Bye Bye Blockbuster (Who Knew They Still Existed?)
The last 300 company-owned Blockbuster stores are closing and I, for one, am laughing really hard. And no, it’s not because I forgot to return a 15 year-old video and now my $400 thousand late fee won’t be collected. It’s because in the annals of corporate history, the schmucks who ran Blockbuster were greedy morons who will go down in history as a case study in total strategic cluelessness.
I am not laughing really hard that 2,800 people will be out of work- that’s sad. Though I must say, I find it hard to believe those poor folks thought there was still much of a future in brick and mortar video rental businesses in 2013, A.D. I urge them all right now to avoid sending their resumes to the last Barnes and Noble left in town.
But back to the corporate idiots. First and foremost among them is Viacom which bought Blockbuster for $8.4 billion back in 1994. Dish Network would shell out $320 million a couple of years ago to buy the bankruptcy-riddled company. Let’s put those numbers in relief. $8.4 billion versus $.3 billion. That puts the idiots at Viacom right up there with Rupert Murdoch’s trendy acquisition of My Space for $580 million which he would end up selling six years later for $30 million.
So what were the major mistakes? Oh, not much- other than failing to anticipate the major consumer and technological trends of the 21st century. Like digital streaming. Like the concept of on-demand viewing. In 2000, Reed Hastings, the founder of Netflix, offered to merge with Blockbuster and the video rental store executives basically laughed him out of their offices. In 2002, Blockbuster executives were still unsure of the veracity of this thing called the Internet. A “niche” market, they called it.
Viacom’s idea of remaining competitive against new-fangled competitors like Netflix was to create- and this is really original- a video rental business that would ship directly to consumers! Oops, day late and a dollar short. By the way, showing they now understand the new trends of the past 20 years, Dish network just announced they are also killing off the Blockbuster video-by-mail service, which most people also did not know still existed.
But mostly, Blockbuster sucked because they put really cool, independent, often family-owned video rental stores, out of business. They replaced neat, eclectic movie titles at the indie’s with mass-marketed crap. They also sucked because whatever family fun was to be had hitting the neighborhood Blockbuster on a Friday night, was a huge and expensive pain-in-the-ass by Tuesday morning, when you realized you’d forgotten to return the videos on Monday and now ended up owing pretty much the price of the original rentals in late fees. And then you had to, like, drive an actual car through snow storms and monsoons to return said late videos.
At least the nice Blockbuster employees knew their cinema! Oh, that’s right. Most had no clue about the motion picture industry. Well, as you were checking out paying last week’s late fees and about to incur the following week’s penalties, you could also pick up overpriced bags of popcorn, Twizzlers and Raisinets. That was something.
But we really do have a debt of gratitude to pay to Blockbuster. Turns out, Netflix founder, Hastings, forgot to return his copy of Apollo 13 to Blockbuster way back when and owed some $40. It was his fault but he felt so stupid about it that he purposely avoided telling his wife about the late charge. He started thinking about that and found it insane he was willing to compromise the integrity of his marriage over a video store late fee. That same day he went to the gym and realized he was paying about $30 a month for unlimited use of the workout facilities.
Hey, now there’s an idea, he thought- what if somebody rented videos by mail with unlimited due dates and no late fees?
Netflix now has over $3.5 billion in annual revenues. And though they initially botched their transition from a mostly mail-delivered service to a streaming model, they were obviously savvy and smart to see the digital writing on the wall in the first place, and now with the creation of their own content like the Emmy-nominated “House of Cards,” they show they are creative too.
And that’s the difference between those who at least try to envision the future- and those who don’t.