Creative Disruption

If there is one lesson to be learned from the DVD rental market – it is to be very careful about your predictions.

Way back in 2001 when I was briefly at INSEAD, Blockbuster was already a case history in how a sector will be disrupted. The narrative, of course, was that it would be nailed by Video On Demand etc.

What no clever clogs at business school of course anticipated was that an entrepreneur Reed Hastings would one day get a $50 fine for taking back Apollo 13, and realise there had to be a better way of doing things. The result, of course was Netflix; and in Europe, the myriad of start ups that now operate under the LoveFilm banner.

What could threaten these businesses? Well the logical narrative, of course, is downloads and streaming – digital distribution. And yes, it’s coming. Or perhaps another disruptive innnovation from a hot shot entrepreneur like Hastings.

Errr no – it’s a vending machine that originally (I think) came from some R&D work at McDonalds…(yes, McDonalds) and run by a vending machine company – Redbox.

The business says ‘no thanks’ to the long tail. And a big ‘hasta la vista’ to the online world – and instead offers top titles for $1 rentals.

The truth is – new entrants and entrepreneurs shape markets – not just technology.

Great write up on Redbox/Netflix here on CNN Money (with a Reed Hastings video interview also embedded).

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• Redbox sues 20th Century Fox in DVD dispute (ctv.ca)
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• Redbox’s Vending Machines Are Giving Netflix Competition (nytimes.com)
• Redbox delivers a social experience (superhypeblog.com)
• Blockbuster Deploying Vending Machines, May Expedite Store Closings (shoppingblog.com)
• Redbox: Media’s public enemy No. 1 (money.cnn.com)
• Sony Pictures-Redbox deal underscores value of bargain DVD rentals (latimesblogs.latimes.com)
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