Blockbuster Almost Beat Netflix...Until This $50 Million Mistake скачать в хорошем качестве

Blockbuster Almost Beat Netflix...Until This $50 Million Mistake

This business documentary explains the story of Blockbuster vs. Netflix. Blockbuster is a classic story of business disruption after Netflix ruined Blockbuster's business model and the company failed to adapt. Back in the 90s, Blockbuster was the face of video entertainment in America. The company was founded in 1985 and within just a decade, Blockbuster had become a household name and a dominant entertainment business that almost everyone used. The company grew to have over 9,000 stores in the United States alone and was at one point valued at over $8 billion dollars. But despite this early dominance, Blockbuster quickly fell from grace and filed for bankruptcy in 2010 due to rising losses, massive debt, and increasing competition from more tech savvy companies like Netflix. Nowadays, only one Blockbuster store remains in Bend Oregon and it has survived mainly as a tourist attraction and novelty: a reminder of a different era. So what caused Blockbuster’s meteoric rise and fall? It’s a more complicated story than you might think. The mistake that everyone remembers the most clearly is how Blockbuster handled its competition with Netflix. Netflix entered the video rental business in 1997 as a mail order DVD rental service. People could rent DVDs from Netflix online from the convenience of their homes and have the DVD shipped to them. This meant that you no longer had to take a trip to the local blockbuster to rent the latest movie - you could just get your DVDs in the mail. The company started its business using a per-rental pricing model, but by 1999 Netflix was already transitioning to a subscription model where customers could rent as many DVDs as they wanted a month for a flat monthly fee. The Netflix subscription also had no due dates, late fees, and you didn’t even have to pay for shipping – just the flat monthly subscription cost. This made it a much better deal than Blockbuster for people that wanted to rent a lot of movies. But while this was an amazing customer experience and service, all of this was also incredibly expensive and Netflix was losing money very quickly. Netflix had been trying to approach Blockbuster for months about selling the company to Blockbuster – eventually, Blockbuster finally agreed to meet with Netflix’s founders about a sale. In the meeting, Netflix pitched the idea of being acquired by Blockbuster and forming a combined business. Their idea was that Netflix’s team could run the online portion of the combined business and Blockbuster would focus on the stores. This combined company could then dominate the movie rental space both in brick and mortar stores and online. Blockbuster asked how much Netflix’s asking price would be for buying the company. Netflix replied that they would sell for $50 million. Blockbuster scoffed at the price and declined the offer – declining the $50 million buyout would eventually haunt Blockbuster as Netflix would continue to take market share from them and help put them out of business. Today as of the recording of this video, Netflix is valued at over $250 billion dollars. But despite Blockbuster’s hubris, it’s not like Blockbuster was completely ignoring the online market or the competition from Netflix. They just were a much larger company that thought they could outcompete Netflix and beat them outright – a classic case of underestimating the competition. After years of failures to innovate and being slow to react to online competition, the rising losses finally took their toll on Blockbuster. During 2010, the company began to close 960 stores in order to conserve money. Later that year the company was delisted from the New York Stock Exchange after it failed to meet the minimum listing requirements of maintaining a stock price above $1. The company was nearly $1 billion in debt at this point and was unable to pay its creditors. With no other options, Blockbuster filed for chapter 11 bankruptcy in 2010 and faded into irrelevance with continued store closures. Nowadays, only one Blockbuster store remains in Bend Oregon as the last reminder of what was once a dominant entertainment business.