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Blockbuster’s Biggest Mistake (hint – it wasn’t digital)

by Lori Taylor · 6 comments

In 2007 I was asked by a friend to take a look at Blockbuster’s failing business model.  Trust me, they saw it coming long before they called me.  And their dilemma was the same as McDonald’s, only thank God you still have to go to the store to get something to eat.

McDonald’s most valuable asset is the location of their businesses.  They were laser focused and knew what “location, location, location” meant…more profits.  As long as McDonald’s was convenient, they knew it would be an easier sale.  (And their french fries kick the pants off most the other guys..)

Blockbuster failed to do the obvious, be Netflix before Netflix showed up.  But more importantly, they failed to change their business model AT the store, not INSTEAD of the store.

What if they could have set up arcade like gaming areas with cafe’s (think Starbucks, Barnes & Noble, many others) and let kids play all the latest and greatest video games.  Guess what could have happened (no one know it would have, including me)?

Mom could have bought coffee that cost a buck for 5.  Kids could have paid to play the games.  And even better?  Maybe, just maybe, they could have cut deals with the gaming companies to do, gasp, gaming focus groups.  Maybe you don’t know what companies pay for focus groups, but I can – and it’s a heck of a lot more than a movie rental costs.

Maybe they could have early on created a member drive review are just like Yahoo did before Yahoo did it.  What about creating more of an Amazon like environment, users who rented this, also rented this.  And what if they let advertisers pay money to target ads to the demographics of people searching for the respective movies.

I actually told my friend all this and more.  I also said he should set up a “date night’ app for online dating sites.  Pay to stream the movie, have chat and let your new online crush who lives in another country “take you to a movie”.  My sister and I love to hop on the phone and watch our favorite shows or the occasional message, we are 3000 miles apart, so spending that time with a glass of wine in our hands is FUN.  How cool to watch a movie and be able to chat and talk via a headset.

Would it have worked?  I don’t know.  But it beats what they did.  Which is nothing…

Blockbuster’s decision-makers were so used to investing in traditional stores that they missed the opportunity to service customers both digitally and traditionally. Failing to adapt emerging technologies, such as online rentals, video streaming and the like, was an irreversible misstep that led to the company filing for Chapter 11 in 2010. The Web was what Blockbuster didn’t see coming, but clearly should have.

Read more here…

Lori Taylor

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{ 4 comments… read them below or add one }

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