Do you remember this company? You would walk into one of their more than 9,000 stores and turn to the right as you walked to the new releases, usually in backwards alphabetical order. You would then proceed to walk counter-clockwise along the outside walls around the entire store, viewing every single VHS or DVD video, and storing in your memory the ones you were willing to consider. You’d discuss it with your friend or family member. Most often, you would end up going back to the beginning again before making your selection. Most of us remember all the warm nostalgia that those Blockbuster Video days invoke.
But ask yourself this: Where are they now? What happened to Blockbuster Video that they have shuttered almost every single store (with a few rare exceptions)? While there are many factors in their eventual and meteoric demise, probably the #1 cause in their downfall was their inability or unwillingness to keep up with what the consumer wanted.
Two major companies began to compete with Blockbuster in the 2000’s: Redbox, and Netflix. In the year 2000, Blockbuster rejected an offer to acquire now industry giant Netflix for only $50M! Netflix is now worth more than $41 BILLION! Instead, they sat on their hands for more than 2 years before finally offering something to compete with Netflix, but by then it was too late to gain traction. Netflix offered a way to find new videos you might like, unlimited rentals, no late fees, and delivered right to the consumer’s front door, all for a low monthly fee.
In response in 2005 Blockbuster tried to sell a new “no late fees” policy, which was an attempt to answer the consumers who despised late fees. The problem is that they weren’t really offering no late fees, they would charge the full cost of the video to the consumer after eight days. Consumers were outraged in what became a PR nightmare, and many states filed false advertising lawsuits. Blockbuster lost these lawsuits and ended up returning customers’ money.
About the same time that Netflix rose to prominence, a small company called Redbox was exploding, renting DVD’s for $1/night, and setting up easy-to-use kiosks in places that consumers were already shopping for other things. They also advertised that you could return the video to any other Redbox kiosk, taking away the hassle of going back to the same location to return them. Redbox tried to sell their business to Blockbuster (and Netflix) early on, but neither company was interested. As of Q1, 2013, Redbox owned 48% of the total physical video rental share1. They found a way to get consumers video faster, easier, and cheaper than anyone, and their value has soared.
As companies like Netflix and Redbox continued to innovate and look for new ways to get the consumer what they wanted, and how they wanted, online giant Amazon began to offer streaming video for purchase or rent. Suddenly the consumer no longer had to even leave their home to rent a movie, and there were no returns to be made- ever. As all of these companies innovated, Blockbuster continued to put its head in the sand, adapting too little, too late, and they were soon completely irrelevant and buried as a video rental company. Who would have ever guessed in the early 2000’s that Blockbuster Video wouldn’t even really exist 10 years later?!
I get the distinct feeling that we in the real estate industry are beginning to have a “Blockbuster Video” mentality as the world around us adapts and grows. The number of startups in real estate innovation and companies working to bring consumers a new and better experience has skyrocketed recently. There is currently more money being invested in innovative ideas than ever before. Everywhere we turn there are entrepreneurs creating new products and services that call out to our customer base enticing them to change to an easier or better way to find what they are looking for.
When I got into this business 15 years ago, controlling the information was a very important thing for agents. When someone suggested broker reciprocity, giving consumers instant access to our full MLS listing data, the industry melted down. It turns out that it was exactly what consumers wanted, and it didn’t eliminate the need for Realtors® as many of us feared it might. However, the change was scary and hard for many of us at that time.
I’m on the Agent Advisory Committee for our regional MLS in my local market. We meet quarterly, and in the two years I’ve been there, I don’t think a meeting has passed where internet giant Zillow® wasn’t brought up by someone. The conversation usually moves toward lots of complaining about Zillow®, their bad data, and agents who are leveraging sites like this to gain a competitive advantage in the marketplace. I too used to be in this boat of haters, never missing a chance to bad-talk them to my clients.
However, I imagine that many an insecure Blockbuster employee took verbal shots at Netflix and Redbox back in the day. What was the consumer response? Well, since they can give me my product in a way that’s easier, cheaper, and more innovative, I think you’re behind the times, and I’m going to take my business elsewhere. And they did. And Blockbuster died.
Listen friends, there’s a reason that millions of home buyers and sellers go to Zillow every day rather than to our brokerage websites- because they like Zillow, even if we don’t. Zillow has found a way to give consumers what they want, how they want it, and made it very easy for them to get it. Thousands of agents pay Zillow every month for the opportunity to get connected to those buyers and sellers. Rather than fighting what the consumer wanted, I joined them where they were and signed up with Zillow too. Thankfully, at this point that’s still an option.
What have we learned from Blockbuster’s failure? As an industry, we have a choice each day to innovate and seek new solutions that give our customers what they are looking for, or we can try to force our current solutions on customers because “it’s the way we’ve always done it”. The second option could send us the way of Blockbuster. Innovation is crucial to the health of our industry. It’s important to always be watching and looking for the next thing, and to embrace change when it makes sense. I think buyers and sellers will always need agents- this is a people job. However, there are too many of us who have refused to adapt and learn new technologies and systems because “the old way works fine.” No, it did work fine, but does it still? And if you aren’t ready, willing, and able to grow and change in this business, it might be time to consider another vocation.
- “Coinstar, Inc. 2013 First Quarter Earnings”. April 25, 2013. Retrieved Aug 1, 2013.