netflix party As I travel around town, I pass the local Blockbuster and think, “How come they’re still in business?” I’ve watched Netflix acquire more and more traction in the video rental sector over the last couple of years, while Blockbuster has remained largely unaffected.

In fact, when was the last time you saw a Blockbuster Video commercial? I haven’t remembered one in at least two or three years! It’s a disgrace for a corporation that once dominated the whole industry. So, what went wrong? Have they dropped the ball? Did they not anticipate Netflix’s arrival? Is it anything wholly unrelated to Netflix, or is it something entirely different?

Blockbuster was the colossus of the neighbourhood. You couldn’t go anywhere without seeing one a few years ago. It was almost like the Starbucks effect. Almost every corner has a blockbuster. Everyone had a membership to their local mom and pop video store before they were famous, I believe just before the DVD frenzy. netflix party chrome extension

Almost everyone in the store could name every staff. The personal treatment seemed to be a significant difference between Blockbuster and the mom and pop stores. Local video stores were usually very welcoming. netflix party chrome extension The reason for this is that the folks who owned and ran businesses were ordinary people like you and me. It was merely a group of movie buffs. And the video rental store was a terrific business idea back in the day.

Everyone enjoyed renting movies, which needed a membership and cost between $3 and $5 per film. You never came home with with one!

With the arrival of Blockbuster, everything changed. Their moniker appeared to fit them perfectly. When they initially arrived in town, it seemed strange. The bright lights were on.

The colour scheme is yellow and blue. And there were rows upon rows of films. That’s all there is to it. They had a large number of them. Blockbuster had arrived in town with many copies of popular films as well as new releases. Even if the movie you wanted to rent was a brand new release that day, it was not uncommon for the local Blockbuster to have a copy on Friday night. Maybe that was the deciding factor? Perhaps it was their “chain-store” vibe?

Or perhaps none of the above. But that was something, because mom and pop video stores began to fade away shortly after Blockbuster arrived in town. When the neighbourhood movie store, which used to be packed on Friday and Saturday evenings, was virtually empty when you went in, you could tell things were changing.

Blockbuster rose to become the big child on the block in what seemed like an instant. The movie rental market was totally controlled by them. All of the smaller stores vanished soon after. Even start-ups like Hollywood Video were unable to compete. Blockbuster has become too entrenched in the industry. It was their game to lose, and that may have been the case.

A new player appeared on the scene a few years after their supremacy was established. It’s not often that a firm is knocked from its throne after thoroughly dominating a market. Blockbuster, on the other hand, experienced exactly this. Because a new player had just joined the game and was playing for the long haul.

In 1997, Netflix entered the movie rental market. Their business model differed from that of Blockbuster. Netflix brought the movie to you instead of you needing to go to the store to rent it. We’re all familiar with Netflix and how it works by now. However, they were entering a market that was dominated by a single business at the time, and they were doing it with an unproven service. By any standard, this is a dangerous decision. Their savvy marketing and superb service, on the other hand, demonstrated that they were not just in the game, but also in it to win it.

Netflix made what may be called a wise business move not long after entering the market. According to a CNET report regarding Netflix and its dealings with Blockbuster, when Netflix made the request, they were laughed out of the office. Blockbuster did not believe Netflix would be able to compete with them at the time.

It didn’t take long for Blockbuster to realise their mistake. Netflix began to eat away at Blockbuster’s market share a year or two after the meeting. Netflix’s earnings were beginning to triple and quadruple from year to year. They added a subscription service to their business plan, which was the main differentiator. Netflix had become the dominating force in the video rental industry, and Blockbuster wished they had another crack at the Netflix proposition from years ago. Unfortunately, no time machine has yet to be invented.

Blockbuster filed for bankruptcy protection in September, and teachers around the country are teaching the Netflix business model. This anecdote clearly demonstrates that things can change dramatically at any time, regardless of the size of the firm or the industry. When change is approaching, you must exercise extreme caution since you may not even notice it. Because the ecommerce sector was about to explode when Netflix made their pitch, Blockbuster should have sensed something coming.