Having written my first entry, I better appreciated the tech industry’s remarkable pace of change. It became clear to me that many of the top tech companies are responsible for this drive to innovate, whether it be through disrupting slow moving markets or even their own established businesses.
Whilst growing up, my father’s frequent trips to the local Blockbuster store made my family a model customer for the video rental service. Seemingly ending with my childhood, the company once valued at $4.8 billion (Dana Jr, 2017) filed for bankruptcy protection in 2010 (BB Liquidating Inc., 2010). One fundamental reason for this catastrophic fall is the company’s business model, requiring a huge number of stores to drive profitability (Nunes & Breene, 2011), as well as relying on charging late return fees to supplement revenue, harming consumer relations.
Blockbuster was seriously impacted by its refusal to introduce any service which could cannibalise its primary revenue stream, leading to one of the most infamous business decisions of the last century, where the company turned down an offer to buy Netflix for $50 million (Calkins, 2012), a company now worth £61.6 billion (Forbes, 2017).
Netflix’s attitude was fundamentally different to that of Blockbusters. At a time when Netflix was a small mail order video rental service, it made the decision to risk its profitability by launching an online streaming platform, disrupting its own revenue stream to target the rapid internet streaming market.
As not just a consumer, but a budding entrepreneur, understanding the fall of Blockbuster makes me appreciate the need to to be willing to adapt and even disrupt oneself to match changing consumer demand. Although Netflix, with little brand awareness and few obligations to third parties, had a greater ability to change, it was Blockbuster’s failure to follow this mantra of self-disruption which led to its downfall.