“Neither RedBox nor Netflix are even on the radar screen in terms of competition, it’s more Wal-Mart and Apple.”
– Jim Keyes | Blockbuster CEO (2008)
I remember popping into Blockbuster every Friday night to search for hidden gems in the new release section. The blue and gold stores were a fixture across the country. You couldn’t throw a rock in a strip center without hitting a Blockbuster.
For you younger readers, let me explain what this video rental thing was…
Back in the day, you had to actually go to a store, find a VHS tape, rent it, take it home, watch it, rewind it, and then return it in a certain window to avoid a late fee.
Sounds pretty archaic today. My kids have a hard time wrapping their brains around the concept. They pick up a remote and have access to thousands of movies. How did we go from the video store to a digital world?
Late fees.
I’m pretty sure I still have a late fee at the Blockbuster in Knoxville, TN for Tommy Boy.
Side note: Here’s a brilliant lesson in sales from Tommy Boy.
Anyway, I hated late fees, and so did Reed Hastings. He was so mad about his $40 late fee for Apollo 13 that he decided to put Blockbuster out of business. At the time, that seemed impossible. Blockbuster was unbeatable. Hence Jim Keyes’ broken radar that didn’t pick up on Netflix.
He could have purchased Netflix for a measly $50 million. That was an ink stain on Blockbuster’s books at that time. Blockbuster would probably still be dominating the video world had they made that purchase.
Instead, they partnered with Enron. Yes, that Enron.
Blockbuster passed on the purchase of Netflix and signed a 20-year deal to deliver on-demand movies with Enron Broadband Services. Whoever made Jim Keyes’ radar is really who we should be researching. That thing was seriously flawed. It failed to detect the threat of Netflix or Enron.
The story goes downhill from here. Enron files for bankruptcy, Blockbuster posts a $1.6 billion loss, Netflix becomes profitable, Redbox starts to spread, and then the once seemingly impossible happens, Blockbuster files for bankruptcy.
This leads me back to the title of this post…
Are you Blockbuster or Netflix in this story?
We’re at a tipping point in history. The world is changing and every industry is being touched.
Online grocery shopping is here to stay.
Home learning is suddenly on everyone’s minds.
Many people will never return to their office or coworking space.
Manufacturing has shifted.
Videoconferencing is used by everyone.
Excercise is happening at home.
Etc…
I could go on for days with examples of how every industry is being permanently altered. Don’t close your eyes like Jim Keyes. Make sure your radar is on and scanning. There’s a lot of opportunity for those of us paying attention.
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