Monday’s WSJ had an interesting piece on Blockbuster [sub. needed]. The main story is Carl Icahn buying up a bunch of shares and his trying to get Blockbuster to pay out a bunch of cash to shareholders. CEO John Antioco thinks the cash would be helpful to build new parts to the business.
Inside the story is a more interesting story for me. From the article:
In his search for a new business for Blockbuster, Mr. Antioco has embraced some idea–like the mail-order DVD service–that he initially derided. When Netflix first started, Mr. Antioco argued its business was only a niche market because he didn’t think consumers would want to think days ahead about what movies they want to order. But Netflix has signed up so many subscribers–three million as of last month, including many former Blockbuster customers–that he had no choice but to follow suit. Last summer he launched Blockbuster Online. So far it has grown quickly. Blockbuster initially expected it could sign up 250,000 customers by year-end. Instead within seven months, Blockbuster had signed up 750,000. Mr. Antioco’s target is up to two million subscribers by early 2006.
This is a clear tale of the importance of listening to your customers. Mr. Antioco was thinking for them. “Why would they do that?” This sort of thinking gets companies into a lot of trouble. In this case, it allowed a new competitor to enter Blockbuster’s market and steal lots of customers. As a matter of fact, Netflix stole us about a month ago.