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By Thomas Baekdal - September 2010

Blockbuster is busted - Finally

Blockbuster has finally filed for chapter 11 bankruptcy, so now there is another thing for Netflix's actors to look happy about.

This doesn't come as a surprise to anyone, Blockbuster's business model is terrible flawed. It is based on running brick and mortar shops, and focusing on selling plastic - not selling or renting movies. Even when faced with the obvious answer, their relentless focus on not doing anything to damage their retail business has now caused them to loose both?

I don't think this will be the last time we hear from Blockbuster. As a big company, a sense of reality doesn't seem to have much influence. They will probably reorganize the company, screw over their business partners (specifically all the landlords they owe money too), reemerge with another business model that doesn't work, fire a huge chunk of their most valuable employees, lose even more money, see a massive drop in stock price, and finally get bought for a measly sum by an investment firm.

Note: Image credit - The Consumerist

It's going to be the most boring event ever to watch, so my suggestion is to simply ignore them completely. We all know they don't have what it takes to compete in a digital world.

What now Hollywood?

The more interesting story is to look at what the old-geezer at Hollywood will do. They have tried everything in the book to keep Blockbuster alive. Everything from giving them a 28 days competitive advantage over Netflix - by delaying new releases, to heavily promoting movies releases on Blue-ray.

When was the last time you saw a Hollywood ad about streaming HD movies over the internet? Never! It's always "Now out on blue-ray" or "On demand via your cable TV provider." They gambled they could win by applying enough force to the old business models.

So Hollywood? What do you think of your strategy so far?

How long is it going to take before you realize that your business is not based on distribution or producing plastic circles with print on them?

Why is it so hard for you to realize that your real business is to give people a good experience for roughly two hours? And that the way to success is to remove any obstacles between that experience, and the people who want to enjoy it.

That's why Netflix is winning. They are making your experiences instantly available, effortless, on any device. It doesn't matter where you want it, Netflix will be there too.

TV, Xbox, Wii, iPad, iPhone, Android - it doesn't matter. Want to watch a movie on the train? Sure, here you go. Want to watch it in your bed? No problem. Finding yourself completely stuck in a traffic jam that seems to go on for hours? Here's something to pass the time with. Can't figure out what to watch a quiet Sunday evening? Here are the all the latest movies your friends really liked ...ohhh... and we know you would like the new Robin Hood movie.

Make a choice and watch it instantly, wherever you like, whenever you like.

That's the business model. It's not rocket science...

See also:The Real Challenge of TV's Future (Baekdal PLUS)


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Thomas Baekdal

Founder, media analyst, author, and publisher. Follow on Twitter

"Thomas Baekdal is one of Scandinavia's most sought-after experts in the digitization of media companies. He has made ​​himself known for his analysis of how digitization has changed the way we consume media."
Swedish business magazine, Resumé


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