I just read that Blockbuster will not be going bankrupt — yet — but that they have found a way to stay afloat for a while longer, which includes being delisted from the New York Stock Exchange. They were trading at 19 cents a share. This just highlights how much the internet has changed the world and will continue to change the world in the coming years. There is no doubt in anybody’s mind that companies like Netflix have completely reinvented the way that we as consumers view. consuming films and television. Netflix itself has changed a lot since its inception in 1997. It is 2010 right now and I’ve had an active account with Netflix since around 2002, which is a whopping eight years, and since then the evolution of Netflix has involved free, streaming movies and television episodes over the internet.
There is simply no reason for any sort of service like Blockbuster at this point in time. The other giant in the industry is Redbox, which is just as it sounds, a kiosk outside of supermarkets and drug stores that offers recent releases for a discounted rate and no sort of contractual obligation other than returning the disc after you’ve viewed it. Right now rental kiosks account for 19% of the marketshare for DVD rentals, with the mail services such as Netflix at 36%. Together, they are the majority and will most likely continue to grow. Both services can co-exist because of how diverse the market is right now. A company like Netflix caters to a certain audience; ones who use the internet often, who enjoy newer technology and who have some disposable income, while Redbox appeals to nearly everybody by making the process simple and inexpensive.
Netflix has nothing to worry about and will not for a while, as for right now they have the market cornered through innovation. Kiosk services like Redbox are a great idea and will continue to thrive, but are still built in the traditional retail model of physical location and offering a tangible product. Of course they do what Blockbuster wishes it could do; have multiple locations per square mile that involve next to no overhead (building costs, utilities, employees). This is all well and good, but Netflix makes a much different mode of attack for distribution of their goods; the internet.
We are still at a point where the internet’s tremendous growth hasn’t caught on with every American, as there is an older generation that went most of its life without it and while they have begun to embrace the internet, cannot grasp how younger generations cannot seemingly live without it. Netflix’s brand is without question right now in the film industry, as it has gone far beyond sending out red envelopes with scuffed DVDs in filthy paper sleeves. Netflix has gotten its brand out into the world by offering their streaming services to as many people as they can. Their streaming service began on their website and then moved on to a few set-top boxes such as the Roku. From there they struck deals with Microsoft for the XBox360 console and multiple DVD player manufacturers, then to other game console developers and the latest big step is television manufacturers themselves. Basically, if you own almost any piece of modern technology that allows you to watch something on a screen and can hook up to the internet, you can view Netflix on it.
So I guess the whole point of this is to see how innovation will always in the end topple stagnation. Blockbuster and other retail rental spots are stagnant and have spent the past ten years playing catch-up to a market that was moving far quicker than they are. As a person who has been in a corporate environment for the past three years inside of a giant, lumbering-yet-stagnant industry, I’ve watched the world move on and I’ve watched how my company and our competitors conduct business. I’ve seen the innovations made by companies within the industry in the past twenty years and I’m astonished by just how little has changed and just how sterile the environment is. To see an industry from the inside be so afraid of its own shadow and to step out from the shadow is to see it walk right off of a cliff eventually without ever seeing it coming, as it was so busy looking back and getting lost in trying to catch up to see what is before them.
I’ve watched committees being formed, I’ve watched the flow of ideas where a great idea is pitched, people get excited, and then it is analyzed, torn apart and then put on the shelf for years because it threatens the status quo and ultimately, it is scary. This is what happened to the film rental industry and what will happen to many more.
The music industry is a mess, with iTunes and Amazon still selling music in a traditional way with non-traditional (yet still somewhat traditional) delivery. There has yet to be a Netflix for music as everybody is so afraid or trying to over-innovate and make music more “social.” I’m sorry, but Netflix does offer me suggestions, but never do I turn on a movie on Netflix and am then forced to sit through a suggestion of what I might like. That is what services like Pandora offer, and while that is OK for some, the complete lack of choice and the poor quality of services like this make it built more in the incredibly antiquated model of the radio station than a direct-to-the-consumer service model that has thrived for other companies in other fields.
People need to wake up.
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