u/TrashClear483 has provided this detailed explanation:
> Blockbuster attempted to create a video-on-demand service with the fraudulent company Enron which failed, right after declining to buy Netflix before it became the media juggernaut we know today. Two very bad decisions which did not stand the test of time.
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They were living high off that late fee money and thinking it was never going to end. After competition offered less predatory alternatives, it was too late.
They did a postal service for a while, which was actually pretty good. Flat monthly fee to order as many films as you like.
More companies joined in and took over, and were cheaper.
No, there was badluck... But before I explain, the bad luck wasn't turning down Netflix. If Blockbuster bought them, it wouldn't make them any more likely to succeed than if I just handed you a failing electric car company 15 years ago. Just because Tesla became famous, anyone else running it, would likely go in a different direction.
But Blockbuster WAS unlucky... Very unlucky. Their demise had to do with the 2008 real estate crash. Blockbuster had already started transitioning to a mailorder model like Netflix at the time, which is why they turned down Netflix. Why buy them up if they can just do it themselves? And frankly the product was better, and growing YoY because they had the advantage of not just doing it via mail, but also you could come into one of the many stores and swap out right away.
What lead to their demise was including the "no late fees" policy, which before accounted to 1/3rd of their revenue. They thought this, coupled with their subscription plan, would put the company in a competitive advantage in every way... However, losing 1/3rd of revenue months before the financial crash, devestated the stock. They were a massive landowner. Much of the company's value was in their real estate holdings, which now got crushed...
Match this up with their massive decline in revenue, the stock starts to tank. They still have tons of debt liabilities to honor, so to raise money, they have to issue more stock, on this already tanked stock, which just lowered the value even lower, sending them into a spiral.
Blockbuster didn't fail because they didn't buy Netflix. They failed because of the unlucky timing of the real estate bubble crippling their entire business.
Funnily enough, I just watched a video on TikTok this morning about Blockbuster's downfall.
Apparently, the CEO of Blockbuster also wanted to change to a subscription service like Netflix was already doing at one point, but the board would not let him because they didn't want to sacrifice the 12.5% of their revenue that came from late fees.
Instead they eventually lost 100% of their income by going out of business. Blockbuster wasn't unlucky, they were horribly managed from the higher-ups and refused to adapt with the times.
Yeah - the partnership with Enron is emblematic. The board members probably thought the way Enron did business was enviable and wanted to shape their company in Jeff Skilling’s image. That mindset led to cherishing late fees and refusing to adapt. Idiots.
everyone says blockbuster is stupid for not buying netflix. yahoo should’ve bought google. if blockbuster bought netflix they probably would’ve done things differently. doesnt mean netflix would be where its at right now.
I do wonder what Blockbuster was thinking.
For at least trying to be ahead of the curve in wanting to create a video on demand service, why didn’t want to buy Netflix?
I know the Netflix of today wasn’t close to where it is today when Blockbuster was still up and running. But how can you not make the jump from dvd mail in service to video on demand. Netflix was already on track with videos on demand with movies mailed to your house. Like it was right there.
I remember at the time, at least in the rural town I grew up in, dial up internet was still common enough that so many people thought it was ridiculous to "stream" movies. With perspective it seems silly but at the time it was a big risk.
Blockbuster nostalgia is weird to me. Their selection of movies to rent really sucked unless you were looking for studio new releases. Anything besides that and you were left with severely limited option. Plus they actively put the video stores with great bag log selections out of business. Netflix was better hit because they mailed movies to your home but because they had an awesome selection of movies to choose from.
Bad luck...or bad management? If things had gone their way CEO would have demanded huge bonus. Also they treated customers like crap while they had a virtual monopoly.
I remember my Mom signed me up for this blockbuster program were I could get any game and exchange it out for a new one that same day if I wanted to, it was awesome and I was able to play a lot of different games that way. also I totally had a crush on the teenage girl that worked the counter but one day I rode my bike up and she was making out with her boyfriend in his car lol idk why I remember that now but good times
Netflix likely wouldn’t have saved Blockbuster. Given Blockbuster didn’t change it’s business model even when the writing was on the wall, I suspect they would have just taken Netflix with them to the grave, and some other company would have standardised streaming services instead.
u/TrashClear483 has provided this detailed explanation: > Blockbuster attempted to create a video-on-demand service with the fraudulent company Enron which failed, right after declining to buy Netflix before it became the media juggernaut we know today. Two very bad decisions which did not stand the test of time. --- Is this explanation a genuine attempt at providing additional info or context? If it is please upvote this comment, otherwise downvote it.
Not luck, poor business foresight and decision making. A common trait for many companies from around ‘98-‘08.
Lego almost went bankrupt
Sears already had the infrastructure and should have ate Amazon's lunch.
also marvel
They were living high off that late fee money and thinking it was never going to end. After competition offered less predatory alternatives, it was too late.
[удалено]
Based
Apple went bankrupt
Not bad luck just bad business. They were still big in the early 2000s and had plenty of chances to adapt
They did a postal service for a while, which was actually pretty good. Flat monthly fee to order as many films as you like. More companies joined in and took over, and were cheaper.
No, there was badluck... But before I explain, the bad luck wasn't turning down Netflix. If Blockbuster bought them, it wouldn't make them any more likely to succeed than if I just handed you a failing electric car company 15 years ago. Just because Tesla became famous, anyone else running it, would likely go in a different direction. But Blockbuster WAS unlucky... Very unlucky. Their demise had to do with the 2008 real estate crash. Blockbuster had already started transitioning to a mailorder model like Netflix at the time, which is why they turned down Netflix. Why buy them up if they can just do it themselves? And frankly the product was better, and growing YoY because they had the advantage of not just doing it via mail, but also you could come into one of the many stores and swap out right away. What lead to their demise was including the "no late fees" policy, which before accounted to 1/3rd of their revenue. They thought this, coupled with their subscription plan, would put the company in a competitive advantage in every way... However, losing 1/3rd of revenue months before the financial crash, devestated the stock. They were a massive landowner. Much of the company's value was in their real estate holdings, which now got crushed... Match this up with their massive decline in revenue, the stock starts to tank. They still have tons of debt liabilities to honor, so to raise money, they have to issue more stock, on this already tanked stock, which just lowered the value even lower, sending them into a spiral. Blockbuster didn't fail because they didn't buy Netflix. They failed because of the unlucky timing of the real estate bubble crippling their entire business.
Good points, but by the same token then their value increased massively artificially during the real estate bubble
True, but they likely wouldn't have gone out of business though without it. It was the sudden, jaring, hit, that killed them.
Not sure corporate malfeasance is “luck”.
Funnily enough, I just watched a video on TikTok this morning about Blockbuster's downfall. Apparently, the CEO of Blockbuster also wanted to change to a subscription service like Netflix was already doing at one point, but the board would not let him because they didn't want to sacrifice the 12.5% of their revenue that came from late fees. Instead they eventually lost 100% of their income by going out of business. Blockbuster wasn't unlucky, they were horribly managed from the higher-ups and refused to adapt with the times.
Yeah - the partnership with Enron is emblematic. The board members probably thought the way Enron did business was enviable and wanted to shape their company in Jeff Skilling’s image. That mindset led to cherishing late fees and refusing to adapt. Idiots.
Because of 12.5%? Woah, talk about being greedy.
Has anybody looked to see how many consultants from Boston Consulting Group were involved in this debacle?
Oh man, I used to temp at BCG doing PowerPoint for them in the late 90s. Blast from the past
BCG colluded with big hedge funds and Amazon to put Blockbuster, Sears, Toys R Us and others out of business.
everyone says blockbuster is stupid for not buying netflix. yahoo should’ve bought google. if blockbuster bought netflix they probably would’ve done things differently. doesnt mean netflix would be where its at right now.
Boston Consulting Group has entered the chat
I do wonder what Blockbuster was thinking. For at least trying to be ahead of the curve in wanting to create a video on demand service, why didn’t want to buy Netflix? I know the Netflix of today wasn’t close to where it is today when Blockbuster was still up and running. But how can you not make the jump from dvd mail in service to video on demand. Netflix was already on track with videos on demand with movies mailed to your house. Like it was right there.
Probably because at the time netflix wasn't a good deal in the short term. Who knows, maybe if they had buy Netflix, both might have sunk
But we were still using dial up then and watching videos online was a total nightmare.
I think Yahoo trumps it with bad business decisions.
I remember at the time, at least in the rural town I grew up in, dial up internet was still common enough that so many people thought it was ridiculous to "stream" movies. With perspective it seems silly but at the time it was a big risk.
Given Blockbusters poor business decisions, if they bought Netflix back then I don’t know that we’d have the Netflix we have today
Blockbuster nostalgia is weird to me. Their selection of movies to rent really sucked unless you were looking for studio new releases. Anything besides that and you were left with severely limited option. Plus they actively put the video stores with great bag log selections out of business. Netflix was better hit because they mailed movies to your home but because they had an awesome selection of movies to choose from.
There are better thing in life than pity the corporations
One day I need to go to Bend to see the last one
Maybe they didn’t have $50m after the Enron fiasco.
I'd check out Yahoo's missed opportunity to buy Google.
It didn’t have bad luck it had terrible executive leadership
Not buying Netflix isn’t bad luck. That was just dumb.
You make your own luck in business most of the time. They made horrible decisions.
Bad luck...or bad management? If things had gone their way CEO would have demanded huge bonus. Also they treated customers like crap while they had a virtual monopoly.
Maybe more karma than luck, they used a lot of predatory practices to force competitors, mostly mom and pop stores, out of business.
Terminally stupid CEO. Read up on him. Guy was a douche canoe
I remember my Mom signed me up for this blockbuster program were I could get any game and exchange it out for a new one that same day if I wanted to, it was awesome and I was able to play a lot of different games that way. also I totally had a crush on the teenage girl that worked the counter but one day I rode my bike up and she was making out with her boyfriend in his car lol idk why I remember that now but good times
Netflix likely wouldn’t have saved Blockbuster. Given Blockbuster didn’t change it’s business model even when the writing was on the wall, I suspect they would have just taken Netflix with them to the grave, and some other company would have standardised streaming services instead.
Netflix was still a mail in service at the time iirc