When is the last time you visited a movie rental store? It’s likely been more than 10 years. I remember going to Blockbuster with my family when my children were little to pick out our Saturday night movies. The kids always cared more about the snacks than picking the movies! My kids are all in college or grown now, so that tells you how long it’s been since I visited what was once viewed as one of the fastest-rising corporate brands in the world. Where are they now?
I recently watched a top-rated documentary on Netflix (ironically) about this fascinating rise and fall called "The Last Blockbuster." This film is about a quaint little store in Bend, Oregon, that is still open due to the sheer will of its owner and the nostalgia factor for its customers. Many of you have fond memories like I do of visiting Blockbuster, but have you ever thought about what happened to this once behemoth company?
‘The Last Blockbuster’ is told in part through the eyes of celebrities who actually worked in the stores, among them director Kevin Smith, who immortalized those times in the movie "Clerks." It is narrated by actress Lauren Lapkus and includes many interviews with comedians, actors and filmmakers who have fond memories of what was often their first jobs.
In the movie, we learned that the original concept of the company was relatively innovative. At the time, movie studios were charging upwards of $100 to purchase videos for home use. Blockbuster’s model was to buy them by the thousands and rent them to consumers for far less than it would cost to buy them. Foolproof, right?
Very quickly, this model became a huge source of revenue for movie studios, who weren’t selling that many videos due to their pricing structure. Viacom billionaire Sumner Redstone bought Blockbuster in 1994 for $8.45 billion and it exploded from there. At its height, Blockbuster had 9,000 stores. But it didn’t continue innovating to maintain its market share. Can you guess what happened?
It is rumored that Netflix, which was founded in 1997 to take the Blockbuster concept a step further with DVD rentals by mail, offered to partner with Blockbuster for a mere $50 million, but was turned down. As of this year, Netflix has 203 million subscribers and is worth approximately $30 billion. It is a publicly traded company currently valued at approximately $500 per share. Blockbuster, on the other hand, is down to a single store and declared bankruptcy in 2010. What does a story like this teach us?
KEEP YOUR FRIENDS CLOSE AND YOUR ENEMIES CLOSER
Whether Blockbuster viewed Netflix as a threat or nuisance doesn’t matter. They had an opportunity to partner with what should have been seen as a threat, or at least healthy competition, and didn’t take it. That simple lack of foresight greatly contributed to their complete downfall and eventual bankruptcy. Do you keep tabs on what your competitors are doing in your markets? Are they offering services you don’t, or amenities that cost little but make tenants’ lives easier? Do they make doing business with them easier than doing business with you? If your answer is Yes to any of those questions, an important analysis of your business is in order.
ADAPT OR DIE
Blockbuster was worth $8.45 billion in 1994, and by ignoring the future of entertainment tech, quickly fell from grace. Sumner Redstone sold the company to Dish Network in 2011, less than 20 years later, for just $320 million and tons of debt. It’s 9,000 stores are gone, and a single location in Bend, Oregon, is hanging on due to the grit of its owner and devotion of its town.
What innovations have you seen from your competitors that you can implement with your own properties? Have you asked your property managers what they are hearing tenants ask for? It may cost a little more to give your properties a leg up on the competition, but an analysis of the long-term value may show that it’s worth it.
DON'T BECOME THE NEXT BLOCKBUSTER
As "The Last Blockbuster" shows, it was Sandi Harding, the long-time manager of the final Blockbuster location, which managed to keep the store open for so long. In the documentary, she was shown as being loved by former employees and appreciated by the community for everything she did. However, even being beloved could not save the store from the corporation's shortsightedness and unwillingness to change.
When analyzing competitors and asking for feedback from tenants, don't just make empty promises for enhancements you don't plan on keeping. Blockbuster did this by promising to have copies of movies not found elsewhere, but never upheld the promise. By gathering ideas from across the organization and industry and following through with implementation, you not only improve your properties, but gain the trust of your tenants as someone that listens to their ideas.
WHAT CAN YOU DO?
The failings of Blockbuster should not be seen in your property management. Blockbuster lacked a long-term strategic plan that was flexible and open to improvements by innovations in the industry.
Take a look at your strategic plan. If you don't see in your short-term or long-term plan that you should focus on evaluating competitors and gathering tenant feedback for improvements, then it’s time for reevaluating your plan.
Ascent can be a great asset in revitalizing your strategic plan. Whether you want to work 1-on-1 with me or have your entire team involved in the process, I can help set your property on the right path with a realistic growth plan by utilizing the best ideas for your property. Call or email me to get started.