Image by Flickr user Consumerist Dot Com

It’s a consumer-driven world: What Blockbuster and Netflix can teach us

Image by Flickr user Consumerist Dot ComIt is becoming increasingly clear that we live and work in a world dominated by the desires and needs of individual consumers. Just over a decade ago, the movie rental company Blockbuster had a market cap of $5 billion and owned 40% of its market with more than 5,000 retail stores. Its position seemed so secure that it turned down an opportunity to buy a young upstart DVD-by-mail rental company, Netflix, for $50 million. Since then, Blockbuster has closed all but 50 of its retail stores and in 2010 was forced declared bankruptcy (the company at the time was valued at only $24 million).  Meanwhile, Netflix has grown into a behemoth, with a market cap of over $21 billion and over 33 million subscribers. Apparently, consumers are willing to sign monthly contracts to avoid late fees and trips to the video store, a fact that Blockbuster failed to learn until it was too late.

The lesson from this and countless other recent examples is clear: no matter how successful a company was in the past, its future success or failure eventually depends on whether it can consistently satisfying its end consumer. As a result, today’s retailers and manufacturers are more than ever before searching for ways to become more responsive to end-customer demand, or “consumer-driven”.

How close is your company or industry to the consumer-driven ideal?

Aaron Pittman

Aaron is former Corporate Counsel/Director of Marketing at One Network Enterprises,A lawyer by training, heprovides practical advice regarding regulatory, compliance, and transactional matters, and also leads global marketing and communications activities including content, messaging, and analyst and press relations. He holds degrees from Vanderbilt University and the University of Michigan Law School.