At its peak in 1857, whaling was the most important and profitable industry in New England. The New Bedford, Massachusetts, fleet alone boasted 329 sailing vessels worth $12 million, employed more than 10,000 men, and supported a host of subsidiary industries. What destroyed the industry, according to the New Bedford Whaling Museum, was not just the discovery of petroleum or the invention of the lightbulb. The U.S. whaling business foundered because its owners, unlike their Norwegian and Japanese counterparts, refused to invest in steamboats and harpoon cannons.
Today, Blockbuster Corp. is facing its own harpoon cannons—video on demand and digital downloading. Like the New England whalers, the dominant player in retail video may run aground unless it comes to terms with new technologies and new distribution channels.
As senior writer Kris Frieswick observes in “The Turning Point”, Blockbuster, like its peers in the check-printing and typewriter businesses, must bet everything on how much and how quickly the new technology will take over its markets. It must choose whether to invest heavily in that technology and forgo short-term profits, or protect shareholder value at the expense of long-term viability. It must decide whether to let go of the model that made it a success, or wring every last dollar out of it. Caught between a rock and a hard place, Blockbuster CFO Larry Zine must publicly endorse the current business model while explaining the company’s plans to embrace change.
Will Blockbuster hang on to its model, or will it (with apologies to Shakespeare) “suffer a sea change into something rich and strange?”