Small businesses can learn from Netflix and Blockbuster

Latest posts by Joel Welsh (see all)

Suzanne and I gave each other a Christmas gift this year that we’re really excited about – a Netflix subscription. Friends have been touting the internet based movie rental service for a few years and we finally cut the ties with our local video store and signed up. It seems like it will really work for our movie renting style because Suzanne the researcher loves to make a list of all the movies we’d like to see and in the past I went off to the store to find ones that they had in stock. I’d spend at least 30 minutes to complete the whole process every time we wanted to rent a movie.

So the idea of creating that list in our own personal Netflix online queue and having the movies mailed to us is quite appealing. So far so great! A real cool feature is that we can also rate movies that we’ve seen and Netflix creates a list of suggested movies based on our ratings. Love that!

The only downside we anticipate is that sometimes we get into a movie watching marathon mode and we’d love to watch more than the 3 allotted movies from Netflix over a 48 hour period. Bummer. So, of course just yesterday I saw a television ad (yes, we still watch television a little bit) for a Blockbuster Video service that is exactly the same as Netflix … only better.

It’s better because you can run by your local Blockbuster store to exchange movies if you like, in addition to having them mailed to you. They even boldly proclaim right in the ad that this is better than Netflix.

Are you paying attention to all of this, small business owners? To summarize, Netflix saw a booming industry & came up with a way to make it better. Blockbuster acknowledged this improvement and leveraged their physical distribution capability to get a leg up on the competition of Netflix. Now it’s Netflix’s turn again. Or maybe it’s another small business that will nimbly step in and get movies distributed even more efficiently. Can anyone say download?

In a recent StartupNation Radio show the StartupNation team offered up business ideas for the community to steal & run with in 2007. My idea is to do just what Netflix did. Find a successful business and set up shop in direct competition. Listen to the show for more great ideas to start your own business.

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