Blockbuster Vs. Redbox

Approximately 5 years ago Blockbuster came up with a campaign to start sending clients late fees to collections. This lead me to start looking at their business model to see how powerful or infallible they really were. After looking at the company model and recent campaigns I realized that they were on their way out. This was in 2005.

Lately I have rented all of my movies from Redbox because it's fast, simple and inexpensive. It just makes a heck of a lot of sense. When comparing the two, Blockbuster had every opportunity in the world to evolve and scoop the market share early for this strategy that Redbox has executed but failed to do so.

I'm not sure if it was arrogance on the part of Blockbuster or lack of insight but they have clearly lost the battle already. I saw recent news that Blockbuster filed for bankruptcy protection and have noticed a few stores closing. Here is where I feel they failed:

1) Instead of focusing on making their process more customer centric focused, they alienated their customers by sending late fees to collections and ultimately ticking off a lot of people

2) They became too focused with trying to make the mail in rentals work in order to compete with Netflix and must of somehow completely missed the entire concept that Redbox executed.

3) The prices of rentals stayed the same rather than focusing on higher volume and convenience to their customers. There are plenty of profit centers within Blockbuster but they seemed to have failed to monetize them and simply "stuck to what they have always done"

So I feel the takeaway here is to stay nimble as a company and be able to adapt to change as well as always keep your customer experience in mind. How can you better improve your company to cater to your customer or client needs. What can you do to increase your companies value to your customers and therefore extend the reach of a dollar in their minds. When value outweighs price, sales will do well.

Here is what I like about Redbox:

1) It's fast and simple

2) It's inexpensive

3) The system is very A to B without any hidden costs or tricks.

Redbox will own this market in a very short amount of time. They have located a need and filled that need with a very simple, inexpensive and customer friendly model which will soon become the future of the movie rental business. Don't be surprised when Blockbuster (late to the game) starts their own vending machine style of movie rentals and the entire store model and pricing model is gone. If you think in futures with your company, products or services and value proposition, it will serve to help with future prediction and allow you to pounce on opportunities that need to be monetized as they come along.

- Robert Cornish
CEO, Richter10.2 Media Group