Blockbuster Bankrupt! Not a surprise, but still a shock

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The news came as a shock today: Blockbuster videos filed for bankruptcy protection in the USA today. I say it’s a shock – not because it’s a surprise, but because it is another deeply disturbing sign that the world of work is truly undergoing some deep structural shifts.

It is not a surprise at all that a company that started 25 years ago to feed the burgeoning home entertainment industry, but has failed to innovate in any significant ways since the onset of the Internet, is now basically dead. Blockbuster has been run out of town by companies like Netflix, Redbox and Lovefilm. These companies allow you to select (and queue up) DVD movies online, have them sent to you by overnight mail and you send them back by return (free) post when you’re finished watching. The next movie in your queue is then sent to you. And, of course, there are also the services made available by online content providers including BBC iPlayer, Skyplayer and others in the UK, and similar “on demand” services around the world. And this is clearly the future – online, on demand content streamed directly to your home over highspeed networks.

And Blockbuster was running bricks and mortar stores offering DVD rentals with a long term contract and two forms of ID required. What were they thinking? Read more on this story here (TechCrunch) and here (The Economist).


So, it’s not a surprise that today we say goodbye to their business model. Like the video machine, the cassette tape, the slide rule and the buggy whip (all once huge industries with specialist stores), Blockbuster is now consigned to history.

But even though it’s no surprise, it is still a shock. The shock is that concepts and products that seemed ubiquitous and part of the very fabric of our culture just moments ago are now anachronistic dinosaurs. How quickly that happens.

Could it happen to you?

As a quick exercise, I looked through my corporate client list for September and October, and asked that question. Could these companies face such disruptive forces in the next few years that they cease to exist by the end of this decade:

  • Rolls Royce – making engines for planes, ships and oil pipelines: YES, if we run out of oil
  • Microsoft – YES. After all, they killed the best wordprocessor of all time, Wordperfect, so someone could do it to them (I’d bet on Apple, but it could be Google or an as-yet-unknown upstart). And don’t forget what a donkey Windows Vista is…
  • Sabre – the people who do the processing of travel tickets for planes, hotels, etc: YES, if automated Internet bots become just a bit more intelligent and social media concepts (direct connections with no middlemen) enter the B2B environment
  • The Institute of Financial Planners – independent financial advisors: YES, if young people continue to be comfortable obtaining financial advice online, and don’t feel the need to save for retirement
  • NEC-Philips – the division selling telecomms devices: YES, but the least likely in this list, as long as they keep updating their devices to get more and more mobile. But the people I am speaking to are their channel partners, and they are a definite YES, as clients continue to want to disintermediate
  • Haniel – a diversified family-owned German group, including a number of different businesses, most of whom are in some of manufacturing: YES, only in so much as they have huge competition from much cheaper competitors in the East. Bizarrely, though, because we will continue to need “stuff”, they are reasonably safe from total extinction. But they definitely need to change how they engage with their clients and how they manage their value chain
  • Ernst & Young – YES. Why? Let me say just one word: Anderson (OK, another word, too: Enron). To be honest I think the remaining “big four” global firms are probably now “too big to fail” and will be protected, but still…

So, let me ask YOU again: Could it happen to you? Could anything happen in the next few years that could so disrupt your current business model that you will be consigned to history by the end of the decade?

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One thought on “Blockbuster Bankrupt! Not a surprise, but still a shock”

  1. Neil Sheridan says:

    Rising oil prices due to reducing supply may have the opposite impact – airlines would be forced to replace older less efficient engines / planes with newer ones, good for RR, providing they are doing development work to improve fuel efficiency.

    Abrupt complete cut off of oil supplies seems unlikely and in any case will be a bit of an apocalyptic scenario resulting in the failure of quite a large part of the worlds infrastructure and industry (for example, no more shipping of medicine, food, etc.) together with likely wars. RR going out of business will be the least of our worries!

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