InstitutionClaim Cited
Blockbuster
Blockbuster did not sleep through the arrival of online rental. Between 2004 and 2007 its executives, store workers, and franchisees tried to join a vast retail network to DVD-by-mail, while customers tested the hybrid and Netflix built a system without leases or franchise economics. The hybrid gained subscribers, but every exchange shifted costs among stores, the online business, investors, and creditors; new leadership then prioritized near-term profitability before debt and a falling store market removed the remaining room to maneuver.
How can an incumbent fund and govern a new delivery system when the new model cannibalizes the assets, revenues, and relationships that make the old organization powerful?