In a recent class of COMM 101 we were discussing how movie giant Blockbuster had filed for bankruptcy. I did some follow-up research and read some very interesting articles about why Blockbuster is going under. As stated in this article: http://www.boston.com/business/articles/2010/09/24/blockbuster_plots_new_strategy_in_bankruptcy/, the main factor contributing to Blockbuster’s huge losses is simply technology and their inability to deal with changes.
The changes began in 1999: Netflix, a burgeoning new company, began to accept DVD mail orders online, and they also offered subscriptions that allowed their customers to avoid late charges while possessing multiple DVD’s. This was obviously very attractive to Blockbuster’s clients, but the management dismissed it as a “niche service”.
Blockbuster’s blunder was that technology was clearly undergoing rapid growth, and there were new companies rising up to take advantage of these new discoveries, but Blockbuster didn’t. Blockbuster thought that its strong brand name and image could just bulldoze its way through the competition, but they were wrong. Being able to adapt to the constantly changing business environment is of the utmost importance.
Now, Blockbuster is trying to copy Netflix’s strategy of renting online. Before, Blockbuster was the leader; if they had been able to adapt, they would now not be the follower.
Blockbuster: failed to adapt