Goodbye Blockbuster, It Was Nice to Know You
Wednesday- January 16, 2008 Filed in: Innovation | New Marketing
Yesterday, Apple dropped a Hiroshima-like atomic bomb on Blockbuster.
The game has changed and Blockbuster just received the biggest wake-up call in their companies' history. It's not as if they didn't see the writing on the wall. Apple has been begun putting distribution channels out of business over the past 5+ years. Not to mention the beating Netflix has already put on Blockbuster.
In my opionon the main advantage that Apple holds are low overhead and scalability. The costs of resources that Apple has remain fairly fixed and will continue to be so. Users downloading an additional copy of iTunes costs them next to nothing. In addition, the advantage of the web makes selling 1 copy vs 1 million copies of a single movie nearly the same.
Blockbuster on the other hand is crippled with fixed (and escalating) costs of doing business. Not to mention store upkeep and such, but also purchasing an additional copy of a movie for the local store is much more than the cost Apple incurs. Blockbuster has a limited number of physical movies that are available in each store, this isn't the case with Apple and iTunes.
I can remember about 10 years ago when Blockbuster was opening stores almost every 24 hrs. What if they would have taken some of these resources and devoted them new technologies and initiatives? Would Blockbuster be sitting in a better position?
Lessons you can learn from Blockbuster
What would you do if you were the CEO of Blockbuster? How do you modify your business plan? What should other businesses take away from this situation?
Additional Resources:
The Internet Changes Everything
Blockbuster, Netflix shares fall following Apple's movie rental service launch
The game has changed and Blockbuster just received the biggest wake-up call in their companies' history. It's not as if they didn't see the writing on the wall. Apple has been begun putting distribution channels out of business over the past 5+ years. Not to mention the beating Netflix has already put on Blockbuster.
In my opionon the main advantage that Apple holds are low overhead and scalability. The costs of resources that Apple has remain fairly fixed and will continue to be so. Users downloading an additional copy of iTunes costs them next to nothing. In addition, the advantage of the web makes selling 1 copy vs 1 million copies of a single movie nearly the same.
Blockbuster on the other hand is crippled with fixed (and escalating) costs of doing business. Not to mention store upkeep and such, but also purchasing an additional copy of a movie for the local store is much more than the cost Apple incurs. Blockbuster has a limited number of physical movies that are available in each store, this isn't the case with Apple and iTunes.
I can remember about 10 years ago when Blockbuster was opening stores almost every 24 hrs. What if they would have taken some of these resources and devoted them new technologies and initiatives? Would Blockbuster be sitting in a better position?
Lessons you can learn from Blockbuster
- It's not the smartest of the species that survive, but the one that is most adaptable to change.
- Bigger is not always better. some may say that small is the new big. No longer can you compete on size. In the current business environment, companies that rely on being fast and nimble are much more likely to be successfull. Apple should keep this is mind as well, as I'm sure more and more companies and startups looking to take them down.
- Your business can evaporate in the blink of an eye. Now, I'm not saying that all Blockbusters will shut down overnight, but I firmly believe Apple will tighten the noose and Blockbuster's current business will cease to exsist. Netflix has seen the erros of those that came before them. They will survive and continue to fight Apple for market share.
What would you do if you were the CEO of Blockbuster? How do you modify your business plan? What should other businesses take away from this situation?
Additional Resources:
The Internet Changes Everything
Blockbuster, Netflix shares fall following Apple's movie rental service launch
