Blockbuster: When The Change Is Not Reached In Time

In 1985, a Dutch entrepreneur named Wayne Huizenga opened a small store in Dallas. The business was the movie rental called Blockbuster.

A few years later we could talk about an entire industry with 8,900 establishments and 90,000 employees in 25 countries. Its turnover reached 11,820 million dollars.

Times of economic growth

In the 1990s, there were very ambitious growth plans in line with a market that was constantly growing. The business model seemed simple and replicable 100% for almost the entire world geography. The establishments were composed of about 10 experts in film and video games with promotions segmented by days.

When Blockbuster went through relatively good times in 2000, there was already a clear threat of online piracy and the Internet in general, the possibility arose of buying a startup called Netflix that sold monthly online subscriptions and that allowed with that fee to rent all the Movies you would like. Finally, the high command decided not to execute the purchase that was around 50 million dollars.

Key points that should have taken into account

Perhaps these key points should have been raised in my humble opinion:

  • The customer used to watching movies, what do you prefer? Pay for each movie that you rent or make a single payment and have free bar?
  • Does the customer want to go to the video store every time he wants to rent?
  • Was it possible that the movie we wanted to see was no longer available?
  • Is the customer happy when he has not been able to return the film on time and has a surcharge for it?
  • How much surface area is needed to expose the entire catalog of films with their respective structural costs?
  • In the United States, they ran 3,500 premises, is it enough that all the inhabitants have a blockbuster nearby?

True, it has not appeared a not too technological market that rents and wants to see the movie on its television screen. Seeing the evolution, it was a matter of time before the Internet burst in and changed the rules of the game and the habits of the home cinema viewers.

Netflix Today Netflix is ​​valued in millions and millions of dollars and Blockbuster went bankrupt with an approximate debt of 1460 million dollars. Paradoxes of destiny, Netflix have been one of the main actors of a film with melodramatic character. This is the story of a startup that could be bought ends up practically throwing a sleeping giant out of the market.

To all this, although a bit late, Blockbuster hired Accenture for its “Blockbuster online” service but already knowing that its main competitors took a lot of advantage in a market segment in which they are not experts.

This story, like many others such as kodak that did not arrive on time and closed in 2013, make us think that you cannot lower your guard even when we have the wind in favor. There are always new trends and consumer habits can change demanding changes and readaptations of successful business models that bore fruit but may be little prepared for the new times.

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