business news in context, analysis with attitude

by Kevin Coupe

It was a matter of too little, too late, and probably too poorly conceived.

Redbox and Verizon announced over the weekend that their Redbox Instant service, designed to compete with Netflix's streaming service, is being shut down as of tomorrow.

"The joint venture partners made this decision after careful consideration," the statement said. "The service had not been as successful as either partner hoped it would be."

I dedicated an Eye-Opener to this story last spring, and think it is worth returning to the subject this morning because it serves as a cautionary tale about competition and disruption.

Here is sort of how it all played out.

Blockbuster pretty much owned the national video rental business, and didn't pay much attention when Netflix got into the category with its rent-online-and-deliver-via-mail model, which, from the beginning, seemed like a placeholder while at-home technology capabilities caught up with the video streaming business model. While Blockbuster's market share was eroding, Redbox got into the business, offering cheap DVD rentals from a rapidly expanding number of kiosks.

Blockbuster went belly up. (Not fast, and not right away, but inevitably.) But as Netflix continued to evolve its business model - moving both to streaming and original content as a way of differentiating itself to an audience with an increasing number of options, Redbox didn't.

It was that simple. The disrupter got disrupted.

Not to say that Redbox is entering Blockbuster territory. Far from it. But it certainly isn't growing the way it used to, and Redbox will need to figure out where it evolves from here and how it can differentiate itself.

Interestingly, the Wall Street Journal reported yesterday that Verizon Communications announced that it "could launch a digital video service over the Internet by the middle of next year," as the company nears "agreements with major content companies, which until recently were more skeptical of licensing content for delivery over the Internet." And, as the article makes clear, the move is seen as positioning Verizon against Netflix …

I've said it before, and I'll say it again.

How consumers consume - everything - seems to change and evolve with almost every passing day. Retailers and marketers also have to change and evolve if they are going to be relevant to these shoppers.

Otherwise, obsolescence beckons. Resistance may be futile. The danger - to every business - is that even the disruptors can be disrupted.

It is an Eye-Opener.
KC's View: