I was a little alarmed by the comments from the head of the Australian operations of the Blockbuster video store operations this week.
In response to inquiries about the viability of the local concern in light of the likely bankruptcy of their US parent (well sort of parent – it’s pretty much an international franchising setup with the distinct Aussie entity using the US mob’s brand, systems etc), Paul Uniacke indicated (in effect) that he saw no significant threat from alternatives to his bricks and mortar operations. This is despite the US version experiencing a 16% sales drop in the last quarter.
I would think the missing word there is “yet“. Surely it is only a matter of time before wandering up to an understocked, inconvenient video store becomes as quaint and antique an idea as using a phone box or sending a telegram?
He is right that the actual decline in store-based DVD rentals hasn’t happened here yet, but I am certain growth slowed a while back, and that decline is just around the corner.
Mail order might not the threat its proponents hoped for, but streaming will be (as demonstrated already by the utilisation of illegal and legal download services). The much vaunted upgrade in Aussie broadband infrastructure will greatly facilitate this.
The strategic lesson: just because technology and socio-cultural effects haven’t kicked in yet, don’t fob them off as irrelevant. Learn lessons from similar and more advanced markets.
Blockbuster Australia should be looking very, very hard at web-based video delivery (although, I must say, I can’t see that much in their existing resources and capabilities that would see them out-perform Amazon, Apple or even Telstra on this front). Alternatively, they’ve got to find something interesting to do with all of the stores.
As an aside, my local Blockbuster has halved in floorspace in the past year, and still looks empty every time I walk past…
Tags: Amazon, Apple, Australia, bankruptcy, Blockbuster, competitive advantage, core capabilities, external analysis, finance, innovation, obsolensce, retail, Strategic management, Telstra, video, video stores