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A Look Back at Why Blockbuster Really Failed and Why It Didn't Have To (2014)

81 points by anairs 8y ago

Animats 8y ago
The author harps on "networks" too much. In general, brick and mortar retail sectors which can be done better on line have tanked. From Sears to Radio Shack to Toys-R-Us, that's happened. Malls in general are hurting badly.
- beamatronic 8y ago
  Oddly one of the big San Jose malls (Valley Fair) is currently undergoing a huge renovation and expansion.
  - ghaff 8y ago
    It's very uneven. Upscale malls are generally doing pretty well. Then there's the nearest mall near me which sports such luminaries as Sears and JC Penneys as anchor stores (plus the Toys R US which recently closed). It's not... great. There are a few stores in the same general complex that seem to be doing fine but the mall itself is moribund.
    - jcadam 8y ago
      I have to go to the mall here in Melbourne, FL for work clothes. The standalone clothing stores mostly sell stuff targeted at tourists and snowbirds (beachwear, Hawaiian shirts, etc.). Bah, maybe I should get a job that lets me wear Hawaiian shirts to work everyday.
      - beamatronic 8y ago
        For sure you can do that in Hawaii. It’s actually quite awesome.
  - lotsofpulp 8y ago
    Only the malls around rich people are doing okay. You can spot these by searching for Apple and Nordstrom’s, also where you will find the wealthier side of any urban area.
    - scarface74 8y ago
      Even those traditional closed in malls are being upended by pedestrian friendly upscale mixed uses communities with stores and townhomes. The local Apple Store just moved from the local mall to one of those communities. It also has the standard cliched collection of yuppie stores - a Tesla showroom, Whole Foods, Gap, Bonobos, Container Store, Pottery Barn, a Pilates Studio, etc....
      - burger_moon 8y ago
        What you described is literally the same thing SouthPark makes fun of in the Sodosopa episodes. https://imgur.com/gallery/Xgea4Ot https://imgur.com/gallery/Xgea4Ot It's amazing how on the nose they are.
        scarface74 8y ago
        That's frighteningly close to the place I was referring to... https://www.youtube.com/watch?v=pm5BOoS3ihA https://www.youtube.com/watch?v=pm5BOoS3ihA http://www.experienceavalon.com/ http://www.experienceavalon.com/ I just watched the video of "sodasopa". If they didn't have the South Park characters in it, I would have thought it was a real ad for either Avalon or one of the other areas in Atlanta.
        lotsofpulp 8y ago
        https://www.nytimes.com/2018/05/08/business/hotel-development-real-estate.html https://www.nytimes.com/2018/05/08/business/hotel-developmen... I think that's an article about that space too.
        beamatronic 8y ago
  - euos 8y ago
    And in Cupertino Vallco is rotting.
    - DoubleCribble 8y ago
      Vallco was doomed as soon as Valley Fair opened for business 4.5 miles away and cornered the market for upscale anchor tenants.
- stevenwoo 8y ago
  I thought Toys-R-Us went under because private equity firms that bought it stood to make more money that way. Probably if it had remained an independent company it would still be around. https://theweek.com/articles/761124/how-vulture-capitalists-ate-toys-r https://theweek.com/articles/761124/how-vulture-capitalists-... https://www.theatlantic.com/magazine/archive/2018/07/toys-r-us-bankruptcy-private-equity/561758/ https://www.theatlantic.com/magazine/archive/2018/07/toys-r-...
  - toast0 8y ago
    Toys R Us going under was essentially guaranteed when it was sold to private equity firms, it was simply a question of when and how. Everyone involved in the transaction knew that at the time of the sale. The question for the sellers was, given that I know this ship is going to end up on the beach, should I run it there myself and try to give it a soft landing, or should I sell it and let someone else take it into the shore full steam ahead.
- jstarfish 8y ago
  > From Sears to Radio Shack The idiotic thing is that Sears was the original Amazon, with their mail-order catalog business. It worked out well for them for a long time. But they became your grandparents' favorite place to shop (and their product offerings reflected this) within a few generations, and in their desperate bid to stay relevant they've decided to mimic the business model of Service Merchandise, which paid the price for its own irrelevance 20 years ago. Everybody overhypes Amazon but it's not (entirely) online shopping that Sears is competing with-- it's Walmart, the neighboring, booming B&M business. Radio Shack is not much better. "You have questions, we have blank stares" gave way to "you need solder, we have cell phones." Somewhere along the way they were forced to sell nothing but phones and lost any cachet they had as the only electronics vendor in most towns, as they were now competing with the 5 or 6 phone stores even the smallest of towns already had. I don't know where they went wrong in the first place but in this overteched age the market for consumer electronics is clearly there. It's like watching a horror film where all you can do is scream silently "don't do that!" as the debutante goes into the basement to investigate the strange noise. Some of these pivots are just painfully short-sighted. I suspect malls may yet make a modest recovery. More and more of them are starting to attract "lifestyle" businesses to prop them up and drive foot traffic, such as movie theaters, events, bars and (actual) restaurants.
- flubert 8y ago
  >Malls in general are hurting badly. I guess I'm getting old, because I've been hearing that malls are dying for at least the last 20 years. The suit is back?
- Simon_says 8y ago
  Toy-R-Us had a business that was doing quite well. Their downfall was a result of a leveraged buyout of which they couldn't afford the debt payments. If there were no LBO, they would still be in business today.
  - drtillberg 8y ago
    Something similar could be said for most of the failed-business stories noted. They were picked clean by vulture investors, bloated with debt, and sent floating down the river. Sears for sure.
pmoriarty 8y ago
Blockbuster used to have a really crappy selection of mostly mainstream movies, but often it was one of the closest video rental stores around, as they seemed to be everywhere. They also censored and cut their movies, which was really annoying. I don't know what their agenda was on that front, and why they couldn't just let mature adults watch the full films. My friends and I used to much prefer going to independent video rental stores, which had a much better selection and did not cut or censor their films, but we'd often have to go pretty far to reach them. Then Netflix DVD came around, and that had a pretty good selection.. maybe not as good as some of the best independent movie rental stores, but wider in some ways, and overall good enough so that the added convenience of getting DVDs delivered to my door and being able to return them by merely dropping them in the mailbox whenever I felt like it made me stick with Netflix and never step foot in a brick and mortar movie rental store again. I had meant to try Greencine, as it supposedly had an even better selection of obscure movies, but I never got around to it, and then it went out of business. Then came Netflix streaming, with a crappy selection comparable to the crappy selection Blockbuster had in the bad old days. I've stayed with Netflix DVD service because of their far better selection, but most people these days don't seem to know that Netflix even has a DVD service (not very surprising as Netflix doesn't even advertise its presence on netflix.com and you have to go to dvd.netflix.com to reach it). Many of them rarely realize how crappy the selection of Netflix streaming is, as they've been brought up on a diet of crap, and are only vaguely aware that there's a whole world of fantastic movies out there beyond Hollywood blockbusters and TV shows.
- ghaff 8y ago
  Unfortunately, Netflix' DVD strategy seems to be to let the back catalog more or less literally rot away. More and more films aren't available at all or have very long waits. In all fairness, a lot of movies are available to rent digitally on Amazon. I suspect a lot of people supplement Netflix' crappy movie streaming offerings with purchases/rentals on Amazon or Apple. (Or Redbox for recent films.) But, yeah, I've definitely had people look at me funny when I admit to still having a Netflix DVD subscription and even buying a DVD once in a while.
- toast0 8y ago
  > I had meant to try Greencine, as it supposedly had an even better selection of obscure movies They did have a selection of obscure movies, but sometimes their selection/availability of popular movies left something to be desired. When they moved their operations to the LA area, it really hurt their delivery times to the bay area, and that happened around the time that Netflix added streaming as a free feature, so it made sense for me to switch. I keep thinking of going back to the DVD subscription because a lot of things I want to watch just aren't available, but streaming is nice for immediacy when it actually has something, and I don't really want to pay for both. How is the DVD selection these days?
schnevets 8y ago
In the same year that Reed Hastings was laughed out of the conference room, Blockbuster announced a partnership with Enron for Videos on Demand. https://www.forbes.com/2000/07/20/mu4.html#545092873541 https://www.forbes.com/2000/07/20/mu4.html#545092873541 The partnership lasted a single year. I wonder which event happened first? If they met with Enron first, it seems the morale is to move fast and never underestimate what the future holds. If they met with Netflix first, I'd say it's don't be as skeptical to the big guys as you are to the startup.
- stephengillie 8y ago
  It seems so bizarre - a rental company would stream video, through an energy company's fiber optic cables. Didn't this seem incongruous to anyone at the time? https://youtu.be/5sMXR7rK40U?t=6m8s https://youtu.be/5sMXR7rK40U?t=6m8s
  - mjcl 8y ago
    The idea of “Enron Broadband” seemed ridiculous to me at the time.
    - martinald 8y ago
      Enron didn't have any last mile broadband capability. How did this deal get done?
      - filmgirlcw 8y ago
        The same way all of Enron's deals got done. Lies about capabilities/offerings and then shady accounting to cover up reality.
        stephengillie 8y ago
        Another video talks about Enron using mark-to-market bookkeeping to record $100 million in revenue from the 20-year deal. https://youtu.be/hwollZoVmUc?t=4m44s https://youtu.be/hwollZoVmUc?t=4m44s
forkLding 8y ago
Article is a bit vague and oversimplified. So Netflix won because of network effects? and Blockbuster didn't have network effects? Blockbuster is bigger than Netflix when Netflix was a startup and simple ripples in Blockbuster could have generated a much bigger effect than Netflix in terms of Facebook posts or Twitter messages. Network effects don't happen because people want them to happen, network effects benefit in marketing is really just really good service that turns into lots of word-of-mouth that is spread super-fast throughout the internet whereas traditionally it would just spread in your traditional community. You can build for network effects but that doesn't mean you can get that effect.
- ghaff 8y ago
  There are different network effects/economies of scale that end up getting conflated. There are often benefits to size like brand recognition, better pricing from suppliers, amortization of R&D, etc. Apple is a poster child. There are network effects where having more users actually helps to make a better product through increased data etc. (This is increasingly true with products that rely on ML and large data sets in various ways.) And then there are the eBay-type (or telephone system historically) network effects. If your auction site only has a handful of sellers (or a handful of buyers), it's more or less useless no matter how wonderful it is by other metrics.
rglover 8y ago
Read it. Internalize it. Profit from it. https://www.amazon.com/dp/B0036S4B2G/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1 https://www.amazon.com/dp/B0036S4B2G/ref=dp-kindle-redirect?...
wnissen 8y ago
Blockbuster was also servicing US$1 billion in debt after being spun off from Viacom.
- scarface74 8y ago
  Netflix currently has $4.8 billion in debt and another $15 billion of streaming content obligations. (https://www.polygon.com/2017/8/15/16151944/netflix-disney-debt https://www.polygon.com/2017/8/15/16151944/netflix-disney-de...)
jackconnor 8y ago
"Antioco was, in fact, a very competent executive—many considered him a retail genius"...yet he made incredibly obvious mistakes to prop up a business with a flawed business model. I fail to see any of the genius, he seems like another corporate idiot in a suit, to me.
- RandallBrown 8y ago
  Antioco tried launching a dvd by mail and streaming service around the same time Netflix did. They were behind, but not that far. The problem seems to be this > While he convinced the board to back his plan, one of his lieutenants, Jim Keyes, led a rear guard action. Had they actually listened to Antioco, they may have survived. I subscribed to Blockbuster Online because I could return things to the store and get movies faster than Netflix. Everything about it was equal or better (except maybe the name.) Then it all sorta fell apart on Blockbuster and I've been a happy Netflix subscriber for more than a decade.
  - scarface74 8y ago
    Has there ever been a successful large scale pivot by an American technology company that wasn’t founder led? All of the successful FAANG companies successfully managed transistions led by thier founders. Even though Microsoft’s recent turn around wasn’t founder led, I don’t think the current CEO could have done it without Bill Gates’ support.
    - captain_perl 8y ago
      It's unlikely because the existing staff incentives are from the previous business line, not the new one. Just try and get your sales staff to sell a new product line when all their commission comes from the old one.
    - filmgirlcw 8y ago
      Intel? The company has massive problems now, but many of the larger scale pivots in its history were not the work of Moore or Noyce. Now, we can debate whether Andy Grove counts (and I tend to say no, because though not technically a founder, he was employee number 3 and there from the day the company was incorporated), but looking at someone like Paul Otellini, who most definitely helped turn the company around, I think that's a good example. Otellini missed mobile, a massive, massive problem -- but I don't think there is any evidence to suggest that Grove would've necessarily done better. It's hard to say. And if we want to go further back, I would argue that IBM was never led by its founders. Watson wasn't a founder; he came into what became IBM as a hired manager. One could argue his son was "more" of a founder because he grew up seeped into the culture of what IBM became and he definitely helped lead the company to greatness. But subsequent CEOs like Frank Cary and Louis Gerstner really did the big turnarounds and pivots.
Paperweight 8y ago
My girlfriend runs an independent video rental store. I've been thinking of ways to implement a streaming service for our extensive collection of physical DVDs from the store to customers in the local area, perhaps to a proprietary TV box. I have the skills to do this. Does anybody here know if this has ever been done, or is legal? I'm in BC, Canada.
- mjevans 8y ago
  You /really/ need to talk to a copyright lawyer in your country about this. I am almost positive it'll run against SOME stupid copyright law even if you do an ethnically correct thing similar to having a human insert a disk in to a real video playback device and streaming the output to a merely a single very long distance connected display device.
  - mikekchar 8y ago
    I'm not a lawyer, but the Canadian copyright act is actually quite readable: http://laws-lois.justice.gc.ca/eng/acts/c-42/ http://laws-lois.justice.gc.ca/eng/acts/c-42/ As a programmer, I'm someone who depends on copyright for my living, so I always thought it was a good idea to understand what it says. While, the advice to get a lawyer is a good one, I think it's actually pretty clear that it is not legal. It falls pretty clearly under "(f) in the case of any literary, dramatic, musical or artistic work, to communicate the work to the public by telecommunication". You would have to get a license -- and that's the difficult-to-the-point-of-impossible bit.
    - Dylan16807 8y ago
      It's not at all clear that it's 'to the public', when it's only being sent to the renter. But that won't stop you from getting charged anyway.
      - mikekchar 8y ago
        Feel free to consult a lawyer, but there are 2 parties to which the copyright act refers: the public and researchers. The definition of researchers is given in the act. The public is everybody else -- you, the renter, anyone else that isn't a researcher. The way it works is that the act outlines all of the circumstances in which copying could be infringing. It then defines infringement in section 2. In section 2 it says that it is not infringement if you have an agreement with the copyright holder (i.e. a license). You may be thinking that "the public" infers a large group of people. This is not correct. The copyright act doesn't distinguish between numbers of people except in very specific circumstances (private copying with respect to audio recordings of music is an example). There used to be a section dealing with "making available", but it seems to have been removed (I haven't lived in Canada for a decade, so I haven't kept up with the copyright act). Generally speaking, copyright infringement is a civil matter, but commercial copyright infringement is a criminal matter so it is doubly important to get a good legal opinion before venturing into that territory. But, like I said, the act is quite clear IMHO. If you disagree, then feel free to get a legal opinion (which mine is not). I would literally be shocked if any lawyer told you that it was legal, though.
phobosdeimos 8y ago
Video rental stores and physical media was destined to go the way of the dodo as soon as uncapped broadband hit in the early 2000s. And now there's unlimited data over 4G networks. I am 30+ too but lets not overindulge in nostalgia. I have access to a vast library of entertainment 24/7.
deleted 8y ago
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sonnyblarney 8y ago
I don't think that social influence critical masses were really a factor here. Blockbuster was brick and mortar, and 'on demand from home at $10 a month' is going to kill that business on the basic fundamentals. There's no special science here. Blockbuster executives were fools - not so much to 'not see it coming' (few did) - but to not react when the writing was on the wall. Video streaming might be hard but it's not rocket Science, and a lot of people still wanted to rent videos. Using the massive installed base, stores, and gazillions of customers to launch an 'on demand' service that was 'pretty good' might have snuffed Netflix. After all - Netflix had to make the switch from DVDs. I worked at BlackBerry and saw kind of the same thing - sitting on the Titanic watching the iceberg get closer ... not at all alone in my concern, however the large ship was unable to change course. Especially as Netflix was just getting into streaming, and however we can point fingers, the fact remains that Blockbuster had all the opportunity and advantage, it was squandered.
- amyjess 8y ago
  > Blockbuster was brick and mortar, and 'on demand from home at $10 a month' is going to kill that business on the basic fundamentals. That doesn't explain why Redbox managed to thrive though.
  - JoeAltmaier 8y ago
    Sure it does. While Redbox is a physical presence, its overhead is negligible. And for those whom $10/mo isn't an option because, no $150/mo internet to base it on (not everybody can afford expensive internet connections) Redbox is an option.
  - mlevental 8y ago
    I've never seen a brick and mortar redbox
xrd 8y ago
If you ever come to Portland, visit movie madness and grab a video: Save Movie Madness, via @Kickstarter https://www.kickstarter.com/projects/hollywoodtheatre/save-movie-madness https://www.kickstarter.com/projects/hollywoodtheatre/save-m...
gscott 8y ago
They have not totally failed. There is one store left in Bend Oregon http://www.sandiegouniontribune.com/entertainment/ny-news-blockbuster-video-down-to-one-store-20180712-story.html http://www.sandiegouniontribune.com/entertainment/ny-news-bl...
rainbowmverse 8y ago
Business Wars did a series on Netflix and Blockbuster at its launch: https://wondery.com/shows/business-wars/ https://wondery.com/shows/business-wars/ Both entertaining and enlightening.

81 points by anairs 8y ago

The author harps on "networks" too much. In general, brick and mortar retail sectors which can be done better on line have tanked. From Sears to Radio Shack to Toys-R-Us, that's happened. Malls in general are hurting badly.

beamatronic 8y ago
Oddly one of the big San Jose malls (Valley Fair) is currently undergoing a huge renovation and expansion.
- ghaff 8y ago
  It's very uneven. Upscale malls are generally doing pretty well. Then there's the nearest mall near me which sports such luminaries as Sears and JC Penneys as anchor stores (plus the Toys R US which recently closed). It's not... great. There are a few stores in the same general complex that seem to be doing fine but the mall itself is moribund.
  - jcadam 8y ago
    I have to go to the mall here in Melbourne, FL for work clothes. The standalone clothing stores mostly sell stuff targeted at tourists and snowbirds (beachwear, Hawaiian shirts, etc.). Bah, maybe I should get a job that lets me wear Hawaiian shirts to work everyday.
    - beamatronic 8y ago
      For sure you can do that in Hawaii. It’s actually quite awesome.
- lotsofpulp 8y ago
  Only the malls around rich people are doing okay. You can spot these by searching for Apple and Nordstrom’s, also where you will find the wealthier side of any urban area.
  - scarface74 8y ago
    Even those traditional closed in malls are being upended by pedestrian friendly upscale mixed uses communities with stores and townhomes. The local Apple Store just moved from the local mall to one of those communities. It also has the standard cliched collection of yuppie stores - a Tesla showroom, Whole Foods, Gap, Bonobos, Container Store, Pottery Barn, a Pilates Studio, etc....
    - burger_moon 8y ago
      What you described is literally the same thing SouthPark makes fun of in the Sodosopa episodes. https://imgur.com/gallery/Xgea4Ot https://imgur.com/gallery/Xgea4Ot It's amazing how on the nose they are.
      - scarface74 8y ago
        That's frighteningly close to the place I was referring to... https://www.youtube.com/watch?v=pm5BOoS3ihA https://www.youtube.com/watch?v=pm5BOoS3ihA http://www.experienceavalon.com/ http://www.experienceavalon.com/ I just watched the video of "sodasopa". If they didn't have the South Park characters in it, I would have thought it was a real ad for either Avalon or one of the other areas in Atlanta.
        lotsofpulp 8y ago
        https://www.nytimes.com/2018/05/08/business/hotel-development-real-estate.html https://www.nytimes.com/2018/05/08/business/hotel-developmen... I think that's an article about that space too.
        beamatronic 8y ago
- euos 8y ago
  And in Cupertino Vallco is rotting.
  - DoubleCribble 8y ago
    Vallco was doomed as soon as Valley Fair opened for business 4.5 miles away and cornered the market for upscale anchor tenants.
stevenwoo 8y ago
I thought Toys-R-Us went under because private equity firms that bought it stood to make more money that way. Probably if it had remained an independent company it would still be around. https://theweek.com/articles/761124/how-vulture-capitalists-ate-toys-r https://theweek.com/articles/761124/how-vulture-capitalists-... https://www.theatlantic.com/magazine/archive/2018/07/toys-r-us-bankruptcy-private-equity/561758/ https://www.theatlantic.com/magazine/archive/2018/07/toys-r-...
- toast0 8y ago
  Toys R Us going under was essentially guaranteed when it was sold to private equity firms, it was simply a question of when and how. Everyone involved in the transaction knew that at the time of the sale. The question for the sellers was, given that I know this ship is going to end up on the beach, should I run it there myself and try to give it a soft landing, or should I sell it and let someone else take it into the shore full steam ahead.
jstarfish 8y ago
> From Sears to Radio Shack The idiotic thing is that Sears was the original Amazon, with their mail-order catalog business. It worked out well for them for a long time. But they became your grandparents' favorite place to shop (and their product offerings reflected this) within a few generations, and in their desperate bid to stay relevant they've decided to mimic the business model of Service Merchandise, which paid the price for its own irrelevance 20 years ago. Everybody overhypes Amazon but it's not (entirely) online shopping that Sears is competing with-- it's Walmart, the neighboring, booming B&M business. Radio Shack is not much better. "You have questions, we have blank stares" gave way to "you need solder, we have cell phones." Somewhere along the way they were forced to sell nothing but phones and lost any cachet they had as the only electronics vendor in most towns, as they were now competing with the 5 or 6 phone stores even the smallest of towns already had. I don't know where they went wrong in the first place but in this overteched age the market for consumer electronics is clearly there. It's like watching a horror film where all you can do is scream silently "don't do that!" as the debutante goes into the basement to investigate the strange noise. Some of these pivots are just painfully short-sighted. I suspect malls may yet make a modest recovery. More and more of them are starting to attract "lifestyle" businesses to prop them up and drive foot traffic, such as movie theaters, events, bars and (actual) restaurants.
flubert 8y ago
>Malls in general are hurting badly. I guess I'm getting old, because I've been hearing that malls are dying for at least the last 20 years. The suit is back?
Simon_says 8y ago
Toy-R-Us had a business that was doing quite well. Their downfall was a result of a leveraged buyout of which they couldn't afford the debt payments. If there were no LBO, they would still be in business today.
- drtillberg 8y ago
  Something similar could be said for most of the failed-business stories noted. They were picked clean by vulture investors, bloated with debt, and sent floating down the river. Sears for sure.

pmoriarty 8y ago

Blockbuster used to have a really crappy selection of mostly mainstream movies, but often it was one of the closest video rental stores around, as they seemed to be everywhere. They also censored and cut their movies, which was really annoying. I don't know what their agenda was on that front, and why they couldn't just let mature adults watch the full films. My friends and I used to much prefer going to independent video rental stores, which had a much better selection and did not cut or censor their films, but we'd often have to go pretty far to reach them. Then Netflix DVD came around, and that had a pretty good selection.. maybe not as good as some of the best independent movie rental stores, but wider in some ways, and overall good enough so that the added convenience of getting DVDs delivered to my door and being able to return them by merely dropping them in the mailbox whenever I felt like it made me stick with Netflix and never step foot in a brick and mortar movie rental store again. I had meant to try Greencine, as it supposedly had an even better selection of obscure movies, but I never got around to it, and then it went out of business. Then came Netflix streaming, with a crappy selection comparable to the crappy selection Blockbuster had in the bad old days. I've stayed with Netflix DVD service because of their far better selection, but most people these days don't seem to know that Netflix even has a DVD service (not very surprising as Netflix doesn't even advertise its presence on netflix.com and you have to go to dvd.netflix.com to reach it). Many of them rarely realize how crappy the selection of Netflix streaming is, as they've been brought up on a diet of crap, and are only vaguely aware that there's a whole world of fantastic movies out there beyond Hollywood blockbusters and TV shows.

ghaff 8y ago
Unfortunately, Netflix' DVD strategy seems to be to let the back catalog more or less literally rot away. More and more films aren't available at all or have very long waits. In all fairness, a lot of movies are available to rent digitally on Amazon. I suspect a lot of people supplement Netflix' crappy movie streaming offerings with purchases/rentals on Amazon or Apple. (Or Redbox for recent films.) But, yeah, I've definitely had people look at me funny when I admit to still having a Netflix DVD subscription and even buying a DVD once in a while.
toast0 8y ago
> I had meant to try Greencine, as it supposedly had an even better selection of obscure movies They did have a selection of obscure movies, but sometimes their selection/availability of popular movies left something to be desired. When they moved their operations to the LA area, it really hurt their delivery times to the bay area, and that happened around the time that Netflix added streaming as a free feature, so it made sense for me to switch. I keep thinking of going back to the DVD subscription because a lot of things I want to watch just aren't available, but streaming is nice for immediacy when it actually has something, and I don't really want to pay for both. How is the DVD selection these days?

schnevets 8y ago

In the same year that Reed Hastings was laughed out of the conference room, Blockbuster announced a partnership with Enron for Videos on Demand. https://www.forbes.com/2000/07/20/mu4.html#545092873541 https://www.forbes.com/2000/07/20/mu4.html#545092873541 The partnership lasted a single year. I wonder which event happened first? If they met with Enron first, it seems the morale is to move fast and never underestimate what the future holds. If they met with Netflix first, I'd say it's don't be as skeptical to the big guys as you are to the startup.

stephengillie 8y ago
It seems so bizarre - a rental company would stream video, through an energy company's fiber optic cables. Didn't this seem incongruous to anyone at the time? https://youtu.be/5sMXR7rK40U?t=6m8s https://youtu.be/5sMXR7rK40U?t=6m8s
- mjcl 8y ago
  The idea of “Enron Broadband” seemed ridiculous to me at the time.
  - martinald 8y ago
    Enron didn't have any last mile broadband capability. How did this deal get done?
    - filmgirlcw 8y ago
      The same way all of Enron's deals got done. Lies about capabilities/offerings and then shady accounting to cover up reality.
      - stephengillie 8y ago
        Another video talks about Enron using mark-to-market bookkeeping to record $100 million in revenue from the 20-year deal. https://youtu.be/hwollZoVmUc?t=4m44s https://youtu.be/hwollZoVmUc?t=4m44s

forkLding 8y ago

Article is a bit vague and oversimplified. So Netflix won because of network effects? and Blockbuster didn't have network effects? Blockbuster is bigger than Netflix when Netflix was a startup and simple ripples in Blockbuster could have generated a much bigger effect than Netflix in terms of Facebook posts or Twitter messages. Network effects don't happen because people want them to happen, network effects benefit in marketing is really just really good service that turns into lots of word-of-mouth that is spread super-fast throughout the internet whereas traditionally it would just spread in your traditional community. You can build for network effects but that doesn't mean you can get that effect.

ghaff 8y ago
There are different network effects/economies of scale that end up getting conflated. There are often benefits to size like brand recognition, better pricing from suppliers, amortization of R&D, etc. Apple is a poster child. There are network effects where having more users actually helps to make a better product through increased data etc. (This is increasingly true with products that rely on ML and large data sets in various ways.) And then there are the eBay-type (or telephone system historically) network effects. If your auction site only has a handful of sellers (or a handful of buyers), it's more or less useless no matter how wonderful it is by other metrics.

rglover 8y ago

Read it. Internalize it. Profit from it. https://www.amazon.com/dp/B0036S4B2G/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1 https://www.amazon.com/dp/B0036S4B2G/ref=dp-kindle-redirect?...

wnissen 8y ago

Blockbuster was also servicing US$1 billion in debt after being spun off from Viacom.

scarface74 8y ago
Netflix currently has $4.8 billion in debt and another $15 billion of streaming content obligations. (https://www.polygon.com/2017/8/15/16151944/netflix-disney-debt https://www.polygon.com/2017/8/15/16151944/netflix-disney-de...)

jackconnor 8y ago

"Antioco was, in fact, a very competent executive—many considered him a retail genius"...yet he made incredibly obvious mistakes to prop up a business with a flawed business model. I fail to see any of the genius, he seems like another corporate idiot in a suit, to me.

RandallBrown 8y ago
Antioco tried launching a dvd by mail and streaming service around the same time Netflix did. They were behind, but not that far. The problem seems to be this > While he convinced the board to back his plan, one of his lieutenants, Jim Keyes, led a rear guard action. Had they actually listened to Antioco, they may have survived. I subscribed to Blockbuster Online because I could return things to the store and get movies faster than Netflix. Everything about it was equal or better (except maybe the name.) Then it all sorta fell apart on Blockbuster and I've been a happy Netflix subscriber for more than a decade.
- scarface74 8y ago
  Has there ever been a successful large scale pivot by an American technology company that wasn’t founder led? All of the successful FAANG companies successfully managed transistions led by thier founders. Even though Microsoft’s recent turn around wasn’t founder led, I don’t think the current CEO could have done it without Bill Gates’ support.
  - captain_perl 8y ago
    It's unlikely because the existing staff incentives are from the previous business line, not the new one. Just try and get your sales staff to sell a new product line when all their commission comes from the old one.
  - filmgirlcw 8y ago
    Intel? The company has massive problems now, but many of the larger scale pivots in its history were not the work of Moore or Noyce. Now, we can debate whether Andy Grove counts (and I tend to say no, because though not technically a founder, he was employee number 3 and there from the day the company was incorporated), but looking at someone like Paul Otellini, who most definitely helped turn the company around, I think that's a good example. Otellini missed mobile, a massive, massive problem -- but I don't think there is any evidence to suggest that Grove would've necessarily done better. It's hard to say. And if we want to go further back, I would argue that IBM was never led by its founders. Watson wasn't a founder; he came into what became IBM as a hired manager. One could argue his son was "more" of a founder because he grew up seeped into the culture of what IBM became and he definitely helped lead the company to greatness. But subsequent CEOs like Frank Cary and Louis Gerstner really did the big turnarounds and pivots.

Paperweight 8y ago

My girlfriend runs an independent video rental store. I've been thinking of ways to implement a streaming service for our extensive collection of physical DVDs from the store to customers in the local area, perhaps to a proprietary TV box. I have the skills to do this. Does anybody here know if this has ever been done, or is legal? I'm in BC, Canada.

mjevans 8y ago
You /really/ need to talk to a copyright lawyer in your country about this. I am almost positive it'll run against SOME stupid copyright law even if you do an ethnically correct thing similar to having a human insert a disk in to a real video playback device and streaming the output to a merely a single very long distance connected display device.
- mikekchar 8y ago
  I'm not a lawyer, but the Canadian copyright act is actually quite readable: http://laws-lois.justice.gc.ca/eng/acts/c-42/ http://laws-lois.justice.gc.ca/eng/acts/c-42/ As a programmer, I'm someone who depends on copyright for my living, so I always thought it was a good idea to understand what it says. While, the advice to get a lawyer is a good one, I think it's actually pretty clear that it is not legal. It falls pretty clearly under "(f) in the case of any literary, dramatic, musical or artistic work, to communicate the work to the public by telecommunication". You would have to get a license -- and that's the difficult-to-the-point-of-impossible bit.
  - Dylan16807 8y ago
    It's not at all clear that it's 'to the public', when it's only being sent to the renter. But that won't stop you from getting charged anyway.
    - mikekchar 8y ago
      Feel free to consult a lawyer, but there are 2 parties to which the copyright act refers: the public and researchers. The definition of researchers is given in the act. The public is everybody else -- you, the renter, anyone else that isn't a researcher. The way it works is that the act outlines all of the circumstances in which copying could be infringing. It then defines infringement in section 2. In section 2 it says that it is not infringement if you have an agreement with the copyright holder (i.e. a license). You may be thinking that "the public" infers a large group of people. This is not correct. The copyright act doesn't distinguish between numbers of people except in very specific circumstances (private copying with respect to audio recordings of music is an example). There used to be a section dealing with "making available", but it seems to have been removed (I haven't lived in Canada for a decade, so I haven't kept up with the copyright act). Generally speaking, copyright infringement is a civil matter, but commercial copyright infringement is a criminal matter so it is doubly important to get a good legal opinion before venturing into that territory. But, like I said, the act is quite clear IMHO. If you disagree, then feel free to get a legal opinion (which mine is not). I would literally be shocked if any lawyer told you that it was legal, though.

phobosdeimos 8y ago

Video rental stores and physical media was destined to go the way of the dodo as soon as uncapped broadband hit in the early 2000s. And now there's unlimited data over 4G networks. I am 30+ too but lets not overindulge in nostalgia. I have access to a vast library of entertainment 24/7.

deleted 8y ago

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sonnyblarney 8y ago

I don't think that social influence critical masses were really a factor here. Blockbuster was brick and mortar, and 'on demand from home at $10 a month' is going to kill that business on the basic fundamentals. There's no special science here. Blockbuster executives were fools - not so much to 'not see it coming' (few did) - but to not react when the writing was on the wall. Video streaming might be hard but it's not rocket Science, and a lot of people still wanted to rent videos. Using the massive installed base, stores, and gazillions of customers to launch an 'on demand' service that was 'pretty good' might have snuffed Netflix. After all - Netflix had to make the switch from DVDs. I worked at BlackBerry and saw kind of the same thing - sitting on the Titanic watching the iceberg get closer ... not at all alone in my concern, however the large ship was unable to change course. Especially as Netflix was just getting into streaming, and however we can point fingers, the fact remains that Blockbuster had all the opportunity and advantage, it was squandered.

amyjess 8y ago
> Blockbuster was brick and mortar, and 'on demand from home at $10 a month' is going to kill that business on the basic fundamentals. That doesn't explain why Redbox managed to thrive though.
- JoeAltmaier 8y ago
  Sure it does. While Redbox is a physical presence, its overhead is negligible. And for those whom $10/mo isn't an option because, no $150/mo internet to base it on (not everybody can afford expensive internet connections) Redbox is an option.
- mlevental 8y ago
  I've never seen a brick and mortar redbox

xrd 8y ago

If you ever come to Portland, visit movie madness and grab a video: Save Movie Madness, via @Kickstarter https://www.kickstarter.com/projects/hollywoodtheatre/save-movie-madness https://www.kickstarter.com/projects/hollywoodtheatre/save-m...

gscott 8y ago

They have not totally failed. There is one store left in Bend Oregon http://www.sandiegouniontribune.com/entertainment/ny-news-blockbuster-video-down-to-one-store-20180712-story.html http://www.sandiegouniontribune.com/entertainment/ny-news-bl...

rainbowmverse 8y ago

Business Wars did a series on Netflix and Blockbuster at its launch: https://wondery.com/shows/business-wars/ https://wondery.com/shows/business-wars/ Both entertaining and enlightening.