On Nov. 9, a customer in a Blockbuster store in Hawaii rented a movie, titled “This Is the End,” around 11 p.m., local time. Coincidentally, this was also the very last DVD rented from a brick-and-mortar Blockbuster store. It marks the end of an era of a business model that lasted for decades and seemed untouchable. However, new competitive models arose and due to Blockbuster’s lethargy to adapt, its market share in the business dwindled and the company was ultimately forced to change its existing model and joined the competition late. First, companies such as Netflix started to mail DVDs to people’s homes and provided an easy-to-use online catalogue. This model was the first major innovation in that business and a serious competitor to Blockbuster. Netflix has continued to evolve and innovate and online streaming of content is becoming the standard for the delivery of home entertainment.
Technology innovation can be completely disruptive, creating a new market and displacing the old business model. The Blockbuster example stresses that if a company does not adapt quickly, more nimble outside entrants could gain a large amount of market share. Mail delivery and online streaming have proved to be completely disruptive, but other types of innovation are more continuous. In these instances, innovation is not completely disruptive, but rather provides more efficient ways of service or product delivery and ultimately provides more value to the customer.
