Blockbuster: A Canary in the Media Coal Mine?

Blockbuster: A Canary in the Media Coal Mine?
underlying image courtesy

I was in New York yesterday visiting a friend who just moved to the area. During a tour of his neighborhood, we stopped to see if there were any good deals at a Blockbuster Video that was closing. It sparked a discussion of Blockbuster’s business model and why they were struggling for survival.

My friend was surprised to hear that Blockbuster may end up in bankruptcy, and he commented that it seemed like they had kept up well against Netflix with their online DVD rental service. I pointed out that it had turned out to be a case of “too little, too late”, as most of their customers who would have been interested had already switched to Netflix. Plus, Blockbuster was stuck between a rock and a hard place; encourage your customers to move to an all-you-can-eat mail order, and you’re driving people away from your retail stores. Spend too much time focused on the retail stores, and you run the risk of losing out on future trends.

Blockbuster is still trying (and potentially failing) to figure out this balance, but they aren’t the only retailers or even industry in this situation. Bookstores are walking the same thin line. If B&N and Borders DON’T spend time training their customers to become ebook customers, there’s a good chance someone else, like Amazon or Apple, may swoop in and steal them away. But if they spend all their time developing new ebook strategies at the expense of the existing retail ones, they’ll stagnate their current growth and possibly lose out anyway.

Newspapers are in a similar bind. Everyone is predicting the death of newspapers, and many papers have moved to online-only circulation, while others have created paywalls where full access requires a paid subscription. Still, there’s plenty of readers who are “old school” and prefer their newspapers in paper form (trust me, you should see the pile of Wall Street Journals and New York Times that get delivered to my office each morning). So again, how do you bridge the consumers who are turning to a new form of media while still trying to keep the existing business model going?

I don’t have any answers, but I do think it’s an interesting parallel between Blockbuster and traditional publishing in the struggle for their futures. Much like publishing, Blockbuster had a great business model for a physical media world, but it was unable to move fast enough or be limber enough to balance the old and the new. Hopefully, it isn’t a sign of where bookstores and newspapers may be headed, and that Blockbuster will simply be an unfortunate victim of the digital world, and not a canary in the coal mine for the printed word!

As an Amazon Associate, we earn from qualifying purchases. If you are shopping on Amazon anyway, buying from our links gives Gear Diary a small commission.

About the Author

Zek has been a gadget fiend for a long time, going back to their first PDA (a Palm M100). They quickly went from researching what PDA to buy to following tech news closely and keeping up with the latest and greatest stuff. They love writing about ebooks because they combine their two favorite activities; reading anything and everything, and talking about fun new tech toys. What could be better?

4 Comments on "Blockbuster: A Canary in the Media Coal Mine?"

  1. gbmiii [ff] – Blockbuster: A Canary in the Media Coal Mine?

  2. gbmiii [ff] – Blockbuster: A Canary in the Media Coal Mine?

  3. I’ve been wondering how long until Netflix eats into their own model with their streaming capability. Right now, the quality of the streaming that you can get on your iPad isn’t all that great (as Dan noted, I believe); but once the vast majority of the library is available as a streaming video, why both with the DVDs at all? I mean, I watched the entire first season of Leverage with ‘way greater ease than if I had had to wait for the DVDs. The picture quality wasn’t quite as good, but it was still a lot better than having to wait for snail mail.

    Just a thought.

    • But that’s not really a negative for Netflix. If you’re still buying access through them, they’re happy. Plus they aren’t paying postage both ways on a DVD, and streaming media doesn’t get scratched up or damaged in transit like DVDs do. Streaming is just an extension of what netflix already does quite well.

      The problem with Blockbuster is that their newer, shinier model (mail order) conflicted with their old model (get people in the store, charge them enormous late fees, and upsell them on pricey candy). Whether you use mail order or streaming it’s all the same to Netflix, and probably doesn’t come out so different in terms of their overall costs (maintaining physical media and mail costs vs maintaining servers for streaming video).

Comments are closed.