HMV and Blockbuster deserved to fail

HMV and Blockbuster both had it coming, we should not be sad about their passing, we should study their failings and learn from their arrogant and blundering mistakes.

I have be reading lots of messages with people reminiscing about the past, and how the internet had killed both companies – some blamed changes in customer sales patterns, others piracy. Those views may be true, but the elephant in the room is this – why did they not figure this out and react accordingly?

I am astonished that both Blockbuser and HMV do not dominate the internet delivery of films and music today. They really should. Instead their shareholders are holding their heads in their hands.

A decade ago, both HMV and Blockbuster had

1) Enough resources to make internet domination happen.
2) Smart advisors who would have made these recommendations.
3) A brand that customers would know and trust.
4) And certainly with Blockbuster, probably the biggest database of paying customers in the country.

So how then could both companies being going to the dogs this week? How could they blunder so spectacularly.

Greed and cowardice.

I have seen it before and I am sure we will see it again.

At the top of the pyramid, people often think that their companies are too big to topple, that what they have works so well, and if it ‘aint broke, don’t fix it – CEO’s can always move on to newer pastures and leave the sinking ship. The powers at +HMV and Blockbuster UK were probably afraid too that if they modified their model too much, they might fail, even get fired by the shareholders – again fear of losing money and market position.

Better to relax on the yacht, sip champagne and enjoy the good times while they last.

Yes I know we have twenty twenty hindsight, and yes I am peddling a horrible cliché about corporate bosses that is most likely unfair. And to be fair to them, those good times probably lasted a good decade as it would have been around ten years ago when real rumblings of massive change were becoming impossible to avoid – I can see why that was more attractive than re-inventing and re-investing in an unproven new world.

At some point around 2002ish, there were board meetings and strategy sessions when the powers that be said ‘No, we are not going to invest in the internet as the future for our business…’ And this week we see the result of those choices.

So let’s not shed a tear for HMV and Blockbuster who both sat on their hands (though of course we should for the staff, shareholders and customers caught in the crossfire). It seems to me they had it coming, they stuck their heads in the sand and they chose to continue business as usual as their ship began to sink.

Onwards and upwards!

Chris Jones
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11 Responses to HMV and Blockbuster deserved to fail

  1. James Page January 17, 2013 at 9:49 am #

    I think its down to a lack of imagination. Every successful company needs a visionary, a Steve Jobs character who is smart/brave enough to see where the market was heading, and make the right adjustments, but they had no-one.

    If they’d adopted a synchronised model that incorporated store based and online sales, as Argos has done so successfully this past year, they’d still be here. But instead they relied to heavily on a business model at least 5 years out of date.

    I worry what the greater implications are, however, for our retail economy, and the character of our town centres. There are at least 16,000 jobs at stake between Comet, Jessops and HMV, but in addition, the knock on effect of empty store fronts on smaller local retailers is going to be heavy. Many people simply wont go into a town centre if the big names aren’t there, meaning incidental trade is going to dissipate.

  2. Danny Jeremiah January 17, 2013 at 9:56 am #

    The world is moving so fast that no business model is going to survive unchanged for more than a few years (except maybe funeral directors). What you sell will change, or how you sell it will change, and if you aren’t in a position to adapt to that change, or even better lead it, you will be left behind regardless of how big you were previously.

    This applies to any company of any size, and I can’t help thinking if more of these companies who were failing had employed Google’s ‘20% time’ then the brands at least might still be with with us. Jessops, HMV, Blockbuster, they could all have driven the change but as you say chose to sit back and by the time they realised they were heading for the iceberg it was too late to steer around.

  3. Peter Darby January 17, 2013 at 10:02 am #

    As with Jessops (who left a snotty message on one of their shops about “Thankyou to our customers for shopping at Amazon”), Blockbuster and HMV trained their customers to care only about the price of physical goods, so for that section of their business, OF COURSE internet stores were going to beat them.

  4. John Ninnis January 17, 2013 at 10:08 am #

    I agree with your blog. The problem being is that many businesses underestimated the power of the internet. In my opinion HMV and Blockbuster should of plan ahead. The sad thing about many business in the high street is that staff who are going to lose their jobs. Especially of this recession that nobody knows how long that is going to last.

  5. Mark Morris January 17, 2013 at 10:44 am #

    Did they fail? In a falling music market (which I’ll go into the details in a minute) did the council with high rents. Town centres with high parking charges strike the death blow? Unfair competition and internet companies that pay NO taxes to this country Also SQUEEZING the last drop out of film makers by dropping prices. How can a DVD sell for £2 and make money? Clearly no one is making any money soon after its initial release.

    This lack of money going back to the artist and the industry means a dumbing down. It also means gaps are being filled by far less talented people.

    How many of those shops were/are profitable?
    Why do the rules mean ALL shops in a chain have to close.
    Why not close the loss making shops and use the money making ones to pay creditors?

    We are in a recession People are not spending as much Chain stores set up in the good times may have only been making marginal profits. It is likely many shops were being propped up by others and the tipping point (Xmas 2012) Arrived.

    In my opinion, music sales are down probably because Top of the Pops was cancelled.

    Top of the Pops also promoted radio stations and vice versa. All we have left is Simon Cowell whose show does not feature what is current and popular but cover versions IE profitable tried and tested formulaic guaranteed to make money for the owner not the artist and at the cost of our once globally respected music industry.

    I personally dont buy new music anymore because I dont get to hear it. I’m not going to watch sky music channels with its non stop adverts and stupid music videos and I’m not going to I tunes and listen on my own to see if there is anything I might like. I want current music sung live in competition with a feeling of this is NOW. So bring back Top of the Pops.

    I think there are a lot like me who now jwatch the X Factor and live in the past thanks to some really stupid marketing and especially the BBC who built it up then let it go.

    I want to go into town and buy records but hit by high car parking charges and a lack of access to modern original music that I have previously heard and want..

    Funny. I often just wait in hope that I might hear something that will get me excited again Only the amazing Adele seems to get air time on the BBC these days.

    It’s about time rules were applied as to who gets to sell artists work and prices fixed as well as more national advertising by way of the BBC. We do need some professional standards and guidance from the source IE companies so they can apply them globally and people dont just buy off the internet from a cheaper country.

  6. KT Parker January 17, 2013 at 11:11 am #

    Some good points from Mark Morris…

    As a consumer I am sad because there is now less choice in the market. When the news about Amazon paying insufficient tax in this country broke, I made a conscious choice to switch to HMV and Waterstones. Waterstones Internet business model and service delivery is every bit as efficient at Amazon’s. Sadly the same could not be said of HMV’s. After a disastrous customer experience, I was forced to go back to using Amazon…

    I am also saddened by the loss of jobs. If you take bankruptcies and add outsourcing to India etc. you get fewer entry level jobs for school leavers and uni grads. Prospects for the young are increasingly bleak, while the doubling of the national debt under Labour and the inability of the present Government to get it under control means the young are the victims of a huge inter-generational transfer of wealth.

    In short, all very depressing news.

  7. Andrew Lagowski January 17, 2013 at 3:45 pm #

    HMV were always way too expensive and as you say, should have adapted to changes in the consumer world around them. As for Blockbuster, they should have given up years ago (in fact, I thought they had!).

  8. applestax January 18, 2013 at 10:36 am #

    How many years did Blockbuster have to scrap their late fees?

  9. Mark Morris January 18, 2013 at 11:58 am #


    What do you think an artist should get for perhaps the millions of pounds they spend. Already many will invest years of hard work and not even get paid. Most films fail to make money.
    The work that goes into making a film is phenomenal Millions of pounds spent with amazing attention to detail Sets built Artists work Time and supreme effort put out and the end user gets a new DVD release for £12,99 that after a few years ends up in the bargain bucket for £2.99

    Going to the cinema where you only get to watch once will cost more and petrol costs, parking.

    A DVD
    The distributers cut
    The film makers cut.
    Money to make, print, artwork, publish.
    It has to be transported to its destination IE flown here then taken by lorry to a depot then onto a store..
    The government then charges VAT.

    A DVD will often have the making of docu’s etc.

    In my case I have a CRT projector that in anamorphic mode makes the DVD ON MY 8′ screen look almost as good as the cinema. I then have a NAD superline pre amp with power amps and five surround speakers.
    I get the full cinema experience I could not bear to watch a film on my 17″ laptop with tinny speakers and alone that I downloaded from itunes as a one off. For me it’s an event. I often won’t watch films on TV either. When I do it’s then spoiled. For a long time I wanted to buy Moon and eventually caught it halfway through on TV. I switched off after 5 mins and recorded it as I want to skip the ads. Although somehow I’m not likely to watch it now. But if I had bought the DVD I would have enjoyed it.

    When I get interested in a film I want to know all about the Director and how they made it. I studied closely Gone fishing and did the course. I want to see the full results of the hard work and understand. I then may go back and study camera moves and how they did certain things.

    Okay that’s me.

    Maybe you are only interested in being entertained and being used to the TV channels expect it for free. And so you will go to the cheapest source say ITUNES watch on your laptop and tinny speakers and think wow that was a bunch of crap. Not worth the money. You would be missing out on so much.

    Although opposite to what I just said If I want a DVD I will go to the cheapest source. I have to, as I’m broke and I try to make films with no money. I’d love to go into town buy some clothes a few magazines some dvd’s etc and bits and pieces but I cant due to such a tight budget. However that said I could if pushed buy a DVD from HMV. I know its wrong to buy from companies outside the UK who pay no tax here and who contribute nothing to the local economy. Working class jobs are fast disappearing.

    One of the things are government should do is TAX companies like Amazon the full whack to make a level playing field because companies like HMV employ working class workers from my community. Some I went to school with perhaps. They in turn spend their wages in the local community. Unless we support our own workers our own communites we are all going down at least the working classes. Its not our job though to decide to do the right thing Its the government’s job to make rules that allow. Our government have signed us up to the EU whose stated aim is to spread the wealth of the EU countries. That obviously means as a richer country we lose out and our living standards go down. But note only for the poor who already have it hard.

    Our government don’t do their job which is to apply an import tax on goods so say you have a product made in china who deliberately devalue their currency and pay their workers survival wages. You will find most products are made in china and branded as a popular name here.
    If our government were to say right to manufacuture that product here it would cost a minimum x amount and then charge them import duty that levels the playing field Manufacturing could begin here again. But while people are happy to have cheap slave wages goods from those on a subsistent living from china who then finish off the world with global warming with no pollution control over coal or wood and completley obliterate all our so called standards targets ect.

    Its not up to us as individuals to make sure we have a thriving media or control global warming or a level playing field for our own workers ITS up to our government who dont do their job. It’s also good for us as film makers to make films that show the politics of our time. Problem is we are effectively cut out from an industry that only makes money on massive blockbusters where a tiny percentage actually recovers the budget and a tiny percentage for a less well known film mean losses. There is a market for low budget films but thanks to cutting out profits and downloading deals that mean the film maker gets nothing at all and so we have a situation where cast and crew have to work for free in order to get a film made. Is that fair?

    HMV Blockbuster are victims of government policy who have slapped all of us now and in the future as our high streets close more unemployed less working class jobs and richer offshore companies who pay no taxes and fix what film makers get let alone less money for schools hospitals services etc.

    Think this is wrong.

    Think about the money already lost as the list of companies going under grows and grows.

    Until governments stop selling themselves and their pretend world and get down to the business of running the country by controlling immigration by allowing those in or out that is working for the country IE when manufacturing is doing well and we need workers and close it when manufacturing is low and we need to support our own When they charge import duty appropriately. When they actually start to care about us instead of their big ego’s salaries pensions kickbacks Cash for questions peerages and expenses.

    Maybe then we can nurture and grow a fair society for all and reward approprietly those who deserve it.

    As for HMV and Blockbuster closing. It’s another nail that ultimately takes us all down. You may have had a bad experience from the shop but then remember those serving you are from your own community. What you dont like really is what you are and what we have all become. So up ourselves No one cares anymore.

  10. Laurence Lowne January 27, 2013 at 7:03 am #

    Chris wrote:

    ‘HMV and Blockbuster both had it coming, we should not be sad about their passing, we should study their failings and learn from their arrogant and blundering mistakes.’

    I am sorry they were not arrogant, and what an offensive term to use, consider the staff who worked at HMV – well informed and human beings, who have had their livelihoods taken away.

    I point a lot of the problems at landlords and councils, who have created most of the problems.

    Chris Morris makes a lot of good points.

    No business deserves to fail, ever.

    • Chris January 27, 2013 at 10:32 am #

      Hi Luarence — you said ‘had it coming’ I said, ‘deserved it’. We both mean the same thing. As I said in my blog, I feel very much for the staff. I never called the staff arrogant, I think its clear that I am referring to the powers that be who considered their opinion to be right, in the face of evidence and advice from their team, and even when it became clear their choices were bad. To me I would call that arrogant and carried no duty of care to shareholders, staff and customers.

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