Most business people these days have very little patience to wait for what they want. Strangely enough, this is especially true during leisure time.
When I want to rent a particular movie, I want to watch that movie now. Years ago, going to a Blockbuster store was very convenient. With a short walk or drive, consumers had the ability to choose from hundreds of titles.
In 1997, a new service debuted and movie renters were hooked. I became an instant Netflix member the first month the service was available. I loved the idea of having four DVD movies mailed monthly and building a queue of movies that could sequentially be sent. This service was all available for $20 a month with thousands of movie choices.
In 2004, Blockbuster implemented a similar service with a key differentiator: the consumer could return the mailed DVD at a Blockbuster retail store for an instant trade in for another movie! I divorced Netflix and joined Blockbuster.
In 2007, a new movie service was introduced by Apple. With Apple TV, the consumer could download from the Internet any movie from the iTunes catalog. Now there were thousands movies to choose from instantly. Instead of paying a monthly fee to Apple TV, the consumer only paid when they actually watched something. I quit Blockbuster the next day and ran to Apple TV.
In 2010, Netflix updated its service. They introduced unlimited video streaming for a good portion of their movie library. Now consumers could watch as many movies as they wanted whenever they wanted for $8 a month. For every movie addict, the possibilities were now endless.
We need to learn from the changing business models that renting movies have transitioned through. Going from mom and pop video rental stores to unlimited streaming of thousands of movies instantly on any device can really shake up a market. Similarly, the services your company has to offer needs to continually evolve.
Here are five things to look for:
1. Constantly be aware of how changing technology can meet your customers’ needs. Blockbuster fell behind Netflix and then fell behind them again. In addition, more and more movies are being watched on devices like iPads and smart phones that do not have a DVD player at all. In these cases, movies must be increasingly streamed or downloaded.
2. Listen to what customers want. Products that are “faster, cheaper, and better” are always more popular, especially when you’re selling a commodity. The movie a consumer rents from Blockbuster is the same on Netflix. Blockbuster tried to add an advantage by offering exclusive movies. Similarly, iTunes has many movies available for download even before they play in movie theaters.
3. Form partnerships. This year, Netflix announced a significant relationship with Apple TV. One of the key success points for any small business is distribution. If you build it, it does not mean that consumers will come. Get your product distributed everywhere.
4. For consumers, more choice is better. America is the land of choice. Do you want that steak with soup, salad, chili, or a baked potato? If the consumer has more choices, it is perceived as a better product. Why should they choose from 100 movies to watch when they can choose from 1,000?
5. Keep it variable. Buying anything by "the drink" is more attractive to customers than one fixed monthly fee. For consumers, it keeps their costs variable. This may not be as profitable for your business, but evolving to this model will keep your company competitive.
What can your company learn from Blockbuster vs. Netflix saga?