Are you Blockbuster or Netflix?

You may have seen the story on the news recently: former video megachain Blockbuster is down to their final store. The familiar blue and yellow signage that once graced over 9000 stores worldwide is now on display at the last remaining vestige of the former giant in Bend, Oregon.

While others have taken this opportunity to detail the swan song of the once-beloved home of VHS tapes galore, the team at YMC and our sister company, uncommn, feels strongly that this is, instead, a teaching moment — a business cautionary tale about Blockbuster’s legendary blunder that contributed to their downfall.

In the early 2000’s, Blockbuster had the opportunity to purchase Netflix for $50 million.¹

They passed.

Netflix is now reportedly worth over $32 billion.²

To be fair, at the time of the sale negotiations, Netflix was a DVD-by-mail service that was consistently losing money. But the real problem was the lack of vision from the Blockbuster team. They couldn’t see the potential for the little red envelope to ultimately shut down the brick and mortar retail video rental space. There were other factors at play but the decision not to move forward with the purchase ultimately boiled down to Blockbuster execs failing to anticipate the overwhelming opportunity they were given to “future-proof” their company. In the meantime, Netflix made the move from DVDs to internet streaming and we all know how that’s working out for them.

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