Posted by: hagengreen | July 5, 2010

Blockbuster is so yesterday; we tend to agree

I used to go to Blockbuster once, maybe twice a month for that stay-in movie night. I’m sure you’ve done it, too. You know those cozy nights when you wrap up in a blanket on the couch and watch that really good Academy-award winning movie that you missed in the theater. (If you know me, you’re chuckling because you know me and oh-so-strong movie watching dedication.) I fear those days are numbered… or at least you’ll be driving much farther to get your rental movie fix. Blockbuster is falling faster than you can spell Netflix. Yes, our dear friends at Netflix are busting the blocks at Blockbuster, sending them to their demise. There’s something to say about selling products via brick-and-mortar as it’s is good for some things. But movies have transitioned to exist in the cloud and on-demand.

Americans are generally lazy. I don’t literally mean we sit on the couch all day eating potato chips (ok, well…), but that humans, given several options, generally take the path of least resistance. If you can sell something people desire and be cheap, fast, and now – you’ll win. One word: internet. Netflix is winning, and Blockbuster is losing. The Web continues to cast itself far and wide. The advent of VOIP (i.e., internet calling – think Skype) and video (think YouTube) have created demand which internet providers continue to invest in as supply dwindles as more and more people are joining in the fun. As Internet bandwidth demand continues to grow, service providers may give preferential treatment to various sites, services, or individuals to control their pipe. Net neutrality is in the midst of debate and is an interesting topic in which to be familiar and opinionated. Enough politics… back to the issue: bottom line is that the Web won yet again.

As occurred with industrialization at the turn of the century, and then more recently with robotics and automation in the technology age, the Internet age is killing jobs. Sure, you can claim a large percentage of the disappearing jobs do not require an advanced degree from an accredited educational institution – but they’re jobs nevertheless. Someone can no longer pay their rent or go on the vacation they were saving up for. Let’s just hope they land a job relatively quickly and continue to grow in their careers. I’m not saying this is necessarily a bad thing, but it’s undeniably the reality on the ground. The human component cannot be ignored, despite rise and fall of capitalistic endeavors of others. That’s the sad reality. The happy reality is that life goes on. Some of these folks will go back to school, others will take a daring leap into a new industry. It all works out in the end.

We vote with our wallets, and that’s hitting Blockbuster pretty hard right now. That’s ok, “the economy” is doing its thing. As said of the animal kingdom: survival of the fittest. May the best man (or woman) win. There’s a Blockbuster a couple blocks from my house, but I haven’t visited in at least a couple years. It’s too quick and easy for me to type, browse a large set of great movies, and click to stream any of them live on my computer screen. They also ship me a physical DVD within a day or two of choosing one. They have pre-paid postage for when I drop it in my mailbox to send it back. If you haven’t used Netflix yet, go try it out. No, I’m not being paid by Netflix for this. But if someone from Netflix is reading this, go ahead and Paypal some cash my way. (Will we put the banks out of business next? Heaven forbid Bank of America disappears! Uh, actually, I really wouldn’t mind. I can’t stand BofA. Too many negative customer service stories. In fact, I had one today over the phone. Ok, I digress, but that was a fun rant.)

The phrase “A New York Minute” was coined before the (real) Internet existed. I’m sure the phrase would have said “millisecond” or “microsecond” instead of “second” if it was coined today. Things happen fast today. Too fast, in fact. Humans are accustomed to travelling on land over days and weeks, not mere hours in the air (not just physically moving, but spreading germs, etc.). Now you can execute a stock trade really fast, too. No more shouting and waving your hands:

High-frequency traders may execute 1,000 trades per second; exchanges can process trades in less than 500 microseconds (or millionths of a second).

Instead of your business rising and falling in a matter of years, it can happen in months or less. And the process is not just linear but clearly exponential – just look at social networks and how fast news travels these days. If CNN and FOX News kept doing news as they did in the 1990’s, they’d be sitting ducks, too.

Blockbuster still has a chance. They need to reach deep and reflect on what their mission was as a business. What got them off the ground and what did customers really like about their offering that differentiated them from others? Then they need to think ahead about what’s next. How do they not just innovate, but reinvent themselves. Not like Comcast did to much chagrin, but create a new business plan that leverages their deep investments. In other words, figure out how to use your brick-and-mortar to add value in the virtual and high-speed 21st century. Look around: lessons are everywhere.


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