Dynamic Marketing Communiqué

Take a look at how this corporate titan fell short in terms of innovation… [Tuesday: Return Driven Strategy]

March 5, 2024

Before the days of what we currently know as streaming services, movie rental businesses stood as the undisputed giant in the entertainment industry, defining the way people consumed movies.  

… and with its vast network of brick-and-mortar stores, Blockbuster became synonymous with Friday night movie rentals and the excitement of browsing through aisles filled with digital versatile disc (DVDs) and video home system (VHS) tapes. 

The iconic blue and yellow signage adorned shopping centers, creating a nostalgic symbol of a bygone era when the anticipation of a movie night involved physically visiting a rental store.

Photo taken from Unsplash

The Rise and Fall of an Entertainment Industry Giant

Founded in 1985 by David Cook, Blockbuster revolutionized video rental with large, well-organized stores and a wide movie selection. The franchise model, adopted for rapid expansion, provided franchisees with a proven business model and brand support.

Exclusive agreements with movie studios gave Blockbuster an advantage over smaller competitors. However, as technology gradually evolved, the need for the once-market-giant began to diminish. 

In the late 1990s, DVDs began to replace VHS tapes, providing superior audio and video quality. Blockbuster adapted to this change by transitioning its rental inventory from VHS to DVDs, but at the same time, this marked the beginning of the industry’s shift towards digital media.

The emergence of online rental services, such as Netflix, posed a significant challenge to Blockbuster’s traditional brick-and-mortar model. Netflix introduced a subscription-based, mail-order DVD rental service, eliminating the need for customers to visit physical stores.

Blockbuster’s delayed entry into the online streaming market proved to be a critical misstep. While Netflix was gaining momentum with its streaming service, Blockbuster struggled to catch up. The latter’s online efforts, such as the ill-fated partnership with Enron Broadband Services, were marred by mismanagement and technical challenges.

The result? 

In 2010, Blockbuster filed for bankruptcy, burdened by debts and the inability to compete with digital streaming services. The closure of numerous Blockbuster stores marked the end of an era for the once-dominant video rental chain.

If seen through the lens of managers and marketers, the company’s legacy serves as a cautionary tale for businesses that fail to adapt to technological advancements and changing consumer behaviors.

Blockbuster and Return Driven Strategy’s Tenet 8 

In the book, “Driven,Professor Joel Litman and Dr. Mark L. Frigo talk about the importance of knowing when to revamp a business framework to innovate and evolve with changes in the business landscape.

They explain that business mapping encompasses key aspects such as exchanges with important customers and vendors. This then extends beyond immediate business processes to consider the broader context, including customers’ customers and suppliers’ suppliers. 

Understanding these interconnected relationships is crucial for effective planning and avoiding misguided directions among enterprises. A comprehensive awareness of a business’s position within its community is emphasized for overall success.

Let’s apply this to our topic for today… 

As detailed above, Blockbuster failed to keep up with changing consumer preferences. It was slow to adopt digital distribution and streaming, and instead stuck to its traditional model of physical rentals. This reluctance to evolve led to a decline in market share as competitors embraced the convenience of online streaming.

That’s why Blockbuster’s rise and fall represent a classic case of a market leader’s inability to navigate the evolving landscape of the entertainment industry. The company’s failure to innovate and embrace digital technologies ultimately led to its demise, while competitors like Netflix thrived in the digital era. 

The bottom line? 

Blockbuster’s story serves as a valuable lesson for businesses in terms of the importance of adaptability and staying ahead of technological trends in an ever-changing market.

After all, innovation demands adopting modern practices and embracing technology, as seen in the shift from traditional movie rentals to today’s streaming services. 

As the world evolves and consumer preferences shift, the fate of companies hinges on the business’ ability to stay agile and embrace what’s to come.

We hope you learned new insights from today’s article! 

If you’re looking to gain a better understanding of Return Driven Strategy and Career Driven Strategy, we highly recommend checking out “Driven” by Professor Litman and Dr. Frigo. 

Click here to get your copy and learn how this framework can help you in your business strategies and ultimately, in ethically maximizing wealth for your firm.

About The Dynamic Marketing Communiqué’s
“Tuesdays: Return Driven Strategy”

In the book, “Driven,” authors Professor Joel Litman and Dr. Mark L. Frigo said that the goal of every long-term successful business strategy should incorporate the combined necessity of “making the world a better place” and “getting wealthy.” 

That is why they created Return Driven Strategy and Career Driven Strategy―frameworks that were built to help leaders and professionals plan and evaluate businesses so they can also help others achieve their organizational goals and career goals. 

The frameworks describe the plans and actions that drive returns for anyone in an organization such as independent contractors, marketers, brand managers, communicators, and other people in any field. These actions lead to the creation of wealth and value for customers, employees, shareholders, and the society. 

Every Tuesday, we’ll highlight case studies, business strategies, tips, and insights related to Return Driven Strategy and Career Driven Strategy. 

In planning, building, or managing brands and businesses, these strategies, case studies, and guidelines will help you choose what specific actions to take and when to take them. 

Hope you found this week’s insights interesting and helpful.

Stay tuned for next Tuesday’s “Return Driven Strategy!”


Kyle Yu
Head of Special Projects
Valens Dynamic Marketing Capabilities
Powered by VX Dynamic

View All

You don’t have access to the Valens Research Premium Application.

To get access to our best content including the highly regarded Conviction Long List and Market Phase Cycle macro newsletter, please contact our Client Relations Team at 630-841-0683 or email client.relations@valens-research.com.

Please fill out the fields below so that our client relations team can contact you

Or contact our Client Relationship Team at 630-841-0683