Blockbuster CEO Is Still Confused By The Long Tail

from the have-you-taken-a-look-at-your-competitors? dept

In 2004, Chris Anderson wrote his feature article for Wired Magazine in which he coined the term "the long tail" to describe the business possibilities made possible by digital distribution. Four years and one best-selling book later, the CEO of Blockbuster is still confused by the concept that has been utilized by Netflix to wreak havoc on his business model. Yet, in a recent interview, the head of Blockbuster, Jim Reyes, misses the entire point of the long tail.

In response to a question regarding the small catalog of Movielink, Blockbuster's digital download service, Reyes responded, "When was the last time you watched 10,000 movies, you know? I don't care how many movies are available to me. As my personal taste as a customer, I want to watch the new stuff so whether we have 10,000 movies or 200 movies it doesn't matter if I don't want to see any of the movies that we have." The point of the long tail is not to ignore the hits, but to make available more. While Reyes's quixotic opinion may appease viewers with very limited tastes, when distribution and content creation is exceedingly cheap, it makes no sense to limit content. In his original article on the concept, Anderson noted that one-fifth of Netflix rentals are outside the top 3,000 movies. Clearly, a sizable minority of movie-watchers want to see films outside Movielink's inventory that "is heavily weighted toward newer releases and mainstream staple titles."


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  1.  
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    Anonymous Coward, Aug 19th, 2008 @ 2:04pm

    Egotistical CEO

    "As my personal taste as a customer, I want to watch the new stuff so whether we have 10,000 movies or 200 movies it doesn't matter if I don't want to see any of the movies that we have."

    Typical egotistical CEO, thinks his own personal tastes are paramount.

     

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    Matt Bennett, Aug 19th, 2008 @ 2:07pm

    Man, I stopped going to Blockbuster physical stores the first time I went in, and they told me they didn't stock "The Holy Grail." I was like, "How the hell can't you stock 'The Holy Grail'?" What we're talking about here is the exact same problem, just digitally. If it's not a recent hit, it's not worth stocking, apparently.

     

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  3.  
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    NSMike, Aug 19th, 2008 @ 2:13pm

    My reason for renting

    The great majority of my Netflix queue is filled with TV shows, and classics that I've never seen. Looks like the Blockbuster catalog would be worthless to me.

     

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  4.  
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    chris (profile), Aug 19th, 2008 @ 2:19pm

    digital means NO STOCKING

    If it's not a recent hit, it's not worth stocking, apparently.

    the trouble with physical media is the cost of failure.

    it's stupid to press millions of discs of movie that bombed. it's stupid to truck those discs all over the country and it's stupid to waste shelf space on them. but a digital copy is a few hundred megs on a server somewhere. it can sit there forever for a nominal cost.

    a warehouse with 10 copies of every movie, tv show, short film and music video ever made would be impossible build, run, stock, and search profitably.

    a digital version is another story. you could house everything, from the first cave painting to the dark knight, to erotic fan fiction and serve it up profitably since people will pay you for the sheer convenience.

     

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  5.  
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    PB'er, Aug 19th, 2008 @ 2:27pm

    I want to thank Blockbuster...

    ...for having such an organized store. I go in to the local store here every Tuesday with my camera phone and take pics of all the new releases and some older, for the wifey, and go back to the house and fire up several pc's, my vista ultimate box seems to be the fastest for the task, go to TPB, DL the torrents and let the machines get all that I have pics for. I then output the pics, all nice and sharpened and cropped to fit my templates, print out the covers and begin to watch. PRICELESS!

     

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  6.  
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    sehlat (profile), Aug 19th, 2008 @ 2:36pm

    Mr.Reyes, what YOU want to see doesn't matter.

    What *I* want to see does.

    My family usually gets together for a "movie evening" at least once a week. My brother has an over-300-movie Netflix queue and there's always something nobody's seen, and frequently no one's heard of.

    The result has been some amazing surprises and the virtual extinction of theater visits for movies. To give but one example, Ang Lee's "The Wedding Banquet" astonished us all with both high and low comedy, along with a marvelously tender and heartwarming story. And that's only the most memorable of over two dozen non-latest-Hollycrud-blockbusters we've seen in the last few months.

    If I want a (shudder) mainstream staple (like the abysmal Mummy 3), I can rent that at the local supermarket these days for a buck while I'm picking up the milk.

    Viva Netflix!

     

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  7.  
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    Anonymous Coward, Aug 19th, 2008 @ 2:48pm

    Re: digital means NO STOCKING

    a warehouse with 10 copies of every movie, tv show, short film and music video ever made would be impossible build, run, stock, and search profitably.
    I don't see why not.

     

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  8.  
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    Cecil Green, Aug 19th, 2008 @ 2:54pm

    Blockbuster still doesn't get it...

    But if you go and read the interview, he makes a good case for there basically being plenty of fooktards out there to keep them afloat.

     

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  9.  
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    Anon2, Aug 19th, 2008 @ 2:56pm

    He understands perfectly well

    You've got it wrong: Blockbuster's CEO understands the concept of long-tail quite well, as the following quote from the interview demonstrates: "We can also supplement that if we wish with a longer tail so we could add another 10,000 movies if we choose to acquire subscription content to Movielink.com or Blockbuster.com, which we probably will over time, but realistically, today we believe that the bigger demand is for the newer titles."

    Where I believe he's got it wrong is in believing his business model is superior to a long-tail based model such as Netflix. He is not confused; he thinks that Blockbuster can thrive without going deeper into catalogue, simply by providing a few conveniences that Netflix cannot offer, such as in-store substitution where you order online, receive the DVD's by mail, but then change your mind about what you want to watch.

    He's taking a chance, and I don't agree with him, but it's a tactical decision to invest in things other than deepening his company's offerings at this stage. Not any failure to understand the long-tail theory.

     

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  10.  
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    Sierra Night Tide, Aug 19th, 2008 @ 2:59pm

    new movies

    I hate most of the new block buster movies. I rent movies that never made it to the theater, the ones shown in other countries and ones not seen by 50,000 people. Maybe this is why Netflicks is winning customers. They rent a lot of what I want to see.

     

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  11.  
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    Anonymous Coward, Aug 19th, 2008 @ 3:04pm

    Re: I want to thank Blockbuster...

    What a fucking looser

     

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  12.  
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    Hulser, Aug 19th, 2008 @ 3:09pm

    Re: He understands perfectly well

    He's taking a chance, and I don't agree with him, but it's a tactical decision to invest in things other than deepening his company's offerings at this stage. Not any failure to understand the long-tail theory.

    I agree. Reading the full quote from the article, my impression was that he understood the principle of the long tail, but that he just didn't agree that the strategy was worthwhile. Now, if he said that he was implementing the long tail by focusing on the top percent of new movies, that would demonstrate confusion over the term. But just because someone disagrees about the benefits of implementing a certain strategy, it doesn't mean they don't understand the strategy.

     

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  13.  
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    Anonymous Coward, Aug 19th, 2008 @ 3:23pm

    the unfortunate thing, really, is that the way Blockbuster's service is run will appeal to the lowest common denominator of America. Also, in response to Chris's "digital means no stocking" post, I believe NetFlix does almost exactly what you're saying is impossible...

     

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  14.  
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    MG, Aug 19th, 2008 @ 3:24pm

    You have got to give some credit to Blockbuster

    While Kevin's point stands, some credit has to be given to Blockbuster. They were getting their collective butts kicked by Netflix (I think I even remember seeing a cover of a magazine with the CEO of Blockbuster and the title "How a CEO acts when his industry is dying" or something to that effect). Then Netflix ran into the problem of mounting costs due to postage. Users (like myself) were watching movies and then returning them quicker than Netflix had anticipated. Netflix response was to "throttle" deliveries or basically hold movies set to ship out for a day or two extra. Blockbuster also ran into the same problem but utiliized their local stores as a private post office. You could return the dvd from the mail service at the local store and get a rental for free. This was a brilliant response that added value for the consumer and saved money for Blockbuster.
    Of course, my local blockbuster shut down and I ended up switching to Netflix for the online movies (which are severely limited also). I am not very satisfied with Netflix which should be an indication to Blockbuster that they have an opportunity to strike again.

    By the way, I would really be interested in a longer post from Techdirt on the Blockbuster/Netflix battle. I know I don't have all the facts and I think it presents an interesting economic case.

     

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  15.  
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    PaulT (profile), Aug 19th, 2008 @ 3:48pm

    Arrogant c***

    "As my personal taste as a customer, I want to watch the new stuff so whether we have 10,000 movies or 200 movies it doesn't matter if I don't want to see any of the movies that we have"

    That's it in a nutshell, the reason why this business is in so much so-called trouble. First, he assumes that his personal taste is what drives everyone, which is simply not the case. I'd rather rent a copy of the 1928 Nosferatu or 1982ś Blade Runner than sit through crap like the newest Paris Hilton movie that litters his stores' shelves. Don't give me that option? I'll go elsewhere.

    I remember when Blockbuster first opened near me in the UK in the mid 90s. I spent a lot of time renting 70s Jackie Chan movies, 80s Dario Argento movies and low-rent action movies starring the likes of Jeff Speakman and Cynthia Rothrock. None of these movies would have made it on a top 200, yet every time I rented these, Blockbuster made money. the idea of the long tail is that if you spend, say, $10 buying a movie into stock and it's rented 6 times at $2 a pop, it's in profit. The long tail says that the profit point will come eventually whatever the movie might be.

    This guy seems to be thinking 90s. Back then, concentrating on a couple of hundred recent movies made sense as Blockbuster's main draw was the fact that they had more availability of these movies than smaller stores. Nowadays, it means nothing. If I want to watch a movies and you don't have it, I'll go elsewhere. Even if the movie I want to watch is a 30 year old movie.

    @sehlat: Hear, hear!

     

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  16.  
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    Hulser, Aug 19th, 2008 @ 4:28pm

    Re: Arrogant c***

    the idea of the long tail is that if you spend, say, $10 buying a movie into stock and it's rented 6 times at $2 a pop, it's in profit. The long tail says that the profit point will come eventually whatever the movie might be.

    "Eventually". But is anyone surprised that a CEO is focused on short-term profits over profits that could be made "eventually"? Jim Reyes' quote does sound arrogant, but I get the impression that he believes enough of the Blockbuster customers are like him that he can make a quicker profit on the top movies and spend the money that would have otherwise gone to extend the digital catalog (to chase the long tail) on more profitable opportunities.

    If you flip around the stat given in the original post, NetFlix makes 80% of its profit on just 3000 titles. Sure, we may like the more obsure movies, but if you're the CEO of blockbuster (who is beholden to stockholders and probably has big bonuses tied to the stock price) and see these kinds of stats, wouldn't you naturally start thinking of short-term profits?

    (BTW, I'm not defending a focus on short term profits. I'm just saying that Reyes' stratety seems to come more as a result of this focus than on arrogance or a misunderstanding of the principle of the short tail.)

     

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  17.  
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    chris, Aug 19th, 2008 @ 5:28pm

    To be honest, I love blockbuster's offering. There's never a movie that I can't find in their catalog, and there's the added convenience of returning the videos to the store in direct exchange for another.

    Blockbuster isn't losing to Netflix because of their smaller collection...they're losing because Netflix developed the model first (and having executed it quite well), and blockbuster hasn't given Netflix users a reason to come back.

    The next frontier is clearly online video streaming. Blockbuster needs to get out in front to gain some leverage. They aren't dead yet.

     

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  18.  
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    Anonymous Coward, Aug 20th, 2008 @ 4:28am

    Its Blockbuster . . .

    They know nothing about movies and never have. They are the generic portal for generic entertainment.

     

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  19.  
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    Anon2, Aug 20th, 2008 @ 7:53am

    confusion

    I also have to point out that it seems a lot of commenters here are confused -- the long-tail concept does not apply to brick-and-mortar retailers, nor can it since the entire premise is based on building virtual stores with unlimited inventory depth. People who are complaining that Blockbuster needs to get with the long-tail program and stock more titles in its stores are the ones who are confused.

    I'm not defending Blockbuster, and as one person above noted, it would be interesting to actually post something comparing Netflix and Blockbuster in terms of where each stands today, how it is doing, and where it appears to be heading. But it does seem as if a lot of the people who comment here are not understanding that there's an apples-to-oranges aspect of the conversation here since Blockbuster is still very much based on a traditional brick-and-mortar model.

     

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  20.  
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    hegemon13, Aug 20th, 2008 @ 8:23am

    Re:

    Actually, they're losing because they provide an inferior service. They're shipping times are slow. They have a significantly smaller selection. They have no streaming video option. And they cost the same. Hmmmm...

    The one option Blockbuster did have that made it worthwhile for a short time was the ability to trade in all your titles at the store. It meant I could get the 2-per-month plan and actually get 5 per month (trade in both movies and use the printable in-store coupon). It cost a little more than a single rental at the store. Alas, that turned out to be a heavily advertised, 90-day ploy to lure users from Netflix, then bait-and-switch by taking that option away or severely limiting it. After being treated like that, I will never use Blockbuster again.

     

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  21.  
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    Tom, Aug 20th, 2008 @ 9:20am

    just moved to netflix

    Yeah, I just moved to Netflix for these reasons, and I'm glad I did. They have so much more that is interesting. BB is in a lot of trouble with a guy like that steering the ship.

     

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  22.  
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    Fushta, Aug 20th, 2008 @ 12:08pm

    Re: Egotistical CEO

    He is so incredibly wrong in my case. Most new remakes are crap (i.e. Japanese horror flix, etc). I like to hop on Netflix and see the original. They aren't always better, but usually are.

    Actually, most new movie suck anyways. If they're good enough to rent, I've probably already seen it at the theater; and therefore, no need to see it again.

     

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  23.  
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    Valkor, Aug 20th, 2008 @ 12:12pm

    Re:

    OK, this is now the "Good Movies Blockbuster Didn't Have" thread.

    For the first time in years, I went to my local Blockbuster a few weeks ago. I asked for The Nightmare Before Christmas. The girl I talked to was visibly embarrassed when she found out that they didn't have it.

     

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  24.  
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    Franssu, Aug 20th, 2008 @ 3:02pm

    The company's called *BLOCKBUSTER*

    That should tell anyone their views about what they want you to see. Of course their business model revolves around what
    Joe Fucktard wants to see : Joe Fucktard wants to see what Hollywood tells him to see.
    I just don't give a damn about what the CEO of a company who's targeting morons and making it plain in their name has to say.

     

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  25.  
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    Pissed at blockbuster, Jan 6th, 2009 @ 3:19pm

    Ten days = no movies

    Ten days of no movies shipped. Full queue. Movies all cleared. Blockbuster online reps have no clue why. They offer coupons but WTF, no product shipped? I quit.

     

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  26.  
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    cbutler, Mar 29th, 2009 @ 9:25am

    no movies

    No movies shipped since 2/17/09.Queue full and blockbuster has been paid.Want to cancel ,this is my sixth attempt to get a response,whats the problem?

     

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