RIP Blockbuster

After a ten year battle with irrelevancy, Blockbuster has succumbed to the powers of disruption and announced it was closing its remaining stores today. The once high flying company is now dead.

This must have seemed like an impossibility from the Blockbuster executive suite at the turn of the century. Everybody knows that Netflix killed Blockbuster. But why did Blockbuster just sit back and let it happen? When you are the dominant player in the market it is often difficult to give credence to threats.

Didn’t Blockbuster have every advantage and opportunity to adapt its business model to a changing world? It certainly had the ability to understand its customer base and anticipate demand for a subscription based model. Even if it didn’t come up with the idea, it had the resources to smother a fledgling Netflix before it was able to crawl out of its crib. Instead, Blockbuster executives focused on protecting their core.

Blockbuster let Netflix disrupt its business because it was unwilling to disrupt itself. By the time the company responded to the Netflix threat it was way too late. Netflix, on the other hand, is actively disrupting the very business model that put Blockbuster out of business. Had they not led the way to streaming subscriptions, someone else would have ultimately killed them as well.

Dominant market positions are difficult to sustain over time. If you are sitting on top of the world with a premium offering at a premium price, you better actively look for ways to disrupt your position or expect someone else to do it for you. What can we learn from the Blockbuster tragedy?

Market leader, disrupt thyself. RIP Blockbuster.