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Comment by gumby | Hacker News Reader

I had never heard this part about Blockbuster:

> Blockbuster ... started with Blockbuster Online, an entity that was completely separate from Blockbuster’s retail business for reasons of both technology and culture...a test version went live on July 15, 2004 — the same day as Netflix’s quarterly earnings call

Blockbuster really snatched defeat from the jaws of victory. The corporate incentives had become completely backward. As we commonly see time and again in oldline companoes like GE, Sears, Google, Boeing...

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One thing that wasn't mentioned was that Netflix has a monstrously large catalogue at the time, and the user ratings and content recommendations made their offering extremely sticky.

Switching to Blockbuster's competing service was a bit painful because you'd lose all your movie ratings, often stretching back years to the DVD-by-mail era.

While Blockbuster could acquire brand new streaming subscribers by pricing their product similarly to Netflix, it was really tough for them to poach existing Netflix subscribers.

Most of us weren't Netflix customers yet at the time this was going on.

Whatever the case I was an active in-store Blockbuster customer at the time their stuff started to launch and I never had an inkling they were doing anything online.

It was only a couple years later I remember trying the Netflix DVDs in the mail service. I don't remember actually subscribing till I moved into my current house in 2010. When we moved in there was no video rental store in town.

2004 was a long time ago! I remember 100% I was still going to the neighborhood Blockbuster in 2004.

> I was an active in-store Blockbuster customer at the time their stuff started to launch and I never had an inkling they were doing anything online.

In a comment in this thread, jonfw mentioned that Blockbuster was a franchise business, which I hadn't known. That would explain why the physical shops wouldn't advertise an online alternative -- it would have been a direct competitor.

This is explained the first time Blockbuster's streaming service is mentioned in the article, in the third paragraph, but perhaps could've been more explicit:

> Blockbuster Online, an entity that was completely separate from Blockbuster’s retail business for reasons of both technology and culture: Blockbuster’s stores were not even connected to the Internet, and store managers and franchisees hated having an online service cannibalize their sales.

And at the beginning, they tried to partner with Enron to do it. For some reason that part didn't pan out...

How much influence did franchisees have on the corporate decision making?

I can definitely see how, as a franchisee, I would rather ride the brick and mortar video rental business into the ground rather than try and transition the business, given that a retail franchise is a dead end either way

Right, it's a remarkable story. There's a wondery podcast series about it that was pretty interesting.

I don't think Google belongs in that list of "oldline" companies... GE, Sears, and Boeing are all over 100 years old, and made/shipped actual physical products. Regardless of whether Google's internal incentives are backwards, they are certainly not a stalwart manufacturer. Google is in the business of selling ads, but they keep trying to branch out into selling products/services. Heh, I'd say the fact that they haven't really succeeded in that (aside from maybe Android) is empirical evidence that they are not an oldline company!

Google exhibits the structural weaknesses that crippled those other companies. The company may be only a quarter century old but it acts geriatric.

The was a long series of articles posted on HN about a decade ago about how Blockbuster fell. TL;DR: Netflix didn't kill Blockbuster, Blockbuster killed itself with a revolving door of those in charge all trying the same simple, obvious and wrong solution to its problems.

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