Business information written specifically for newspaper advertising departments

Learning From Blockbuster’s Failure to Adapt

Many have noted that Blockbuster's closing was a long time coming, and other businesses — especially media companies — should take its story as a cautionary tale.

Another company, that was once a leader in its market, has bitten the dust due to its unwillingness to adapt with the changing times. This time, it’s Blockbuster. Last week, the movie rental retailer announced it would be shuttering its remaining 300 stores, leaving only 50 individual stores run as independent franchises. Blockbuster’s demise comes after years of losing customers to its online competitors — namely Netflix. In the wake of Blockbuster’s announcement, many have noted that it was a long time coming, and other businesses — especially media companies — should take Blockbuster’s story as a cautionary tale.

Many customers were dissatisfied with Blockbuster’s inability to understand their needs and meet them. Specifically, the movie rental store’s return and late fee policies were difficult for Blockbuster customers, many of whom work a busy 9-to-5 schedule and don’t have time to watch a movie in a day’s time, let alone return it by the early afternoon deadline. With late fees on top of rising movie rental prices (approximately $5 for new releases), Blockbuster was quickly writing itself out of the game once Netflix came around.

Netflix understood the misgivings of unhappy movie renters. It came up with a model that allowed renters to watch movies at their leisure and return them at any time with no late fees. All the while, they only had to go as far as their mailbox to receive and return the DVDs. That’s all it took for many Blockbuster customers to change their loyalties.

Netflix didn’t stop there. It has continued to transform itself since its original DVD-by-mail beginnings. Now, many customers only subscribe to the rental company’s online streaming catalog. Even today, Netflix announced that it would be redesigning its interface for some streaming devices to better meet the needs and interests of their customers. This is a company that isn’t growing complacent in its success.

If Netflix has adapted its business model during its relatively young existence, then Blockbuster certainly wasn’t making the grade. To top things off, Blockbuster missed a valuable opportunity when it declined to buy out Netflix for $50 million in the early aughts. Now Netflix is worth almost $20 billion.

Blockbuster didn’t have the foresight to see where the Internet and technology would take the movie rental industry. Instead, it did what many corporate giants do: deny the influence of transforming technologies and ignore the changing needs of their customers.

This is a story that may resonate with newspapers and for good reason. Newspapers are still a staple in their communities, but in many ways, they also ignored their changing surroundings. An unwillingness to bring their pages and ads into the digital era stunted their growth. Meanwhile national news hubs that successfully made the transition online and free advertising pureplays like Craigslist outpaced newspapers. Many saw these developments, but denied the possibility that newspapers could ever become irrelevant. After all, newspapers have been around a whole lot longer than Blockbuster. However, those sites were meeting the needs of their readers and advertisers in ways papers weren’t.

Thankfully, many papers have now accepted that these changes can no longer be ignored. While it may be too late for Blockbuster, it’s not for newspapers. Continue to follow how media and advertising are transforming and respond to those changes. Don’t balk in the face of change. Instead, take measures to be a leader in your industry in order to maintain your relevancy amongst modern readers.