My wife Joanne was dismayed to see the signs stuck in the medians yesterday as we were driving leisurely through Franklin, Tennessee. Our local Hollywood Video store is closing. They recently filed for bankruptcy protection, citing increasing real estate and labor costs, and growing competition. They want to close 520 unprofitable stores and concentrate on 4,000 stronger locations.
Frankly, I think they should liquate their stock and sell the real estate as quickly as possible.
Look at the changing history in a comparable industry – music.
I still remember the 331/3 rpm vinyl records. I listened to Pretty Woman and I Want to Hold Your Hand by spinning the big discs. Then we saw 8-track tapes. Soon we had the marvelous introduction of the smaller and more efficient cassettes. Then came CDs. And now we have digital downloads that don’t require any physical product at all – and you can select just one song rather than being forced to purchase the other 10 you don’t care about. Would you want to be a vinyl record manufacturer today?
Now at one time we have these options available for movies:
1. Carmike Cinemas – you drive out to the local shopping mall, park the car, fight the crowd, spend $10 for each family member, $7 for a bag of popcorn and then sit down right in front of 8 giggling teenagers.
2. Hollywood Video – you get in your car, go across town to the nearest location, browse through the possibilities, make your selection, discover all of that title are currently loaned out, choose another title, go home to watch the movie and then hope you remember to reverse your trip the next day to avoid the late fee.
3. Netflix – you select your favorites, the physical DVDs arrive in the mail a few days later, you watch them, make some new selections, send back the watched movies and wait for your new batch to arrive.
4. iTunes – you log on the iTunes site from the comfort of your own home, take 30 seconds to find your selection, instantly load it to your laptop, eat your own $.99 popcorn and include 6 family members at no additional cost.
Where would you put your money if you were going to invest in one of these models?
Let me ask you this? Where is your current job or business on this development scale? Are you hoping for revival in a model that is dead? Are you using business principles that were effective 20 years ago – but are dreadfully out of date today? Are you going to fight to continue selling typewriters – or can you see the writing on the wall and embrace the inevitable changes?