How Did Ignoring Innovation Kill Blockbuster? - Marketeers (2024)

FAQs

How Did Ignoring Innovation Kill Blockbuster? - Marketeers? ›

Blockbuster filed for bankruptcy in 2010. Blockbuster's inability to recognize the potential of online streaming ultimately led to their downfall, while Netflix's willingness to embrace innovation and pivot their business model proved to be a winning strategy.

Blockbuster was slow to adapt to emerging technologies and consumer preferences. Their foray into online rentals and streaming came too late and lacked the same level of convenience and breadth of content that Netflix offered.

Lack of Innovation:

Blockbuster's reliance on physical DVD rentals became its Achilles' heel. While successful initially, this model became obsolete as consumers shifted to digital streaming services. The lesson here is clear: businesses must innovate to meet evolving consumer needs.

After years of growth in the late 90s and early 2000s, Blockbuster faced a series of challenges as streaming became more accessible which would lead to the company going bankrupt and closing all but one of its stores.

Giants Movie Gallery and Blockbuster, driven by physical rental stores, began struggling to compete with streaming and mailing platforms. Both were driven into bankruptcy because they failed to adapt quickly enough.

On March 17, 2010, Blockbuster issued a bankruptcy warning after continued drops in revenue threatened its ability to service its nearly $1 billion (~$1.36 billion in 2023) debt load. By April 1, 2010, Carl Icahn had resigned from Blockbuster's board of directors and sold nearly all his remaining Blockbuster stock.

Blockbuster Failure in a Nutshell

Blockbuster's inability to adapt to the changing market conditions, poor customer service, high rental fees, and inability to understand and adapt to client preferences resulted in its downfall.

The company failed to recognize the changing preferences of consumers and was slow to invest in digital streaming platforms. By the time Blockbuster tried to catch up, it was too late, and competitors had already established themselves as dominant players in the market.

There is not a right answer - there are elements of both cognitive limits and and Christensen's disruptive innovation theory. But application of both has generated deeper insight into what happened.

Who kills Blockbuster? ›

The Roland Desmond incarnation of Blockbuster appears in Adventures in the DC Universe #1. The Mark Desmond incarnation of Blockbuster appears in Batman: Arkham Knight – Genesis #5 as an associate of the Joker, Harley Quinn, and Catman until Jason Todd kills him.

It is hard to overstate how much Blockbuster customers hated late fees, which could easily double or even trip the cost of the original rental, even if a movie was returned only a few days late. By eliminating fees, Netflix gained a concrete advantage it could use to attract customers.

Dish Network, the owner of the Blockbuster trademark, no longer grants new franchises with the Blockbuster name, which has cemented the Bend store's status as the last Blockbuster. The location has become a popular tourist destination since becoming the last Blockbuster.

Blockbuster Failures

Some of these challenges were external, such as the rise of new competitors, new technologies, and new consumer behaviors. While there were some challenges that were internal, there were other challenges as well, such as poor management, bad decisions, and missed opportunities.

John Antioco, then Blockbuster's CEO, dismissed the offer, considering Netflix a niche business and downplaying the significance of the dot-com era. In hindsight, Antioco's skepticism about the dot-com bubble was justified, as its subsequent burst demonstrated.

People think they could hae bought Netflix but all they would have done is change the name of rent by mail to Blockbuster-by-mail, a service that had but failed at because: 1) Their sold franchises based on renting movies. They would get sued if they droped that.

Blockbuster was slow to recognize the potential of digital streaming services and the impact they would have on the entertainment industry. Instead of embracing this new technology, Blockbuster continued to focus on its brick-and-mortar stores, leading to a significant loss of market share.

The company's inability to recognize the importance of technological trends and adapt its business model accordingly led to its downfall, offering a cautionary tale for businesses in the digital age.

Blockbuster Failures

Some of these challenges were external, such as the rise of new competitors, new technologies, and new consumer behaviors. While there were some challenges that were internal, there were other challenges as well, such as poor management, bad decisions, and missed opportunities.