The "Gravity" of Blockbuster

As an addendum to my recent essay “The Gravity of Success,” this week’s headlines regarding Blockbuster warrants a quick note. It was reported this week that as of January the last of Blockbuster’s stores, along with their DVD mail service, will close. After declaring bankruptcy in 2011, the enterprise once known for offering families all across North America a “Blockbuster Night” will shutter its last remaining doors. The amazing thing about this story is not the ultimate success of on-line vs. traditional retail models (though this is a great example of that dynamic,) but the speed of this decline and my personal experience with it that began at a dinner in Dallas in May of 2002.


Now more than eleven years ago, I was in a role that oversaw the Blockbuster relationship for The Coca-Cola Company. We had a team of bright and talented sales and marketing executives working on that business and we looked upon it as a very strategic commercial and marketing relationship. I remember quite clearly being in Dallas for meetings at Blockbuster’s Headquarters in late May of 2002, working on key partnership marketing plans and it was in that bar, now more than eleven years ago, that I witnessed a live version of the concept “The Gravity of Success.”


Quite coincidentally earlier that day, in late May of 2002, Netflix had announced their plans to go public. At that time, Netflix was just a few years old, primarily a mail order DVD rental company, which had never generated a profit. The “dot-com” bubble had recently burst, and many on-line startups were failing. I remember everyone gathering at the bar and the Blockbuster team toasting and laughing about the breaking news regarding Netflix. One of their team laughed that with over 9000 stores , spanning towns large and small across North America and across numerous other countries, who would want to wait for a DVD to come by “snail mail” when you could stop by at your local store and enjoy a “Blockbuster Night.”


In hindsight we all laughed and toasted what seemed to be the folly of that day. But now, just eleven years later, Blockbuster will close the last of their 9000 stores, and Netflix is soaring and innovating to new heights. It’s amazing in hindsight to see how wrong we all were, and how influenced we were by the historic drivers of success at that moment. In 2002, those 9000+ stores seemed like a huge barrier of entry for others, and that the physical experience of stopping by at your local Blockbuster was a convenient and entertaining part of your weekly routine. For Coke, all of those stores, and all of those coolers, and all of those shoppers were pure gold, both commercially and as a marketing resource. None of us that night took a second to think about the “virtual currency” that Netflix or other on-line media sources would someday dominate. We all missed it that night; we were all caught in “The Gravity of Blockbuster.”


I share this story not only to connect to this week’s headlines, but to reinforce that we all need to learn from history, and sometimes form our own history! The memory of that night in Dallas makes me humble and attentive as I reflect on my current work world and our current levels of success. The memory makes me want to be more critical of our current business drivers, and it is pushing me to try to “look over the horizon” at the possible drivers of our current success, our “9000 stores” that may be our Achilles heel in the years ahead. Equally I am attentive to watch the competitive landscape more attentively. Eleven years ago Blockbuster wrongly dismissed Netflix as a competitive threat. Wrongly dismissed to their detriment and demise! What new innovative small businesses and brands am I being too casual and complacent about? Reflect on your own realities as you read this essay and be mindful and active about lessons you can learn from “The Gravity of Blockbuster.”