What Happened To Blockbuster?
There is no reason that Blockbuster Video had to fail.
I liked Blockbuster video. I will also admit that since I got Netflix that I haven’t gone to the store as often as I used to. Now that the stores are all closed, this might be a good time to take a look at the company and see if they could have done anything to change. Also, are there any wider effects that this closure will have?
First and foremost, Blockbuster did not fail because of streaming video or video piracy. Certainly those things didn’t help, but they did not cause Blockbuster to fail. In the same token, Blockbuster did not fail because of iTunes. Blockbuster did not fail because of new technology, new devices, or because of high speed internet access. Blockbuster video failed because they chose not to change.
You can often tell when a company is entering the throes of death. They begin to make changes that seem disjointed, almost random. First, Blockbuster offered a no late fee policy, but charged you a restocking fee if you returned the movie too late. Then they excluded certain products, like video games, from the offer. Finally, they did away with the offer completely, but without really telling anybody or making any announcements.
They offered excellent pricing on previously viewed discs, and yet they charged a premium for new discs. How is it that the same store can have a PV copy of a movie for $6.99, a new copy of a movie for $29.99, and yet I can go to Wal-Mart and buy the same movie for $9.99 any day of the week? And how is it that it cost nearly as much to rent the disc as it did to buy it previously viewed?
Finally, at least at my store, there was a serious lack of quality control. Too often I would rent movies, only to get them home and find out that they were scratched. Far too often I found out half way through the movie.
So, what could they have done? Obviously, pricing was a major issue. It’s just too costly to rent a movie, when there are so many other alternatives out there. Their stores were another issue: far too big, far too costly to maintain. The Kiosk model would have served Blockbuster well. What if they offered a download service, right in the store? Choose from ANY movie ever made, and they’ll burn it to a disc for you. All for $4. Return the movie, or keep it, and be charged an extra $5 after a week. The technology is there.
They could also have launched a streaming service, similar to NetFlix, or a mail service (again, like NetFlix). Why limit bulk rentals (3 for $9.99) just to old movies? What if there was a Blockbuster PPV channel? Or a premium cable channel? What about a monthly subscription fee, were you could walk into any store, pick up one movie at a time, at watch them. Can you watch 30 movies in a month? 60? 90?
There is a funny twist of fate here: the corner confectionery that has been renting movies for $1.99 since 1985? It’s still in business, and it’s still renting Blu-ray discs for a couple of bucks. So much for the big guys forcing everybody out of business.
There is another twist here as well: remember the Blu-ray vs HD-DVD debate from about two years ago? Blu-ray won that battle, but it’s kind of a moot point, isn’t it? As I understand it, besides the corner confectioneries, there is one rental place left (a Rogers Video) in my community. As more and more technology moves online, the only thing that matters is how fast you can download a movie, how good the streaming quality can be. The optical disc is now dead, as much because Blockbuster failed as the reason it failed. I live with my wife, my four year old, and my four month old; we can stream video on our Xbox 360, our Nintendo Wii, our Apple iPad, two computers, and on two phones. Many of you have televisions, Blu-ray players, or home theatre systems that connect to the internet and allow you to stream video. Or perhaps you have an Apple TV.
I spoke with someone about Blockbuster a couple of weeks ago – he mentioned that he and his family would sometimes walk to Blockbuster to buy nachos while they waited for a movie to download. When the last thing your movie rental store can do well is something that a 7-11 can do better, you fail.
