“It’s come to this: the success of Netflix and Redbox in the United States have driven Blockbuster, as expected, to file for bankruptcy protection.” -TechCrunch

blockbuster building with only the outlines of the removed signs still on it

Woah woah woah, let’s back up a second here.

Blockbuster didn’t fail because of Netflix – it failed because it couldn’t understand the needs of its customers.

Blockbuster succeeded initially because it did understand its customers: they wanted the latest release and they sure as hell didn’t want to get to the store just to find out it wasn’t in stock. So Blockbuster focused on new releases, carrying dozens of each and extremely unimpressive selections of older movies. It was a good business for awhile. Mom and pop video rental stores went out of business as customers headed to Blockbuster for a guaranteed selection of new releases.

But customer habits and wants change, and Blockbuster has been totally oblivious to the new world order for video:

  1. People are busy. They don’t want to go out to the store, they don’t want to have to go back to the store to return their tapes, and they certainly don’t want to pay late fees. Netflix brought videos to your door and then to your computer screen before Blockbuster was even contemplating either.
  2. In the digital world, there’s no such thing as having the most copies of a new release. Instead, depth-of-catalog ease-of-finding becomes more valuable. Netflix excelled at these.
  3. People want good customer service (which sometimes means getting out of the way). Dealing with a snarky teenaged employee at Blockbuster is not a fun experience: they don’t know anything about movies, they don’t care about your needs, and their pimples seem to be judging you while you debate over Bridget Jones’ Diary and Jaws 6 for 15 minutes. Netflix keeps you from ever having to look at pimples again.

Blockbuster looked at the SOLUTION, not the PROBLEM, and tried to imitate it.

Sure, they probably sent out surveys and had user testing sessions. But they were focused on the product, the solution, the Netflix imitation. Had they actually tried to understand their customers (and ex-customers), they might have had a chance.

RIP Blockbuster, I’m going to watch Season 4 of the X-Files on Netflix Instant while I eat ice cream out of the carton.

Blockbuster photo courtesy of Dave Dugdale.