Blockbuster Goes Back to the Future19 Nov, 2007 By: Stephanie Prange
When I read comments by new Blockbuster Inc. CEO Jim Keyes, I couldn't help but recall another CEO for the chain, Bill Fields, who left Wal-Mart to head the No. 1 rental company in 1996.
Like 7-Eleven veteran Keyes, Fields had a solid foundation in traditional retail, especially sellthrough, and he attempted to apply that template to Blockbuster. Under his leadership, Blockbuster diversified and ventured into books, magazines, CDs, toys and other licensed merchandise that ultimately didn't goose earnings. Fields abruptly left in April 1997 and was replaced two months later by turnaround-whiz John Antioco, of fast-food chain Taco Bell.
Now, Antioco's successor, Keyes, is once-again putting the focus on changing the stores from being purely rental outlets to offering “convenient access” to entertainment, including downloads and sellthrough.
While his ideas are somewhat different from Fields', Keyes is similar in at least one aspect, he is looking to turn Blockbuster's customer base toward other products, not just packaged-media rental. He has talked of kids' sections, kiosks and interactive options in stores.
“That existing customer base represents one of our most valuable assets,” he said in the most recent financial call.
I'm sure Fields thought the same when he drastically altered the product mix at Blockbuster stores.
Certainly, the landscape, both brick-and-mortar and digital, has changed much in a decade. The time may have come for Blockbuster to branch out more from its video rental roots. The brick-and-mortar competition is on the ropes. No. 2 rental chain Movie Gallery is in the throes of bankruptcy and is closing stores, which can only benefit Blockbuster. This might be just the right time to move to reinvigorate stores as Blockbuster's biggest competitor pulls back.
However, Fields still stands as somewhat of a cautionary tale for any Blockbuster CEO who strays from the core business of video rental. Keyes' predecessor Antioco tried his hand at downloads (with Enron), reinvigorating the core business (with new direct deals with the studios) and rental-by-mail (Total Access). It's now Keyes' turn to reinvent Blockbuster — even if it means going back to the dreams of Fields.