Monday, January 01, 2007

Blockbuster Using Its Assets For Innovation

Watching my home team Boise State play in the Fiesta Bowl tonight, I noticed the sponsorship by Blockbuster and its new offering Total Access Service which is competing against the current leader in mail order movies - Netflix. Blockbuster has had a similar offering to Netflix since 2005, but although they could replicate the basic model, their service and efficiency wasn’t as good as Netflix, and the results were less than stellar. Some companies would just regress back to their legacy model, but Blockbuster evolved its Total Access Service into a new business model innovation.

They replicate the model of Netflix, but then they add an additional service that takes advantage of their existing brick and mortar assets. Not only can you mail your movies back once you finished, you can bring them back to store, and pick up new movies from their as well. Instead of trying to compete with their existing legacy movie delivery model alone, or trying distance themselves from the model that built the company and move to compete on the same service as Netflix they combine aspects of both models to offer business value that cannot be replicated by Netflix.

Many such as Tech Crunch blogger Michael Arrington are deciding that Total Access is a much better option and are switching. They use a great play from the startup playbook on this current add campaign. They compare their sevice directly to a known player (Netflix) in the commercial, and then explain how their offering is better. This is compelling for Netflix users, as well as current blockbuster customers who are thinking about using a mail order movie service.

In an era where many traditional business are being impacted by digitization and internet business models, its great to see examples of companies using current expertise coupled with creative thinking to create competitive advantage. Their next challenge is when broadband infrastructure becomes robust enough to deliver movies purely in digital format.

1 comment:

Tac said...

I agree that this seems like a good idea. The issue is that every variance from their traditional model has failed. Remember 'no late fees'? If Block Buster pulls this off it would would be a great move. I just wonder if there is already too big of a split between those that prefer the online only model. I think that people who switch back to Block Buster will be quickly be reminded why they hated the the in store experience. NetFix is so quick on their turn around that leaving my house, dealing with traffic and dealing with the in store crowds isn't worth the 2-3 day wait for my next movie. Only time will tell.