Lessons from the Blockbuster failure

Tom Dougherty, CEO – Stealing Share

7 November 2013

The Blockbuster failure signals problems for others

It’s now official. Blockbuster is kaput, announcing it’s shutting its remaining 300 stores and will only exist as an on-demand service for DISH customers.

Blockbuster failureI’ve written plenty about Blockbuster and I’m not here to throw extra dirt on its grave. Instead, let’s consider the lessons we can learn from the Blockbuster failure.

  • Don’t be arrogant. Blockbuster owned the video rental place, but it laughed off Netflix back in the early 2000’s. Netflix started with mail order DVDs and Blockbuster didn’t react. In a short time, Netflix owned that space. Blockbuster begrudgingly began its own mail service, but it failed because Netflix had a large head start and Blockbuster was associated with brick and mortar stores.

This is similar to what happened when Steve Jobs came calling to Sony with the idea of iTunes and a new generation MP3 player. Jobs thought Sony could own this space because of its large music library. Sony ran him out of the door.

“Rest on your laurels, you die. Refuse to change, you die. That’s the main lesson of the Blockbuster failure.”

And we know what happened next.

  • Be open to change – especially when you’re successful. The above example is related to this, but companies slow down the more successful they become. Like a superstar athlete who no longer has the hunger, they get complacent. The more successful they become, the more cumbersome they get, with inside-outside thinking becoming the norm and decisions made by committee.

For Blockbuster, that led to a refusal to look ahead. To ask itself, what’s next? As it turned out, that old nemesis, Netflix, answered that question with a streaming service that still dominates the competition – and continuing to dominate by offering original programming. Amazon is currently trying to follow the same model, which is fine. But all the players still need to ask themselves: What’s next? Maybe it’s this.

  • Make your messages unique and different. You know I had to get brand in there. In the beginning, the Blockbuster brand was positioned as the spectacular. “Make it a Blockbuster night.” Competitors followed suit (Hollywood Video, anyone?), which is why they fell by the wayside faster than Blockbuster did.

But there was something old-fashioned about that brand meaning. As consumers took control – they now pick when and where and how – the idea of making a spectacular night of it lacked emotional resonance. Blockbuster, like many market leaders, never looked into what the emotional drivers were for ever-changing target audiences. And it didn’t consider how to make its messages different and better than the oncoming competition.

In simple terms, what all companies and brands must consider is that their markets are always in flux. Rest on your laurels, you die. Refuse to change, you die. That’s the main lesson of the Blockbuster failure.

Insert the word “brand” instead of “relationship” in this Woody Allen quote from Annie Hall, and you get the idea: “A relationship, I think is like a shark, you know? It has to constantly move forward or it dies. And I think what we got on our hands is a dead shark.”

See more posts in the following related categories: Blockbuster Blockbuster closings Blockbuster demise Lessons from Blockbuster


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