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The Blockbuster Case for #EdOptions


Nostalgia has a way of carrying us back into our memories and reminding us of special moments, like Friday nights spent fighting over new releases, standing indecisively in front of DVD covers, and arguing about Indiana Jones’ relevance in Raiders of the Lost Ark. Oh, come on, we have all seen that episode of the Big Bang Theory. Going to Blockbuster on the weekend and renting movies was a fun event. Whether you were planning a night in alone or spent with friends or family, it was an activity that required effort and collaboration. Someone had to take the blame for renting Gigli.

Blockbuster, which first opened its doors in 1985 in Dallas, Texas filed for bankruptcy in 2010. Then in 2013, the parent company DISH announced that the remaining stores would be closing including its DVD mail distribution by January 2014. It was an end of an era and signaled a transition to a new world of streaming and on-demand. The market had clearly changed, but not for everyone.

While the majority of the population has seen the convenience in streaming services and companies like Netflix were able to make an effective shift from mailed DVDs, there is still a population that continues to keep ten Blockbuster stores in business in the digital age. Seven of the ten Blockbuster stores still in existence are located in Alaska, a state known for dark, long, brutal winters and extremely expensive Wi-Fi. Alan Payne, the owner of eight stores, seven in Alaska and one in Texas, was able to maintain the stores’ profitability through “managed downscaling” and thoughtful business practices. He pays a licensing fee to use the Blockbuster name and logo, enters into aggressive real estate deals with landlords for reduced rent, and runs the business a lot differently than Blockbuster. He found a balance between Blockbuster’s weaknesses of pursuing customers over late fees and eliminating them altogether. Alan leveraged the strengths of Blockbuster in an increasingly digital world by understanding who he served, learning from mistakes, and delivering consistent service.

The Blockbuster Customer: for many, the fond memories of walking into a Blockbuster store intending to rent one DVD and walking out with three movies, two buckets of popcorn, and more Twizzlers than any one person should eat, brings a smile to our face. However, for a majority of the population, binge watching our must-see television shows on our favorite streaming service provides us the best of all worlds. We can have our snacks delivered by Uber and instantly catch up on Game of Thrones. While this may be the new normal, there are still people who prefer to pop in a DVD and save money on expensive streaming services. In Alaska, internet service is costly. Alan understood these facts and decided to cater to this population.

Higher education has increasingly entered the online learning space to meet the needs of adult students. In addition to online programs, other educational options are offered to meet the various challenges students face such as affordability and flexibility. There are educational options that tend to receive less attention because they are seen as being outdated. While enrollments may decline for specific learning models, that should not solely define them as being an ineffective model. All students learn differently and should have access to quality education offered in ways that best meet their preferred academic styles. We just need to better understand who we serve and how we can best meet their needs.

The Blockbuster Mistakes: the end of a company that was in existence since 1985 is always a shock. Blockbuster experienced its peak success in 2004 when it boasted 9,000 stores nation-wide. Blockbuster was comfortable in its market and succumbed to complacency. It did not acknowledge its new reality in enough time to effectively pivot its primary business practices. Additionally, Blockbuster developed a “contentious culture over late fees” which only served to alienate its customer base at approximately the same time that other streaming options were available. This coupled with other errors only served to accelerate the company’s demise. Alan, having been a Blockbuster franchise owner for years, saw these mistakes. He understood that to return his stores to profitability he needed to ensure that these missteps were not repeated.

Higher education, while not in the same boat as Blockbuster, still has the same opportunity as Alan, to carefully examine the past and correct missteps going forward. Not every educational delivery option is perfect, but that doesn’t mean that it cannot be perfected to meet the needs of students. Much of the time, we expend our efforts looking for the “big” solutions to make a significant change, but sometimes, it is the small tweaks that have the biggest impact overall.

The Blockbuster Service: one of the best parts about going to Blockbuster was getting movie recommendations from the employees. It was an opportunity to interacting with other human beings and seeing a spark of excitement when they shared their latest favorite movie pick. Sure, they would eventually upsell you when you got to the end of the checkout line, but by then you felt like you had made a new friend, so what did a few extra packages of gummi bears really matter? People enjoy the interaction.

Students also appreciate customer satisfaction. Navigating the nuances of higher education can be daunting and sometimes it is a showstopper for many. If they cannot figure out how to apply, enroll, pay, and attend, they will also begin to wonder if it is really worth the effort after all. Institutions can have a big impact by simply taking the guesswork out of the college process and many do. Students need to know that someone understands how overwhelming the experience can be and provide the encouragement they need to persevere. Sometimes it just takes a little human interaction to make the difference between a drop out and graduate.

Alan Payne is under no illusions. He knows that eventually his remaining Blockbuster stores will be forced to close and for those customers it will be one less entertainment option on a dark and cold Friday or Saturday night. The same may be true for some educational options that are currently being offered. Eventually, the business model just no longer works, but that does not mean we cannot learn some valuable lessons. We just need to realize that variety is more than the spice of life, for some students having quality educational options may be their only opportunity to achieve their academic dreams. While educational models come and go, we always need to be meeting students where they are and providing them pathways forward.

How does your institution deliver educational options that meet the needs of the students you serve?

About Susan Chiaramonte

President of EduCred Services and publishes weekly blog posts on higher education, business, and leadership. EduCred Services is a higher education consulting firm providing customized solutions to strengthen institutions’ foundation for continued growth, efficiency, and sustainability. You can connect with her on Susan Chiaramonte and educredservices.


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