Analysis, reflection, and forecasting about past and present business examples can help us as business owners and professionals to learn how to best position ourselves in the future so we do not repeat past mistakes.
This post is going to take a general look at Blockbuster, Netflix, and Redbox to see what has gone right, eh, and badly so we can apply these discoveries in our businesses. The worst thing we can do is to be oblivious to what is going on around us and repeating the struggles that have been experienced and dealt with by others, instead of learning from them. Crafting a successful business is challenging enough and we are bound to experience plenty of highs and lows ourselves, without repeating the ones from our predecessors, peers, and rivals.
At one time, Blockbuster was the big name in the movie rental business. They were everywhere for movie fanatics to get new releases and classics. They were big when VHS was still a common medium to watch movies at home with and managed to stay relevant through the popularity of the DVD and somewhat into the use of BluRay. Their challenge ended up being in their strategy to utilize only a standalone retail location as their way to service their customers. Patrons of their business were required to go into their stores like they would any other retail location. It required you look through their collection, wait in lines to check out, and to bring them back to avoid late fees. Their adjustment of eliminating late fees and creating a mail-in or return to store policy only came after the popularity of Netflix soared and their market share dwindled. They stayed committed to their business model for too long and it was only in a last ditch attempt at staying solvent that they incorporated the no late fee and the mail to get movies and return to store strategies. By then the writing was on the wall and bankruptcy was looming. Had they rolled out those strategies while Netflix was still in its infancy, we might be shipping blue envelopes instead of red ones.
Netflix came to be when DVDs were becoming all the rage and people were becoming less interested in going to a store to get movies. People enjoyed the subscription model where their movies came right to them through the mail, where they created a wish list of movies they wanted, and by simply returning their movie with no late fees, the next movie on their list would come to them. It was a really fluid process that was easy for people to understand and became about as commonplace as taking the garbage out, except in this case, they got a few hours of enjoyment. Netflix has stayed relevant because they have constantly tried to evolve and remain current. Instead of waiting for a trend to settle in and try to compete with a company that took advantage of an emerging fad, Netflix would create trial programs like online streaming, creating original in-house productions, and developing separate brands. The first two were successful and have become common practices the company uses. The latter was highly unsuccessful and was quickly abandoned. Their ability to stay nimble and learn quickly from their lessons is what has allowed them to stay relevant. The question remains, can they figure out a way to compete with a recent rival to come on the scene, Redbox?!
Redbox is a rental company that in many ways plays on the successful themes found in Blockbuster, movie theaters, and Netflix. They get movie titles faster than Netflix does so in that way they rival movie theaters. Since their kiosks are found outside grocery stores and gas stations, they use the “brick and mortar” concept but don’t require people to take a special trip to get a movie. They are found in high traffic places that people are already going to on a regular basis. They tapped into the things people actually dislike about Netflix and used it to create a huge competitive advantage for themselves. Instead of requiring people to put a credit card on file and sign up for a monthly subscription, movies can be rented one or more at a time, for a nominal fee for each without much of a late fee if there is one at all, without a monthly commitment or providing financial information that gets stored. Therefore, for people who like to keep a low profile and do not want to make a commitment, this becomes a great option for people who may not want the cyclical program Netflix offers or the streaming service.
In this space, the question remains…is the fad that is Redbox going to eclipse Netflix? Will they expand into the territory Netflix is in and try to gain their market share instead of simply carving out their own niche? Or can Netflix learn from Blockbusters mistakes and utilize their large infrastructure and resources to prevent a company like Redbox from gaining any more popularity than they already have?
While our analysis focuses on these three companies, it’s also important to look at how movie rental companies are dealing with the internet, Smart TVs, Apple TV boxes, mobile applications, Hulu, on demand, studios, actors, and theaters. There are many who have tried to enter the space and for the most part, the many who have tried, have also failed. So the key is not only trying to mimic what is already being done, but identifying a new way for movie goers to experience and interface with your service that is different. Redbox learned from Blockbuster and filled a void that BB left when Netflix and online streaming services became the hot trend. Now with Redbox on every sidewalk outside grocery stores and gas stations, one has to think, what is the next frontier for movies and users? Who will identify them? Who will end up victorious and who will we be studying as a case of bad business decisions?
Whether you are in the retail, movie, or rental industries - there are significant take away’s from the analysis of these three companies.
It’s important that you’re always aware of what is going on around you within your industry and vertical. It’s not okay to just stay narrowly focused on what you’re doing, even if at the moment you’re doing well and your margins are respectable. By the time you realize something is amiss, it may already be too late to change course and thwart the progress of a rogue competitor. If you’re already in business and successful, it’s important you not only stay committed to the very things you’re doing well, it’s essential you divert some of your resources to try new things. Some will succeed and most will fail, but it’s the process that you will learn from. If you’re a new company, don’t simply try to become a twin of a giant. You need to find a niche area for yourself so you can market yourself as being different than the giant. You’ll find success by addressing a need people want that the giant isn’t satisfying. Whether it’s a service that isn’t being provided or a lack of flexibility, find a way of providing a product or service that’s unique and distinct. It’ll be far easier to become successful filling a void a giant like Netflix has left then to attempt to become Netflix’s miniature version.
Think through your business, your industry, your competitors, and your desired customer or client to identify how you can better transform your company to be successful right now, but more importantly, to stay relevant in one year, five years, and 100 years.
To learn more about myself, our services, the types of things WSA has on the horizon, or topics you’d like discussed, please reach out.
- Derrick S. Wong, CEO of Winning Solutions Advisory LLC.
www.WSAWINS.com / 855. WSA. WINS / @WSAdvisory
www.DerrickSWong.com / Linkedin.com/in/DerrickSWong
Winning Solutions Advisory is a management advisory firm designed to help small to mid-size companies examine the effectiveness of their planning and innovation strategies regarding business strategy, branding, technology, finance, and legal. Our “call to fame” is identifying opportunities of potential in both startup and established companies before even the management or market has identified them. We then help to develop sound methods to transform the objectives into reality.