You’re right but it is almost impossible for these companies to switch gears like that.
If you are the CEO of Blockbuster and start undercutting your video rental stores with this new streaming thing you will not be CEO for long. Likewise there is no way a CEO at Kodak could kill their (at the time) hugely profitable film business to push this new digital camera thing (which, as it happens, Kodak invented). That CEO would be run out of town by angry investors. So even visionary leadership who see the change coming are almost powerless to stop it.
Just seems to be the nature of the beast. Like an organism it evolves to fill an ecological niche. If the ecosystem changes and that niche disappears the organism dies. There is no time to evolve into something new and keep going.
I’m not so much advocating kill, as much as change course and not double-down on the old ways of doing things. Look at Humana as an example. They used to run hospitals, and are now a major insurer. In those two companies’ case, I’m not saying they should have just shit-canned the existing way of doing business, but rather have been open to reconsidering what “their business” was- they were both kind of hung up on the delivery details- if Blockbuster thought of themselves as a video rental business, but not as married to physical media and stores, they might have been more open to streaming and we’d all be streaming from Blockbuster instead of Netflix or Hulu or whoever now.
In Blockbuster’s case, it’s like they felt threatened by the rise of Netflix and the mail-order DVD business, so they just dug in deeper with brick-and-mortar video rental. All they’d have had to do is be the least bit visionary and invest in video streaming and/or mail order video rental- they already had a HUGE customer base and massive brand recognition and value, as well as the relationships with the studios for getting the latest movies, etc… The rest was literally technical details, but they chose to entrench harder on video rentals with dumb-ass stuff like that confusing no late fees business and turning their stores into as much candy stores as video rental places.
Kodak already had digital cameras and printers, and was doing well until the rise of the smartphone actually, but failed to recognize that the barriers to entry in digital photography are extremely low- the components are literally off-the-shelf in most cases, so they were being built really cheap and integrated into cell phones, etc… Their best bet would have been to essentially move into component production and/or licensing their brand name- it could have been a selling point for a smartphone to have a Kodak camera in it rather than a no-name hodge-podge of components like their competitors (with appropriate marketing to point that out, of course)
These two companies are actually curiosities of mine; in business school(2002-2003) we had to write papers about actual companies either facing present difficulties, or ones we foresaw having difficulties (and why), and how they might remedy them. At the time, we foresaw Kodak and Blockbuster potentially facing exactly what they did, and suggested what I am saying today- we actually suggested that Blockbuster and Columbia House merge, to give Blockbuster a foot in the door on mail-order operations, and suggested that the new joint company seriously consider moving into streaming video and audio; they had the brand recognition at the time, and Apple was still considered a computer company, with the iPods not really getting a lot of traction at that point.
It’s more than a little eerie to write academic papers like those and see them mostly come true, including the suggested path.
Yes and no. At some point a company has chosen the wrong fork in the road - they have chosen the track leading to a brick wall. The problem is, then they continue to head down that track full tilt trying half-assed measures to stem the tide. Maybe it’s a lack of imagination. Maybe it’s a fear of being the doomsayer. Maybe it’s stupidity disguised as optimism.
Blockbuster is a good example. Kodak is another. Numerous department stores. Chrysler, the City of Detroit. Basically, everyone deferred the tough decisions with stop-gap measures that were guaranteed to fail.
Kodak - I disagree on cellphones - it happened well before that. Kodak was never as renowned for cameras as the real camera companies - Pentax, Canon, Olympus. etc. But it knew how to make consumer cameras. (Friend of mine had one of the early 1Mp B&W Kodak digitals.) It simply failed to compete on the things that mattered to consumers - features and price. Maybe it was a lack or rapid product development in a previous staid market, but technology at the time was evolving so fast that rapid development cycles were called for. Fuji and Canon were running rings around it in the early snapshot market. By the time I considered buying a camera, in 2000, I bought a Fuji 4900Z. Kodak had nothing to compare. And… they did what most American companies do when faced with strong competition from overseas… nothing.
Similarly, Chrysler and Detroit exhibited a real head-in-the-sand approach to business. It didn’t take a rocket scientist to see the business graphs all trended downward; price vs. cost, committed employee costs like pensions, poor quality vs. competition… As the old saying goes, “If things can’t go on like this… they won’t.” Instead, people produced graphs showing that thanks to this or that miracle, things will turn around in a few fiscal years.
We see this even today, where cable execs deny that there’s a problem with cord cutting. “The millennials will start connecting cable TV when they start reproducing”. No, the cable company is only relevant because they supply internet. They are only one cellular generation away from a cell service strong enough to eliminate the need for cable, much as it has eliminated the need for landlines.
Yeah, I agree. The cable companies aren’t seeing the writing on the wall, despite it being there in huge, luminous letters.
I’m not sure how it’s going to go in the long term; I have a feeling that most houses will have one cable coming in, and it’ll essentially be an internet connection.
But I think there’s a lot of room in there for variations on what we have today. Cable companies might be smart to fund something that’s essentially a cable box combined with a Wi-Fi router, with a very simplified interface that lets subscribers get to the streaming services they purchased as part of their “plan”, and also provide DVR service and web browsing/wireless hub functionality as well. I think that might be a better plan for a lot of less tech-savvy people in the long haul than the separate method we have today; there are a lot of people out there who would value a TV/internet appliance without having to set up separate accounts for everything and connect their TV to the Wi-Fi, and all the separate accounts.
What I’m imagining is kind of like Apple TV or Chromecast writ large and more integrated.
But the cellular companies are designing the 5G networks, which (they promise, honest!) will have up to (!) 500Mbps speeds. Mind you, for that kind of service, they will need to have plenty of towers all over. Assuming the tech works, where will many of these towers be? Where will they appear first? Well, mainly in the places already dense enough to be served well (relatively well) by cable. To pay for the new tech, the cellular companies will offer discounts on usage…
So cable will lose its biggest customer base first, in the larger urban centers. they will become the equivalent of dial-up modems of the future, the companies serving the areas where it cost to much for the cell towers to go in usable numbers at first - much as the areas where people tend to choose no land line are in the cities.
With dwindling revenues, then what do they do? Spend less on infrastructure in a downward spiral.
If I can see this risk then someone in the cable business can see it and do a more in depth study of it. My educated guess is that the solution is exactly what they have failed to do with their government assigned monopoly gravy train - build out the infrastructure ASAP, with fiber to the home, faster backbone, etc. - so that they can offer better service and at a lower price. It’s almost too late for that. Instead, the path of least resistance for yes-men is to produce reports that all is going to be ok, that things will turn around, produce spreadsheets with wildly optimistic projections (because the numbers are massaged to produce the desired goal).
And this has been the pattern with so many doomed enterprises - don’t apply he brakes, don’t make radical changes, wait for the train wreck. Even more annoying is when we see the same people who drove the train off the rails paid “retention bonuses” by the bankruptcy trustee because “they are needed t keep the company running”.