Saturday, November 20, 2010

Week 44: Bye-bye Blockbuster

For those of you who know me it will come as no surprise that I am hilariously, sadly behind in the great American pastime that is watching movies. A few weeks ago, a group of guys at the office went through a list of the basics, and I hadn't seen 90% of them. I'm talking Indiana Jones, Tommy Boy, Ferris Bueller's Day Off kind of basic... Embarrassing, I know. For some reason I've instead been spending my time learning about random topics and forcing Sunday night writing deadlines on myself. As a kid, I was too busy learning state and country capitals to watch movies (thanks, Mom and Dad.... no, really). I can't tell you how many times someone has quoted something, everyone laughs, and I say "what's that from?" It is basically a miracle that I have been able to exist in a very social, often judgmental line of work without knowing where "Show me da money!!!!" comes from.

So with an eye toward the inevitable end of my 52 week project, a new service has entered my life... One that might just fill my soon-to-be void. I'm talking of course about Netflix. My girlfriend and I recently signed up for a free 30 day subscription to Netflix. I can feel your eyes rolling. Why am I writing about a service you not only know, but likely already use? I want to frame the Netflix story in a very specific way, because like my prior posts on ePublishing and on Apple, the Netflix case study represents how understanding and embracing a new way of thinking is the only way to succeed going forward. Any entrepreneurs out there, listen up. Four years ago I wanted to make a website that would help people identify and remember the songs they heard in random places, or had stuck in their heads. My idea was to create a collaborative, web-based community that could somehow help users based on just the few song snippets they knew or remembered. One year later the iPhone came out, the Shazam app was invented, and my idea seemed antediluvian. Needless to say, I felt pretty stupid. But it was a great learning experience. To succeed in the future, you have to recognize that any business you create must be flexible enough to survive and adapt to not just a more connected world, but to an exponentially more connected and efficient future world. Your assumptions must not be lazy or based on what has worked in the past, and more than ever, you must be laser focused on the convenience and functionality of your service or product.

Let me start by telling you what Netflix it is not. It is not Blockbuster. An ex of mine worked at Blockbuster, and I could never figure it out. To me it was an enigma - why were people were willing to drive all the way to a store (often to find that their desired movie was not available), wait in line, pay $4, and then drive back to drop it off? And oh by the way, they would then slam you with late fees if you didn't return that sucker in a few days! What a crappy business model... Netflix understood that while some people for some period of time would go through the tedium described above, in an increasingly digital world, the Blockbuster model could never succeed. So they started with a monthly subscription service that delivered DVDs of the movies you picked to your house. You would watch the movie, and could keep it for as long as you'd like. When you were finished, you would put the DVD into a pre-paid envelope, place it in your mailbox, and it would be sent back to Netflix. All for $8.99 per month. More convenient, less expensive. Pretty cool.

This delivery based part of the service continues to exist, but most recently Netflix has moved to a newer, better model: streaming video. As I type this from my iPad (which can stream Netflix content from anywhere, by the way... as can the iPhone), my roommate is streaming a movie from Netflix, as is my girlfriend on a different laptop. The TV is turned off. Neither of them know my post is focused on Netflix, and that they are my guinea pigs. But this wireless, on-demand delivery of video entertainment is becoming increasingly common. Movies and TV had to be the laggards to eBooks and iTunes. The file sizes are large by modern standards, and the bandwidth and infrastructure had not been enough to support wireless mass distribution. Given the ubiquity of 3G and now 4G phones, as well as wireless internet, this is no longer the case. From your phone you can now video chat with someone else, so why not watch TV and movies in real time, from anywhere?

This is not to say that TVs are obsolete, by the way. Sony has recently come out with a new, internet friendly television powered by Google TV. Netflix predicts that within one or two years all TVs will have wifi, and therefore movie streaming capabilities. Think about this. Cable companies must be shitting themselves. No wiring necessary. This is the future, ladies and gentleman. I've harped on this in prior weeks: brick and mortar book chains are done, Blockbuster is done, cable companies will be brought to their knees. And they deserve it. In New York City each time a person moves to a new apartment, Time Warner charges an "installation fee", as if that unit had not been wired up fifteen times previously. Again, crappy business model.

The retort here is simple: Blockbuster has already filed for bankruptcy, and everyone already knows about Netflix. Fine, conceded. My point relates specifically to DISTRIBUTION - Netflix's new streaming strategy is the future. Blockbuster thinks it is reinventing itself by copying Redbox's $0.99 rental kiosks. This is laughably short-sighted. Who cares about a DVD rental kiosk for $0.99 when your TV is connected to the internet and you have a streaming service that delivers in real-time the content you want? Nobody. I will say it again: bye-bye DVDs, bye-bye new and improved Blockbuster.

Thanks to Netflix, last night I checked off one of the must-sees: Jerry McGuire. That's right -- I now know where show me da money comes from. You can bet I will be laughing with the rest of them next time. And you can bet I'll pay the $8.99 per month once my free subscription expires.


  1. It is about time you put logged some research hours on America's artform ;)

  2. Dear anonymous,

    Can you please elaborate? Not sure I follow...


  3. while I enjoyed this post I am very sad. By the way, Blockbuster tried another program called blockbuster online where you would get dvd's by mail and you could exchange them in-store for another rental. Once the barcode was scanned in the store blockbuster would mail the next movie to you, so you would have your in-store rental and the next movie would be on the way. This never really took off, I guess they waited too long to put it into practice and it seemed like netflix took over almost overnight. Blockbuster is still around, not nearly as many, but Jon works at the one in Waynesboro, PA.

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