But at some point, they lost sight of what business they were really in. Never forget what you’re really selling.įor years, Blockbuster dominated the video rental space. On July 1st of the same year, Blockbuster was de-listed from the New York Stock Exchange and filed for bankruptcy having incurred nearly $1 billion in losses.įor comparison, today, Netflix is valued at around $203 billion – a 4,060% increase from its valuation back in 2000.
In 2010, Netflix was signing deals with names like Sony, Paramount, Lionsgate, and Disney to help them grab a 20% market share of North American viewing traffic. In 2008, Netflix signed a deal with Starz to stream around 1,000 blockbuster movies and shows on its service.
Then in 2007, Antioco left Blockbuster, late fees were reinstated, and Blockbuster’s online efforts were put on the back burner. (Meanwhile, in that same year, the number of Netflix subscribers reached 6.3 million.) In 2004, Blockbuster did launch a Netflix-like online DVD rental platform, and even abandoned their unpopular (but lucrative) late fees for overdue rentals.īy 2006, subscribers for Blockbuster’s online services had grown to more than 2 million. In 1999, Netflix received backing from Groupe Arnault, giving them a $30 million cash injection that helped launch its subscription-based service. But as soon as I saw it, I knew what was happening: John Antioco was struggling not to laugh,” Netflix’s Marc Randolph remembers of the encounter.Īt the time, Antioco considered Netflix to be small potatoes, and would come to realize only too late that having an online platform would be the way of the future. “It was tiny, involuntary, and vanished almost immediately. Partly because Blockbuster laughed in Netflix’s face when they met to discuss the deal. And as part of the deal, the Netflix team would run Blockbuster’s online brand. In fact, in the year 2000 –perhaps realizing that it’d be easier to fight alongside Blockbuster than against them – Netflix co-founder and CEO Reed Hastings approached Blockbuster’s then CEO, John Antioco, with a merger proposal: So by the time Netflix showed up on the scene with its video rental-by-mail service, it appeared to be a classic case of David vs. Two years later, Viacom paid $8.4 billion to acquire Blockbuster.
When Netflix launched in 1997, Blockbuster was the undisputed champion of the video rental industry.īetween 19, the brick-and-mortar rental chain grew from its first location (in Dallas, Texas) to more than 2,800 locations around the world. Netflix story unfolded, here’s a short summary: The Rise of Netflix (and the Fall of Blockbuster) My goal with this post is to distill everything I’ve learned about these two companies down into a few actionable takeaways for marketers – sort of like this post on Zoom’s success story.īut first, for those who aren’t familiar with how the Blockbuster vs. There was a perfect storm of poor decisions and technological advances and other contributing factors that led to Netflix’s staggering growth…and Blockbuster’s equally staggering decline (when Blockbuster filed for bankruptcy in 2010, Netflix’s annual net income was $161 million.) Blockbuster saga has been told a dozen different ways, with a dozen different lenses applied.Īnd what I’ve come to realize (and this likely won’t come as a huge surprise)is that there’s no single explanation for why Netflix succeeded where Blockbuster failed.Īs is the case with most things in life, it was a nuanced situation. Or is it a story about the extreme hatred people have for late fees? Or is it really the story of a leadership shakeup that toppled an empire? It’s the ultimate example of technology disrupting a marketplace…
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