News this week that Blockbuster filed for bankruptcy. Is anyone
surprised? Doubtful. However, it reminded me of all the talk back in
1995 about the inevitable demise of Blockbuster brought on by the
ability for people to order movies directly from their cable provider.
Everyone thought Blockbuster wouldn't last more than a few more years.
They went on to make $3.8 billion in 1998 and $5.9 billion in
2003. What does this tell us? That consumer behavior takes a long time
to change. That the promise of what technology can deliver well takes a
long time to actualize (e.g., sufficient bandwidth to stream movies). That a strong brand can endure competitive threats for quite a while. But that ignoring / not anticipating / not accepting dramatic innovations by emerging competitors - competitors who invent new models and highly superior experiences - will eventually be near-fatal. (Near-fatal because some companies are somehow able to hold on for quite a while, like AOL, which has been slowly dying - but profitable - for years despite their infamous collapse.) Given their industry position, Blockbuster should have dominated the online space but was too slow to act and too focused on its retail business to be on the leading edge of innovation. Comcast, Netflix, Sony, etc. won.
