Blockbuster is down but maybe not out
Tom Dougherty, CEO – Stealing Share
1 September 2010
Sears losses but all retailers should take note.
As I’ve mentioned before in a different context, Blockbuster is filing for bankruptcy. Honestly this comes as no surprise to me, I had been expecting it for a while now. In fact, I’ve been talking about this for more than year.
So now, as the stock is trading for pennies ($.08 as of this morning), the hope is that the bankruptcy filing will allow Blockbuster to get out of existing leases and close brick an mortar stores. Analysts believe the filing will allow Blockbuster to concentrate more on convenience vis-a-vis their kiosk business and digital downloads, thus making its brand more “convenient” for consumers.
However, as I see it, there is a fundamental flaw in the logic here. I do not believe that consumer trend is seeking “convenience” in their movie choices. Rather, the consumer trend is moving towards seeking immediacy. The advent of the rental kiosk is a simple tactic of meeting the consumer where they are, related to the traditional marketing idea of reach and frequency.
Kiosks in and of themselves are not convenient. They serve only to meet a need as an afterthought, such as when you are at the grocery store and you see a kiosk and think, “Oh, I could rent a move tonight.” I have seen a line of people at a Redbox kiosk, trying to herd their kids while attempting to keep their place in line, only to find out the movie they wanted to get was not available. For these consumers and countless others, standing in line to find the movie you want is not available does not qualify as convenient.
What I believe consumers want, and this is borne out if you look at the history of the video rental business, is a sense of discovery immediately followed by gratification. They want to find a movie and watch it.
What is missing from kiosks and most digital download sites is the “thrill of the find” and the experience of walking through a store and stumbling on something that you may have not been looking for or even known of its existence. Even the download leaders, such as Netflix, are having trouble with this. Netflix is still hard to navigate, but it does offer recommendations based on your previous choices. And iTunes attacks this through the Amazon model of showing what other users bought who made the same purchases you did.
C’est la vie Blockbuster video stores, but perhaps your story is not over yet. You were once the trailblazer who brought rental VHS to the masses and gave them the opportunity to find something great to watch. What Blockbuster has the opportunity to do now is to change the game once again by giving consumers an experience and immediacy that is no less convenient than not having to leave home.
Netflix and other digital download services give you immediacy but no experience. In fact, if you look at movie rental today, the experimental element has been essentially removed or is weakened. For the most part, people watch movies they have heard of. Very few browse. In order to survive, Blockbuster must once again revolutionize the movie rental business and return that experiential element back into video rental or it can start to draw the curtain and roll the credits.
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