First: Most people believe it was Netflix that killed Blockbuster, but that's not strictly correct. It was the combination of Netflix and Redbox that really sealed the deal for Blockbuster (and video rental generally). It normally takes not one, but at least two things to really fill the full functionality of a old paradigm. Also it's human nature to focus heavily on one thing (Blockbuster was aware of Netflix) but lose sight of getting flanked by something else.
Second: Not listed here is how banks themselves have changed to be almost entirely online, which in many cases is more of a outsourcing play than a labor destruction play. My favorite example of this is Capital One, where the vast majority of their credit card operations literally cannot be solved in a branch. You must call them to say, resolve a fraud dispute. Note that this still requires staffing and is (not yet) fully automated, just not branch staffing. It doesn't make sense to staff branches to do that.
The thing that actually killed Blockbuster was Carl Icahn. He bought up a bunch of shares and wanted to quickly turn a profit on the company. At the time, they were investing heavily into a Netflix-like service, which required a significant up front capital investment and, therefore, was losing money. Icahn, wanting to make a profit, decided to cut spending and basically not look forward at all. He got a quick, massive bump in stock price and jumped ship as it was crashing into the iceberg. Blockbuster was caught in the middle of a paradigm shift and found itself massively under prepared to deal with it.
This is interesting, but doesn't have to be correct.
If Blockbuster had kept pouring money into the new service, maybe it would have lost it all - I see no reason to think Blockbuster's movie rental franchise business would have 'transferrable skills' to allow it to succeed at streaming.
If it had been trying to pivot into a pizza delivery business (perhaps more transferable, in terms of locating franchises etc) would Icahn still have been 'killing' it?
My point is, maybe it was already dead and Icahn just prevented it from wasting a lot of money on the way down the drain.
I have a hard time believing that Redbox had much of an impact on Blockbuster, and they certainly weren't changing the video rental paradigm.
Netflix's original DVD-rental by mail business no doubt ate into Blockbuster's business to some degree, and with their huge inventory was more of a head-on competitor than Redbox which could only offer a vending-machine full of options - the most popular ones.
What really killed Blockbuster was streaming video, not just a way of "automating" the DVD rental business - it was the paradigm shift, similar to the mobile banking vs ATM shift that TFA describes.
That sounds logical but the timeline doesn’t match up. Blockbuster filed for bankruptcy in 2010. This came after years of decline.
Netflix streaming launched in 2007 and ended 2010 with only 20 million users. (They currently have over 15x that). I was using it from the start, they had barely any content back then, Hulu was pretty new, and that was the entirety of the streaming universe. Netflix’s first major original content, House of Cards, came out in 2013.
Blockbuster peaked in 2004. Redbox was just getting started.
Blockbuster’s fall loves to get shoved into 100 different narratives, none of which match the facts. It was death by 1,000 papercuts. Netflix. Redbox. Cable system technology improving drastically. Cable TV improving drastically (this happened right around the time Blockbuster peaked, great book on how/why called Difficult Men). TV show quality in general improving drastically. The rise of HBO. Poor management. Etc.
Yes, that sounds about right. I was too glib in saying that it was video streaming was the cause - one of the final nails in the coffin, perhaps.
As I recall Blockbuster was really in it's heyday in the VHS era, and the largest selection was always VHS even when DVD and then Blu-ray came on the scene.
Digital of one form or another - DVDs and streaming - was the future, and Blockbuster never really fully embraced it, instead just becoming increasingly irrelevant as various alternatives emerged.
It was fun while it lasted though - there was something about the experience of going to Blockbuster, or any of the smaller local video rental stores, and choosing something for movie night. I never really saw the appeal of the Netflix approach of having a want list and not really having control over what they mailed you, as well as the delay of mail.
Cash App is probably the biggest. I was surprised how many gen z people I talked to say they use cash app for everything from direct deposit to their tax returns.
Instead of chastising people with another guess you could find the source. The founders of blockbuster knew it would eventually fail. Short version, they knew once people watched the huge initial backlog revenues would plummet. The plan was to build everywhere and capture that initial high income. Afterwords, well whatever.
Built to Fail: The Inside Story of Blockbuster's Inevitable Bust
Yea that could have been worded better. My point was more that the banks didn't turn into software (an app) with just developers working on it, just that the labor force that was doing teller operations moved.
First: Most people believe it was Netflix that killed Blockbuster, but that's not strictly correct. It was the combination of Netflix and Redbox that really sealed the deal for Blockbuster (and video rental generally). It normally takes not one, but at least two things to really fill the full functionality of a old paradigm. Also it's human nature to focus heavily on one thing (Blockbuster was aware of Netflix) but lose sight of getting flanked by something else.
Second: Not listed here is how banks themselves have changed to be almost entirely online, which in many cases is more of a outsourcing play than a labor destruction play. My favorite example of this is Capital One, where the vast majority of their credit card operations literally cannot be solved in a branch. You must call them to say, resolve a fraud dispute. Note that this still requires staffing and is (not yet) fully automated, just not branch staffing. It doesn't make sense to staff branches to do that.