yet. I’ve been a long time customer, and did a tiny bit of work for them about 8 years ago, so, love the brand and company. I wish them the best of luck, but frankly, I don’t see recovery happening. I see a slow and painful death. You might ask why?
Well, to put it frankly, this is a company with a history of being afraid to change, afraid to respond quickly to market shifts. Their initial path to glory was simply renting movies. They made a great deal of money on rentals, and even more on late fees, in their ubiquitous stores. Then Netflix came along and starting cutting into their market with a better option, notably, one that wasn’t punitive to consumers. I don’t know exactly how long it took Blockbuster to come up with a by-mail offering, but I do know that it was way too late for it to matter. It’s my impression that this is their history with other avenues for making money with movies, too little, and too late to be a market leader and winner.
The Blockbuster CEO, Jim Keyes, is still talking about how they are going to leverage their cross channel portfolio (i.e. stores, kiosks, by-mail, vending, and digital) and their strong brand name. Humm, let’s look at that. How great can their brand name be if they’ve just dragged it through bancruptcy? Nothing like instability to create doubt in a consumers mind, in my view. As for their cross channel portfolio — how valuable is being an also ran in everything you do? What are they the best at? Stores probably, and that’s the least profitable thing at this point. They have some advantages in terms of product availability, but they’ve been unable to leverage this differentiation. This is a company that is desperate for Innovation, and yet, you have the sense that they knew what they had to do. It has never been a question of ideas has it? When consumers wonder out loud why they didn’t jump in and compete with Netflix for the subscription business, it’s not about ideas, it’s about action.
Keyes is well aware that Blockbuster needs to change its business model. He has a difficult road ahead because he has to preserve what’s left of the current business, while coming up with a whole new business idea that trumps the market. That new idea will probably cannibalize their current business, making it oh-so-painful to pull the trigger and take action. They key for Keyes (sorry) is to find that disruptive idea quickly and pull the trigger as fast as possible to begin the painful, but necessary, transformation. They probably already have that idea in hand, but if they don’t, it’s time for Idea Generation big time. Then, it’s all about Rapid Innovation — this is the path for Blockbuster’s return to glory and profit. Crisis is often the mother of innovation. I’m hoping that the current crisis will shift the Blockbuster innovation culture to a more daring and fast moving one. The Blockbuster board and C-suite need to think differently, and let Keyes fire when ready.
In my view, this is not about consolidation, this is about disruption. Best of luck Mr. Keyes. Put on that innovation pistol and start firing! And have some fun with it already…
7 responses to “Blockbuster – Rapid Innovation is Your Path Back”
I think you need to get up to speed on Blockbuster. Blockbuster is in the Top Free Apps in the Entertainment Category on the Android Market web site. Android OS is on what, 50,000 phones a day being introduced to the market.
And lets not forget that Blockbuster is on nearly every new TV, and Blue-ray player out there.
I do not think Blockbuster’s troubles will last long.
Netflix may soon have some work to do though.
Thanks for the comment. The Android angle is interesting to be sure, but what about the iPhone and the iPad? I see the iPad as a very important movie player. I see Android based mobile phones as less important — who wants to view a movie on a phone? It’s not The Market, in my view. You make a good point about TV’s and Blue Ray, that’s an advantage. The question is, how do they take advantage of that and make some money?
I got this comment from a friend on Facebook, Dave Markey:
Can’t say I’ll miss them. I spent much of my youth working at mom-and-pop video stores. Blockbuster ground those stores out of business even though their selection was inferior and their staff less knowledgable.
As a movie geek, I object to the pressure Blockbuster used to have Unrated movies (which Blockbuster wouldn’t carry) recut to R-rated (which they would carry). The shelf space they devoted to Full-Screen versions vs. Letterboxed also indicates to me that they were aiming for the lowest-common-denominator customers.
The market doesn’t lie though. The same forces that destroyed mom-and-pop stores and made Blockbuster #1 are now destroying Blockbuster while favoring Netflix. It’s evolution. Better ideas triumph.
The Samsung Galaxy Tab is the first that truly qualifies as a contender to the iPad.
As far as the consumer electronics for the home, it seems that Blockbuster is some how connected to the Yahoo! Connected TV offering.
This is the link for Yahoo! Connected TV.
http://connectedtv.yahoo.com/
I think people tend to over use the pay movie option when they first get it. I know that I rented about $60 of movies when I first got cable, and I think people will do the same with there new smart phones and smart TVs.
This could be a huge surge of new revenue for Blockbuster. It should pull back after they have had the devices for a month or so, they will slow down after the first bill.
That is what I was thinking anyway, I would not call myself a consumer spending expert though.
Like you Chopper I don’t know the details regarding consumer spending in this area. I’m sure Blockbuster has done the research. What’s powerful for them, as you indicate, is the possibility for a good slice of the pay-per-view market. Cable operators have owned that for years. If BB can get its fair share, they’ll be golden. The question is: how.
Thanks again for contributing to the conversation!
I do enjoy conversing with someone that has more to say than, guess what I just seen on Facebook.
One thing that does concern me about Blockbuster, is the relationship between Keyes and Icahn. Icahn dumped most of his Blockbuster stock, then bought about 1/3 of the 2014 bonds after the price fell.
Now if I read the Ch.11 filling correct, it looks as if the 2014 bondholders will get all of the company.
Something smells a tad off.
We might see some conflict over this, I would not be surprised if people started screaming foul.
The entire Ch. 11 could be called into question.
Anyway, thanks for the chat.
Oh, by the way my name is Jack.