The Economics of Blockbuster Failure
TL;DR
Blockbuster rejected $50M Netflix acquisition in 2000
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Case study documenting Blockbuster's failure to adapt to digital disruption despite seeing Netflix coming. Provides detailed analysis of the succession trap - how 20 years of retail optimization made digital transition organizationally impossible.
Key Findings from Greenstein (2010)
- Blockbuster rejected $50M Netflix acquisition in 2000
- Total Access program was working but killed to preserve stores
- Store leases, late fees, inventory model all created lock-in
- 84,000 employees lost jobs in collapse