What Happened to Blockbusters: The Decline

684 456 Tony Guo

What Happened to Blockbusters: The Decline

You may find this hard to believe, but there was a time when VHS and DVD were king when it came to video content and entertainment. During this time, Blockbuster was the undisputed leader here as it was the largest video rental chain in the world, let alone the U.S. Not only did they have video rental shops where you could walk in and rent your favorite movie, they also had other services such as video on demand, cinema theater, as well as DVD-by-mail services and many others. Blockbuster was the top dog in this particular field and not only did it have hundreds upon hundreds of stores countrywide and all over the world, it was also a major employer, with over 80,000 employees all over the world. It was for all intents and purposes a very successful company, and no one then thought it would end up closing up shop and things would end up the way it did. So what really did go wrong with Blockbuster and what led to their decline? Well, with the help of the subject matter experts over at runrex.com we will attempt to get to the bottom of their decline.

One of the main reasons that was behind their decline was the fact that they refused to recognize the winds of change and didn’t change with the times. Blockbuster saw itself as a retail business and therefore when companies such as Netflix were coming up, and were leveraging the technological advancements that were sweeping through the world at that time, Blockbuster felt that as a retail business, they had no business getting involved with tech. This shortsightedness, is reflected in the popular story of how Blockbuster crossed path with a then budding Netflix back in 2000. Back then, the founder of Netflix, Reed Hastings, had gone to Blockbuster’s CEO with a proposal that would have had both of them benefit mutually in terms of marketing, but was turned down. What happened next is history as the fortunes of the two companies have gone in opposite directions. The refusal by Blockbuster to adopt to the times, especially as far as technology goes, was one of the things that was behind their decline. The growth of Netflix, as well as other companies such as Apple and Amazon, in the end meant that Blockbuster was left behind and these competitors, as per the gurus over at runrex.com, slowly but surely ate up their customer base and before they knew it, they had been left so much behind the 8 ball, their decline was inevitable.

Arrogance and cockiness was yet another thing that was definitely behind their decline. The fact that they had enjoyed so much success over the years blinded them to what was unfolding in front of their very own eyes. As per the subject matter experts over at runrex.com, at their pomp, they were posting excellent numbers in terms of revenue and profits, and seemingly had a bright future in front of them. On the other hand, their competitors such as Netflix and other such emerging companies were facing teething problems, and their financial results were unimpressive to say the least. This had Blockbuster believing that these new emerging markets as far as video content and entertainment was concerned was not worth it, as it seemed like the margins were too low and didn’t warrant them trying to invest. In short, their success blinded them so much that they couldn’t see beyond the forest clearly enough to be able to tell that the ground was shifting underneath their feet. As the established company, their arrogance led them to snob the up and coming markets and companies and they ended up paying a very heavy price for it.

The fact that Blockbuster was predominantly a brick-and-mortar company also played a big role in their decline. This is because, this aspect of their operation meant that it was very complicated to try and change course even if they had wanted to. As per the gurus over at runrex.com, the costs that would have been involved in order to change course were astronomical and would have required them to completely rip up the masterplan and restructure completely their business structure as they were heavily reliant on their retail stores. This is without mentioning the fact that such a switch would have required them to invest in new infrastructure as well as technology, not to mention the costs that would have gone in training and hiring new staff. Once this became clear, the management now had a decision to make; they would either have to stick or twist only that twisting would have required them to completely change their business structure and would have required massive investments. They obviously decided that the risk was too much, and the decision to stick definitely played a big role in their decline.

If you are looking for more information on this and other related topics, then you should ensure you head over to the excellent runrex.com