The Blockbuster Netflix Effect | The Blockbuster Netflix Story

The Blockbuster and Netflix effect, while this might be one of the more well known ‘faux pas’ the truth is, it has happened to multiple companies in multiple industries…. Amazon alone has sent more business to bankruptcy in multiple sectors that most, of course, starting with bookstores.

So What happened?

Well, Blockbuster clearly had the market share, it had loyal clients, 60,000 employees, 9000 locations and a value of over $5 billion!

 So Where did it all go wrong?

They got complacent, they thought they were too big to fail, they stopped innovation and got comfortable and they were punished for it. All they had to do was first start to send DVD’s out to customers homes and then move to streaming online and they would no doubt be worth more than Netflix now. Another reason Netflix did so well was no late fees you simply had to return the DVD to get another and just pay your monthly subscription fee. While blockbuster, on the other hand, made 16% of its revenue from late fees, that’s 800 million dollars made from penalising their customers.

What makes it worse is when Blockbuster was approached for a possible partnership with Netflix the CEO of Blockbuster practically laughed them out of the meeting – well we all know what happened next.

So what can we learn from Blockbuster?

 You are never too big to fail

  Make money from a good service not by penalising your customers

Don’t laugh at new and disruptive ideas

What can we learn from Netflix?

The better service will win

Put the customer experience first

Always innovate and use the latest technology and trends to keep ahead of the competition

Just because you are new doesn’t mean you can’t take over.


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