No, Netflix didn’t kill Blockbuster. And for the record, “technological disruption” usually takes much, much longer than the media first predicts.
If you need proof, look no further than Family Video, the last traditional brick-and-mortar movie rental store still standing. If you think that sentence sounds dire, maybe you should look at their bottom line. From Forbes:
Yes, the year is 2017 — and the Granite City store is defying odds, humming along in an industry most people assume has ceased to exist. In fact, the business is “doing gangbusters,” says its owner, Keith Hoogland, who has grown Family Video into a sprawling chain of 759 locations spread across 19 states and Canada, with a concentration in the Midwest and rural America and with more grand openings on the way. “I’m 57 years old,” says Hoogland, “and this is the most exciting time I’ve ever had in my life.”
Family Video isn’t doing anything new, they’re just doing it well. Blockbuster survived because they had a near Monopoly on most areas, and could charge ridiculous late fees. When Netflix (back when it was a DVD-by-Mail rental service) and Redbox came in, Blockbuster didn’t care.
It seems to have been scrubbed from the internet, but at one point an alleged internal memo leaked to Blockbuster execs entitled “Why Netflix isn’t a threat.”
They were as follows:
- “People like flipping over the DVD case and reading the description.”
- “They like picking up snacks at the store.”
- “They like running into their neighbors when they return videos.”
Translation: We’re a huge company that makes a lot of money, and we don’t actually care about our customers.”
Blockbuster had a ton of cash. They had spent decades as a market leader. They could have moved more quickly to compete directly with Redbox, or thrown their cash at competing directly with Netflix in the streaming video space. Instead, their leadership sat their like bumps on a log until they were no more.
But “innovation!” “Market disruption!”
Sure. Partly. But that doesn’t explain how Family Video is raking in the cash. Will physical movie rentals eventually die? Of course, but as the last king of the hill, Family Video has got plenty of time to figure that out, and the cash to create a new business model.
The same is true of broadcast radio. After a brief stint in country radio, I spent a decade in contemporary Christian music broadcasting, landing in drive time in Chicago at the age of 19. I’ve been out of radio for six years, but during that time the Christian Music broadcasting format has grown into a quiet juggernaut.
This is in an era where there’s unfathomable competition for the attention of the consumer. And yet more listeners are turning to Christian music radio even as Apple Music and Spotify subscriptions increase each month.
Because it’s still easy to win by executing on the basics and building a company people love, whether or not it’s “innovative.”
That being said, the day will come when broadcast radio really does die, which is why my friend Brian of the Shine.FM network, covering parts of Chicago, Indiana and Michigan says, “We are not a radio station.” Instead, he describes Shine.FM as a ministry, connector and relationship builder. Shine.FM still accomplishes their mission and vision via broadcast radio, but is also building out a podcast network and expanding social media efforts to build communication channels and community around common values, which is the secret sauce to the growth of Christian music radio.
Haydn Shaw and I drilled down into the speed of innovation with Brian on the Consultant and the Millennial podcast, which you can grab via iTunes or wherever you subscribe to audio. Haydn adds some brilliant insights gathered from 30 years of consulting, working with companies like Microsoft, Hilton Hotels and the Atlanta Hawks.
Because Netflix didn’t kill Blockbuster. Laziness and arrogance did.
You don’t need to panic over “disruption.” Instead, execute on the basics now, with an eye on the future. There’s likely still plenty of market share and profits right where your standing.