Blockbuster has struggled over the past several years to respond to disruption in the movie rental industry disruption led largely by online movie leader Netflix. This isnt news to our familiar readers, who will recall that weve profiled Netflix success before both here on the blog and in several issues of our newsletter Strategy & Innovation and that weve detailed Blockbusters struggle to respond (Innovators Insights #88: May 15th, 2007). Our perspective has been that Blockbuster has missed out on the online rental wave of disruption "Total Access is a response that is too little and comes too late.
But news this week shows that Blockbuster understands that it needs to do more. On Wednesday, it announced that it would be acquiring Movielink, a digital movie download service. The acquisition is a step forward for Blockbuster, but it moves them into a crowded area, where big players like competitor Netflix, Amazon.com and Apple already play and where success is far from guaranteed. In order to win the battle for digital movie downloads (rental and otherwise), Blockbuster will have to overcome some serious hurdles.
Movielink gives Blockbuster the content and the competency to let customers make digital rentals and purchases, but it doesnt make watching digital movies that much more attractive if it anchors movie watching to the PC. True, Movielink does allow you to watch movies on your television, but it requires a network with your PC, Xbox 360, or an AT&T set-top box. These arent impossibly high barriers Im sure that thousands of people overcome them. But for many millions of people (particularly those not living in a college dorm), Im sure the extra hassle and money involved take away from the attractiveness of digital rentals. If you have to move around a bunch of furniture to hook up your PC, buy an expensive gaming system or sign up for an expensive AT&T service, you might just opt to keep checking the mail to see what has comes out of your Netflix (or Total Access) queue.
I wonder to what extent digital film will follow the path of digital music only taking off when one company (Apple, in digital musics case) is able to create a seamless, integrated process from purchase to playing. If digital film does adhere to such a similar trajectory, I dont know how Blockbuster plans on winning against Apple (Apple TV + iTunes), against Amazons Unbox (partners with TiVo), or against any of the other seemingly endless list of companies developing set-top boxes or download services.
But at the very least Blockbuster wont be sitting on the sidelines for this next wave of disruption.
You Can't Win If You Don't Play the Game
Luke LangfordPosted by Luke Langford | Comments (1)
Discussion
Posted: Friday, August 10th, 2007 - 5:00 am EDT
That's a very good point you made about the challenge of getting people to switch to digital downloads of movies. If it's too hard, it won't be an attractive option.
Blockbuster has had that problem before.
Initially, when they first unrolled their Netflix-like subscription service, I tried to sign-up with Blockbuster, but their online system kept breaking down and wouldn't let me register. Even a call to customer service couldn't sort out the mess.
Finally, I just gave up and went to Netflix. The whole process is always so easy that I'd never try to struggle with Blockbuster again. It's sad because I actually preferred Blockbuster.
But I also agree that it's good that Blockbuster is expanding into new mediums. They have the brand strength in movie rental--as long as they don't make it difficult for their existing customers to use the new service, I think they'll have some success.
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