Blockbuster was an $8.4 billion company that was taken down by a startup called Netflix that successfully shifted the habits of consumers. Blockbuster thought that people wanted the experience of picking out physical DVD’s and would not want to just download a movie. They were wrong and today Blockbuster is out of business and Netflix is valued at $147 million.
Patrick Bet-David, successful startup entrepreneur, CEO of PHP Agency, Inc., emerging author and Creator of Valuetainment on Youtube, talks about Shifting Habits:
Shifting Habits
I want to tell you a story about a company that’s going to be a love story for some, a horror story for a few, a fantasy type of story for others, and then obviously a money-making story for the people that were involved. But before I tell you the story about this company I want you to be thinking about two words; shifting habits. I’ll come back to those two words in a minute.
Let me tell you this story about this company. It’s 1984, a company gets started, it has got a yellow and a blue logo and it’s called Blockbuster. Blockbuster is a great story. You’d go to Blockbuster with your girlfriend or your husband or your wife and say, “Do you want to go to the horror section?” “Oh no, maybe comedy. I’m almost certain this movie’s not going to be available.”
Blockbuster: Nobody Wants to Download Movies
That’s 1984, the year got started. Blockbuster after only nine years was worth $8.4 billion in 1993. By 1997, a company got started called Netflix and it’s only worth $50 million dollars three years later. At one point Blockbuster could have bought Netflix for $50 million. But they said, “I just don’t think that’s the direction the consumer is going. I don’t think they’re going to shift their habits to this area because people like the experience of coming to Blockbuster and actually seeing the DVDs they pick up. Nobody wants to just download the movies. It’s not going to be taking place. People are smarter than that,”
Well, 149 million users worldwide disagreed with them. Netflix went from being a $50 million company in 2002 to today it’s a $147 billion company. By the way, Blockbuster on September 23rd, 2010, went out of business. They filed bankruptcy for $930 million and they’re gone. What’s the moral the story? Netflix since Christmas their stock is up 50 percent. Just in 2019, in the first 19 days of the year, Netflix is up 35 percent.
The Moral of the Story is That Netflix Shifted Our Habits
Netflix is up. That’s a love story for some, a horror story for a few, a fantasy type of story for others, and an obviously money-making story for those of us that were involved. Now having said that, what do you mean by shifting habits? So many people want to be innovators and shift their industry. I want to be in there, but I want to be disrupting my industry.
Bezos shifted our habits and we stopped going to bookstores to buy books. He said I’m going to shift your habit of the way you buy books. That’s why Walmart is afraid of Amazon. Instagram shifted our habits of the way we looked at albums. When’s the last time you bought an album? The list goes on. Wikipedia put encyclopedia companies out of business. How many times have you gone to Wikipedia to find out about different things? All the time. The moral of the story is that Netflix shifted our habits.
Disney is about to come out with Disney Flicks or whatever they want to call it. I know one of the Disney executives said, “We’re not really trying to compete with Netflix. We like Netflix. I use Netflix. We are just going to put out our Marvel products and Star Wars products and all this other stuff.” But Netflix becomes the one that led the way.
No one even thinks about Red Box anymore because Red Box at first made sense. By the way, if you say I still use Red Box, you’re probably over 40 years old. I’m not trying to offend you, but if you still use Red Box you’re over 40. You go to Kroger or Ralph’s to get your movies.
Start Thinking About Shifting Habits
Stop trying to come up with a great idea. Starts thinking about shifting habits. Not Seven Habits of Highly Effective People. Shifting habits. How do people buy your product? How can you shift that habit? How do people buy the product from you? How can you shift that habit? Those who can become the Bezos, become the Zucks, become whatever you want to call it of their industry because they shifted someone’s habit.
That’s all you got to be looking at. Not all this other crazy fancy stuff. So by the way, well Facebook ever be put out of business? Yes, by somebody who shifts our habit. Zuck says, “There’s no way in the world that’s the direction people are going to go to.” The will go that direction. That could also happen to Amazon and other companies as long as a new innovator is able to shift our habit.