September 23, 2010
Blockbuster Bankruptcy - Technology Evolves, and So Must Alarm Systems
Blockbuster Inc. has filed voluntary Chapter 11 petitions with the US Bankruptcy Court. For the largest US video rental company (and its shareholders), this is a sad day. Blockbuster closed 1,000 stores over the past year: the 3,000 remaining US stores and 400 franchises are still open as of today, but sources close to the company expect that another 1,000 stores will close in the next year.
The filing has been anticipated for over a month. Here’s a link to a news report with background. Since I write about evolving technology in the world of interactive wireless home security, the following portion caught my eye:
“…Blockbuster’s business has been shrinking for years as customers moved to Netflix’s DVD by-mail business and Redbox DVD rental kiosks. Consumers also finally began to adopt a growing list of digital options that threatened to make the company obsolete since the 1990s. Ironically, it was other DVD rental options that hurt Blockbuster the most.”
And here’s another informative link, this time to the Wall Street Journal, with a salient excerpt:
“U.S. consumers now get many of their movies through vending machines operated by Redbox, and from mail-order and online streaming giant Netflix Inc. Consumers have also gravitated toward cable on-demand services and getting films and television shows through gadgets such as Apple Inc.'s iPod and iPad.”
What this announcement strongly suggests is that the company paid insufficient heed to the “technological imperative” affecting home entertainment. No, I did not make up that term – see for yourself at this link! The point is that Blockbuster’s world was changing, actually for some time, but their business model did not keep pace. This is a harsh lesson of business survival, and we’ve seen it before.
For me, there is a direct comparison to evolving alarm technology. Not only are the intelligent alarm companies finding new ways to reach prospective customers (like this blog!), but the underlying alarm technology itself has evolved – and the companies who are stuck in the traditional alarm world will likewise suffer. What are the specifics? The topics I cover here make a great start: safer cellular monitoring, smarter interactive services, simpler systems you can set up yourself, and pricing that makes it all affordable. Home security is evolving as well, and companies who stick to the “old school” model do so at their peril.
There is a final wrinkle in this story. Wayne Huizenga, the man who built Blockbuster into a giant, also once controlled the 4th largest alarm company in the US. It was eventually sold to a certain very large US alarm company that is also having trouble keeping up with the times – and I think you know who I’m referring to. We often say that bigger is not necessarily better, and the smaller, more nimble companies like FrontPoint are often the ones that survive, and thrive - not the dinosaurs.