Extreme: The Cloud is a Natural Evolution, Ask Blockbuster

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As we enter the third decade of the 21st century, we are witnessing a change in the way business operates. Move away from legacy device-based solutions and a CAPEX model in a natural evolution towards the cloud and an OPEX model. In an age of cloud or business failure, SD-WAN is proving essential to sustaining the infinite enterprise.

An old friend used to say, “I’ve made mistakes, so you don’t have to,” and that’s why we’re telling today’s uplifting cloud tale.

For nearly 30 years, “Let’s Make It A Blockbuster Party” was a household slogan nationwide, as adults and children alike flocked to the entertainment center to rent the latest movie and video game releases. Unfortunately, CEO John Antioco didn’t see the writing on the wall. Listening intently to a pitch from Netflix looking to partner up, but instead of eagerly accepting the offer, he fought to restrain himself from making them laugh at the reunion.

The first Blockbuster opened in Dallas, Texas in 1985. Within a few years, the one store grew into many, and in the late ’80s, an influx of money propelled Blockbuster onto the national stage. and a buying spree of local video libraries to scale the business.

In the 1990s, Blockbuster outlets grew to 1,000, then 6,000. Viacom bought the video rental chain for $8.4 billion in 1994. Some 10 years later, Blockbuster had 9,000 stores worldwide and $5.9 billion in revenue, marking the zenith of its journey.

When the change of heart happened for Blockbuster in 2004, Hubris had already done Goliath. Netflix had an insurmountable lead. Blockbuster spent nearly $200 million to launch Blockbuster Online and cost the company $200 million in revenue by cutting late fees.

Bankruptcy was Blockbuster in 2010, and in 2011 Dish Network bought the struggling company for $320 million, intending to keep the remaining 600 stores open.

Today there is one. No, this is not a Highlander reference, this is reality. There remains a Blockbuster-branded location in Bend, Oregon, where a loyal local clientele and an Airbnb partnership keep the lights on.

In 1997, Reed Hastings and March Randolph founded Netflix, convinced that renting DVDs by mail was an idea with legs – Long Legs. In six short years, Netflix surpassed one million memberships and issued a patent covering its subscription rental services. In 2006, membership reached five million subscribers and in 2007, its streaming site was launched.

The following year, Netflix expanded its ecosystem by collaborating with consumer electronics brands to enable streaming via set-top boxes, Blu-ray players and Xbox 360s.

Streaming made its way to Canada and mobile devices in 2010, and in 2011 Netflix buttons started appearing on remotes and services reached Latin America and the Caribbean. The following year, Netflix reached the UK, Ireland, the Nordics and 25 million members – not to mention, released its first comedy special.

Fast forward to today, and chances are you’re one of over 200 million subscribers in nearly 200 countries – or at the very least, using the credentials of “someone” – watching the new season of Ozark or finally watching Squid Game.

Netflix reports $7.7 billion in revenue for the fourth quarter of 2021, with a current valuation flirting with $300 billion.

There are a number of lessons learned from the example above. The one that stands out for me, “You can’t stop progress.” When cloud-based networking and SD-WAN arrived, many laughed at these options. He guessed at the solutions, doubted the benefits, and didn’t quite grasp the big picture.

These “Blockbusters” cling to legacy, on-premises, device-based networking, struggling to stay afloat in the digital age. As the “Netflixes” of the world look to the cloud for solutions, take advantage of SD-WAN as an on-ramp and supporting this software-defined change with net results. We cannot be afraid of change; we have to embrace it and not laugh at what we don’t understand.

Learn more about SD-WAN and its impact on your business HERE.

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