The Fatal Mistake: Blockbuster's Disregard for its Mission Led to Its Demise

It was a fateful meeting in the year 2000 that ended up destroying Blockbuster.

Blockbuster had an opportunity to buy Netflix for 50 million dollars. Blockbuster was worth about 5.9 Billion dollars at the time.

John Antioco, Blockbuster’s CEO held back laughter at the idea of the purchase while Ed Stead, Blockbuster’s legal council expressed how Netflix would never make money.

Netflix was 3 years old at the time and was founded by Reed Hastings and Marc Randolph who started the company because they hated late fees.

After the 2000 meeting, Blockbuster began to decline, losing about 4 Billion over the next three years.

🎯 The Mission of Blockbuster was:

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“To be the global leader in rentable home entertainment by providing outstanding service, selection, convenience, and value.”

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The mission was ignored or likely not even considered when declining to purchase the Netflix team.

It was 100% a revenue decision.

If you Google, “We are in the business to make money.”, you will find it said by CEO after CEO and I can’t help but think that was the mindset of John Antioco.

I totally get that a business needs to make money, but shouldn’t a company be in business to fulfill its Mission first? A company’s Mission is its “Purpose” and should be its motivation, not revenue.

I can’t help but think, that if John Antioco and Ed Stead, the leaders of Blockbuster, BELIEVED in their company's Mission, they would have seen the value in Netflix, taken them seriously, and would have made a different decision.

It was later in 2007 when Carl Icahn moved in and drove to remove John Antioco. Carl Icahn seemed even less motivated by the Blockbuster Mission and implemented a leadership team lead by Jim Keyes that made moves counterintuitive to the Mission. Specifically focusing more on brick-and-mortar and less on the online business.

I think you would be hard-pressed to say Brick and Mortar is more convenient than online even back in 2007.

Resources:

An Inside Look at Blockbuster, Inc..pdf?ref=nu-detroit.com#:~:text=Blockbuster%27s%20mission%20statement%20is%20%E2%80%9CTo,each%20very%20diverse%2C%20whom%20appreciate)
Blockbuster Rise and Fall
How I Did It: Blockbuster’s Former CEO on Sparring with an Activist Shareholder

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