What If Blockbuster Had Taken Netflix Seriously?
Remember when you’d go to a Blockbuster Video store and rent a movie to watch at home on your VCR? Back in the 1990s unless you went to a theater to see a new movie release, Blockbuster was THE way to watch anything that came out of Hollywood. Of course this was during the pre-streaming era, when the only other way to watch a movie was for a tiny little company called Netflix to mail (yes, snail mail!) a CD of the movie to your home.
By September 2000 Blockbuster was at the height of its power and the bankruptcy vultures were circling over Netflix. That’s when Blockbuster invited Netflix cofounders Reed Hastings and Marc Randolph to their Dallas HQ to discuss a possible acquisition. In his new book That Will Never Work, Randolph describes in vivid detail the events leading up to the meeting and what happened next.
Spoiler alert . . . in the meeting Blockbuster’s CEO John Antico asked Reed Hastings how much they would sell Netflix for. Hasting replied with $50M, which was met with smiles bordering on laughter in the room. Of course the deal didn’t happen. Since then the two companies fates have gone in polar opposite directions. Blockbuster was overtaken by digital downloads and then streaming, and eventually closed its last store in 2014. And of course Netflix led the streaming revolution that eventually devoured Blockbuster.
Besides the sheer fascination of the story itself, what happened in that fateful meeting has become a cautionary tale for just about everyone in the business world. The lesson is this – no matter how successful you are in the moment, you need to expect that market innovation will eventually overtake you, which is why you need to be the one doing the innovating. In that meeting Blockbuster’s Antico actually stated that “the dot-com hysteria was completely overblown”, because their current success wouldn’t allow him to imagine the transformative innovation on the horizon.
This lesson not only applies to corporations, but also to teams and individuals. Even if you’re wildly successful right now, you need to keep learning, pressing, and innovating to be on the bleeding edge of whatever success looks like tomorrow. Otherwise we risk ending up in the dust bin of history, just like a certain video chain who ruled the home entertainment industry 20 years ago.