Facing an inevitable bust?

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.

His argument is that Aussie consumers haven’t embraced mail-order DVD delivery offerings from startup competitors, nor have they shifted to streaming/download options.

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…

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Mobile banking done well

I liked this version of mobile banking facilities that I spied here in the Thai beachside village of Bophut:

While there are quite a lot of ATMs along the same street, the hotels do warn that if you lose you card in one, you may have real dramas getting it returned.  The only bank branch is about 150 metres away up on the less glamorous and traffic-filled main road.

This little van fills a neat gap in the market and gives this bank (the third largest retail bank in the country) a little step up in attracting custom (and presumably can be moved to more popular or event-specific locales when need be).

Now that’s innovativeness…

Why Melbourne live music venues should embrace change

Good strategy oftens requires undoing old habits and embracing new.  Firms who think outside the industry norm can often find themselves at a better place competitively.  External factors that look like threats  might actually be opportunities.

Take the current dramas in the Melbourne live music scene.  In the past week two long-running pub venues have hit the newspages with the tales of woe.  First, the Tote and now the Arthouse, have announced they will close their doors to bands and music fans, in the face on recently imposed laws regarding security requirements and opening hours.

Here’s a summary:

“The Arthouse’s manager, Melanie Bodiam, said Liquor Licensing Victoria had given the venue two options: close at 1am instead of 3am, or stay open until 3am at a reduced capacity of 90, instead of 300. She said both options were financially unworkable.

”Once our bands finish playing, musicians and patrons want to sit around, have a beer and a chat,” she said. ”We don’t want to have to usher them straight out the door.””

Now I have been a big gig-attendee over the years and love the sweaty confines of said venues (and numerous others), but it strikes me that there is a real opportunity to respond in a way that will be ‘punter-friendly’: start the bands earlier. Have the headline act on by 9.30.  That way you can still get the post-gig drinking bucks, while potentially also tapping into the come straight afterwork and have a meal beforehand market.  It works in UK extremely well.

It is too easy to get stuck in the well-worn groove of the firms/products around you.  But when faced with a challenge, think beyond the norm.  You might find there is a much bigger market over there…

Visualising an iLifeycle

The take-up speed of new technology or products is an important issue for any firm involved in innovation-driven industries.

We typically argue in the early stage of industry or product life cycles firms will battle it out to produce the dominant technology, and the winner(s) will then ride the growth wave as consumers rush in and profits soar. Finding data on such processes it not always easy.

The two slides discussed in this Techcrunch blog post looking at the uptake and impact of Apple’s iPhone and iTouch are illuminating.

The first shows the speed at which various comparable technologies were taken up in their respective markets (in (admittedly crude) terms of number of products shipped):

Source: Morgan Stanley Internet analyst Mary Meeker vis Techcrunch

What is apparent is the huge appetite for Apple’s new offerings relative to (i) its big competitor in the smartphone domain (Blackberry) and (ii) their precursors in the i-world, the iPod. No wonder Apple is more profitable than ever. Of course, you could also argue that Apple is leveraging off the harder fought gains of these precedents in terms of building consumer interest and confidence with such products… but that IS what the life-cycle idea argues too.

A neat little aside to this discussion is seeing what impact such huge market growth has on suppliers/complements. This slide looks at the upswing in mobile data traffic on the major telecoms network in the US:

Source: Morgan Stanley Internet analyst Mary Meeker vis Techcrunch

Now that’s a nice trickle-down effect!