You probably read the title of this article and thought, “Wait a minute, is Blockbuster even still in business? I bet this is one of Ed’s bait-and-switch articles…” And you would be right! Blockbuster is still on life support, under the Dish Network satellite TV umbrella. But I’m not here to tell you about anything Blockbuster itself did that will help you grow your business.
So… a guy named David Cook started out in business supplying software services to oil and gas companies in Texas. In 1985, his wife suggested he start renting videocassettes instead, and Blockbuster was born. At its peak in 2004, Blockbuster had 9,094 stores across the world, 84,300 employees, and $5 billion in market capitalization.
And then it all came crashing down. Losses, store closings, more red ink than you’d find at a crime scene, and eventually bankruptcy.
What happened? Netflix. Redbox. Amazon video. Blockbuster found itself in the buggy whip business just as cars were picking up speed. And there was no Plan B. There was no way for Blockbuster to add enough value to their videotapes to justify getting into the car, driving through the rain or the cold to a video store, and hoping the latest hit you wanted was actually in stock. (Remember those racks and racks of empty plastic trays?) Customers didn’t want videotapes at all. They wanted the content on those tapes. And they were perfectly happy to ditch the physical tapes when they had the chance. Today, most homes don’t even have a VCR to play them. (Does yours?)
So what’s the marketing lesson? Well, it doesn’t matter how good your marketing is if you don’t have something people want to pay you for!
Capitalism is brutal. It’s like watching cheetahs go after gazelles in Mutual of Omaha’s Wild Kingdom, except the cheetahs are wearing pinstripe suits and the gazelles file Chapter 13.
If you’re in the business of recording history for your clients, on the tax side, the accounting side, or both, that’s fine. (For now, at least.) But there are plenty of “Netflix”-type startups prowling the deep grass in the savannah, just itching to take you down. Just because you don’t see them doesn’t mean they aren’t there. (And denial isn’t just a river in Egypt.)
You can get out of the recording history business (by adding tax planning, business consulting, part-time CFO, financial services, and similar enhancements) and thrive. Or you can wait out the cheetahs and hope they don’t find you before you’re ready to retire.
We’re here if you choose Door Number One!