Blockbuster Bankruptcy, Yet Again, Highlights How It's Not Easy To Just Copy The Disruptive Innovation

from the and-there-we-go-again dept

Late last week, there were a ton of press reports about how Blockbuster was preparing to declare Chapter 11 bankruptcy in September. It's not shutting down, but just trying to restructure its debt, get out from under a bunch of store leases and try, try again. That said, this is yet another example of the fallacy of the claim of many that if you have a good idea some big company will just come along, copy it, and be successful. It also demonstrates the huge difference between idea and execution.

Netflix had a good idea and executed well on it. But for years everyone thought it was only a matter of time until the company got destroyed, because all these bigger (at the time) companies were just going to copy Netflix and win. First it was Wal-Mart. The retail giant started a service that seemed almost identical to Netflix way back in 2002. Everyone thought there was no way an upstart like Netflix could compete with the likes of Wal-Mart. Fast forward two and a half years and Netflix took over Wal-Mart's online DVD rental business, because Wal-Mart's offering couldn't compete.

In between those events, in late 2004, Amazon stepped into the market (oddly, Netflix itself broke the news), by starting a Netflix-clone in the UK, though everyone expected them to bring it to the US as well. Even those who thought Wal-Mart didn't have the digital know-how to compete with Netflix figured that Amazon had a strong likelihood of success given its e-commerce success. Jump forward to 2008 and Amazon, which never brought the offering stateside, dumped the DVD rental business in Europe.

And, of course, there was Blockbuster. It came out with a Netflix-like offer around the same time that Wal-Mart did, and while it held on for much longer, it was just never able to build up the same sort of userbase that Netflix did, and now the company is going to declare bankruptcy and try to restructure once again.

It's really a fascinating case study. If you just looked at the simplistic analysis of "oh no, big company will crush small innovative company," you had to imagine that at least one of these firms would destroy Netflix along the way. Wal-Mart is a retailing giant, and even if it didn't have the digital chops, it had more money and distribution process efficiencies than Netflix could ever dream about. Amazon similarly had cash and distribution scale, along with that digital knowhow. And then Blockbuster had the relationships with Hollywood and a massively powerful brand name when it came to rentals.

But none of them were able to execute in this market nearly as well as Netflix, which really did focus on making the consumer experience top notch from very early on. None of this means that the small company always beats the incumbent. Certainly some big companies are able to step in and crush upstarts. But it's not nearly as easy as some people make it out to be.

Filed Under: disruptive innovation, dvd rentals
Companies: amazon, blockbuster, netflix, walmart

Comcast And Blockbuster Team Up To Make Us Wonder Why They've Teamed Up

from the hey,-Comcast,-you-have-a-fat-pipe dept

It seems like Comcast is a bit confused about the technology that it offers to its customers, which involves a generally fat broadband pipe to users, through which they can access all sorts of content, including on demand videos. So, you might think that if Comcast were to team up with a company like Netflix or Blockbuster, it would be to deliver streaming content. Nope. Apparently Comcast has done a deal with Blockbuster to deliver DVDs by mail. That's literally what the two companies are calling the product: "DVDsByMail." It's not like this hasn't been done for ages by both Netflix and Blockbuster. It's not clear what Comcast brings to the table here other than the "um... why?" factor it adds by wondering why Comcast is involved in something that doesn't involved delivering content over its own network, but using the US Postal Service's "network" instead.

Filed Under: dvds by mail, rentals
Companies: blockbuster, comcast

Do People Really Think Best Buy's Retread Of CinemaNow Will Eat Into Netflix And Blockbuster?

from the am-I-missing-something? dept

CinemaNow was one of the dreadful early Hollywood attempts at offering streaming videos online. Pretty much since it launched it was considered a joke that no one used. However, Best Buy last year announced a "partnership" with the latest owners of CinemaNow, Sonic Solutions, and have now announced that they've also bought the name CinemaNow. Best Buy has now announced it will be using the name for a new movie download service still powered by the same tech as the old CinemaNow. Got that? Of course, the press is saying will compete with Netflix and Blockbuster's streaming offerings -- and the stock of both companies took a hit. But, it's difficult to see what's all that compelling about this new service. Unlike the popular "all you can eat" models, Best Buy's will be $4 per movie download with $15 for full "purchase." Those prices seem quite high, especially when you can find used DVDs for half that or less. Plus, why bother going to Best Buy for all of this?

At least some in the press wonder what all the fuss is about:

Best Buy is hoping to rent digital flicks for $4, and sell permanent downloads for roughly $15 apiece. Those prices aren't all that different from what Blockbuster and Amazon.com have been trying to do for several quarters -- and those companies haven't exactly set the digital realm on fire.

Bulls will argue that Best Buy has certain chain-specific advantages. It can promote the service within its stores, and bundle home theater systems with pre-paid rentals.

So how is Best Buy's scorecard on that front? The company teamed up with TiVo for a strategic alliance last summer, yet the DVR pioneer continues to shed subscribers. Best Buy acquired Napster two years ago, yet Best Buy is still an afterthought in digital music.

Sure, Best Buy sells a ton of DVD and Blu-ray discs. Now, it can tack on digital copies through CinemaNow, and all will be perfect... right?

What's that? Wal-Mart teamed up with Time Warner four years ago to do this with the DVD release of Superman Returns, and it was retail kryptonite? Uh oh.

Basically, this seems like yet another case of "well if we offer service combined with a big brand, people will just have to use it," rather than any look at coming up with at truly compelling offering.

Filed Under: cinemanow, movie downloads, movies
Companies: best buy, blockbuster, netflix

Blockbuster Using Its Deal With Warner Bros. To Mock Redbox And Netflix

from the getting-desperate? dept

You may recall that, at the end of March, Warner Bros. studios did a new deal with Blockbuster that seemed likely to confuse the hell out of consumers. That's because Warner Bros., in its backwards-looking wisdom, had already done deals with both Netflix and Redbox to not make new release movies available to rent until 28 days after their release. There is no good reason for this, other than it pisses off customers all around, and makes them less interested or inclined to bother watching Warner Bros. movies (hint to WB: you have competitors).

But the Blockbuster deal seemed confusing -- because most consumers wouldn't be following these silly deals and wouldn't understand why a movie had been "released" but wasn't available via their favorite rental service. Apparently, Blockbuster's answer to all this is to mock Netflix and Redbox for not carrying new releases. Seriously. Reader Daylyn sends in the following ad he recently saw that points out that Netflix and Redbox don't carry this movie: Apparently, this is all part of Blockbuster's new WB-partnered advertising campaign: "hey, the movie studios screwed over our competitors! rent from us!" Looking around, it appears a few others have noticed this campaign as well, which went into place quite quickly after the WB deal was announced.

Filed Under: delays, dvds, rentals
Companies: blockbuster, netflix, redbox, warner brothers

Warner Bros. Latest Movie Release Strategy? Confuse The Hell Out Of The Market And Prop Up Blockbuster?

from the at-least-that's-what-it-appears-to-be dept

It's tough to figure Warner Bros. out these days. It got both Netflix and Redbox to agree to delay renting new release movies for 28 days in an effort to get more people to purchase DVDs. For this, it got hit with a class action lawsuit. But now comes the news that it's signed a new deal with the financially troubled Blockbuster that has no such restriction. This has lots of people scratching their heads. The obvious answer is that Blockbuster is promising Warner a lot more money...

But there's a bigger issue here, which goes beyond just commentators scratching their heads: this is going to confuse a lot of customers at a time when that's the last thing Warner Bros. should be doing. Your average movie renter isn't paying attention to the silly games that Warner execs are playing, and all they want to know is how come they can't rent the latest release. If Warner somehow convinced all players not to rent until a certain date, then that would effectively have just shifted the release date further back (a dumb move in an age when windows are shrinking... but that's Hollywood for you). However, by having the movie available for rental in some places, but not others, it's now setting itself up for mass customer confusion, where people will hear that a movie is available, but then get pissed off that it's not available in their preferred rental system.

It's as if the folks in Hollywood haven't been paying attention to what happens to companies that aren't providing what their customers want.

Filed Under: dvds, movies, rentals, windows
Companies: blockbuster, netflix, redbox, warner bros.

Blockbuster Blames 'Piracy' Rather Than Bad Strategy For Bankruptcy In Portugal

from the gotta-blame-someone dept

paperbag was the first of a whole bunch of you to send in the news of Blockbuster declaring bankruptcy in Portugal and claiming that it's all the fault of those darn kids and their downloading. Well, more specifically, it blames the government for not doing enough to stop the sun from rising every morning... I mean, from stopping people from engaging in unauthorized file trading online. This is just an excuse for a company that failed to execute. The number of folks accessing unauthorized movies online is still a blip, and almost certainly had little impact on Blockbuster's bottom line. The simple fact is that Blockbuster, worldwide, has done a really poor job of adapting to a changing world.

Filed Under: movies, portugal, rentals
Companies: blockbuster

Blockbuster, Netflix Found Not To Have Infringed On Patent For Notifying You Of The Status Of Your Rental Queue

from the how-did-this-get-approved? dept

Slashdot points us to the news that a lawsuit against Netflix and Blockbuster for patent infringement has been dismissed by a California court. At issue was a patent, 7,389,243, that is for a method for alerting users to the status of their rental queue. Read through the claims and look at the drawings and try to figure out how such a patent was possibly approved. It's patents like this one that make people question what patent examiners actually do. So it's nice to see the patent holder sent packing, though you have to wonder if GameFly, who had previously settled a lawsuit over the same patent is now regretting that decision.

Filed Under: movie rentals, notifications, patents
Companies: blockbuster, netflix

Once Again, You Don't Compete With Innovative New Services By Being Lame

from the in-case-you-weren't-paying-attention dept

A couple years back we pointed out how the entertainment industry kept trying to "compete" with new (legal and not-so-legal) online services, but always seemed to do so by being incredibly lame. And, you don't compete by being lame. It appears that this message still hasn't quite gotten through to some yet. With the movie industry facing new challenges concerning online distribution and innovative services like Redbox, here are two stories of old school players trying to "compete" but missing out on the part where they make their offering compelling.

The first comes from Josh in CharlotteNC, who points out that Blockbuster is trying to compete with Redbox and its widely available kiosks (and Netflix with its larger library of downloadable movies) by setting up kiosks in its stores where you can download movies. But... you can only download them to proprietary SD cards, and then it can only play on special proprietary hardware that participants in this program need to have. How is that a better experience then, well, anything? If you want a movie that can be downloaded, why not just let people download it at home? Why have people go out to download it?

Then we have a story sent in by Loydster, about how Sony Pictures is offering owners of new Sony/Bravia HDTV's the chance to download and watch the movie Cloudy With a Chance of Meatballs before the DVD release. While that is actually a nice tie-in between Sony's content business and its consumer electronics business, Sony (of course) has to screw it up. That's because the company thinks it can charge $25 to download the movie. The company seems to admit that it's charging this much because it doesn't want to piss off its retail partners (like WalMart), but it's difficult to see why it's worth doing the project at all if the pricing is going to be so ridiculous.

Experimenting with ways to compete is good... but being so obviously lame is not.

Filed Under: competition, downloads, kiosks, movie rentals
Companies: blockbuster, sony

Eolas Is Baaaaaaaaack; And It's Suing Everyone Over Embeddable Web Widgets

from the because-otherwise... dept

Well, here we go again. As you may recall, Eolas is a company that claimed to hold a patent (5,838,906) on browser plugins. The company sued Microsoft, and a long drawn-out battle ensued. Even though web inventor Tim Berners-Lee presented prior art and asked the USPTO to invalidate Eolas' ridiculously broad and obvious patent, the USPTO eventually upheld the patent (after initially rejecting claims). Even as Microsoft began presenting evidence that it actually had made use of the technology in question before Eolas applied for its patent, losses in the courts and the Supreme Court's refusal to hear the case eventually resulted in Microsoft agreeing to settle rather than continue to fight.

Since then (two years ago), plenty of people have been waiting for the other shoe to drop, concerning Eolas' plans to sue others. Now we know why it waited. It's now received a new patent -- a continuation patent, which is often used to abuse the patent system by putting forth a broad patent, then filing for continuations to make changes that let an earlier "invention" cover technologies that later become popular. In this case, the new patent (7,599,985), which basically just extends the earlier patent on browser plugins, and extends it to javascript widgets. Yes, those embeddable widgets used all over the web? It appears that Eolas thinks that those are infringing and everyone should pay up.

The new lawsuit has been filed against Adobe, Amazon, Apple, Blockbuster, Citigroup, eBay, Frito-Lay, Go Daddy, Google, J.C. Penney, JPMorgan Chase, Office Depot, Perot Systems, Playboy Enterprises, Staples, Sun, Texas Instruments, Yahoo, and YouTube. Apparently, starting small isn't part of the plan. Not surprisingly, Eolas filed in Eastern Texas using McKool Smith -- one of the most popular law firms representing patent holding firms in East Texas.

I am honestly curious how patent system defenders, who are also programmers, can defend this. I'm sure non-programmers will claim that the patent is valid, but I can't imagine how anyone who has any knowledge of basic programming principles can claim that such a patent is valid. In the meantime, tons of companies doing an incredibly basic thing on the web will now have to waste millions of dollars fighting a ridiculous patent lawsuit. How is this promoting innovation in any way shape or form?

Filed Under: browsers, embeddable, patents, plugins, widgets
Companies: adobe, amazon, apple, blockbuster, citigroup, ebay, eolas, frito-lay, godaddy, google, j.c. peney, jpmorgan chase, microsoft, office depo, perot systems, playboy, stabples, sun, texas instruments, yahoo, youtube