Fast Company

Blockbuster's Digital Chief Attacks Apple, Netflix

King Kong Blockuster Netflix

"Our goal is to be everywhere that you would imagine there should be movies," began Kevin Lewis, Blockbuster's head of digital strategy. "That means partnering with every consumer electronics manufacturer on the planet. Our mantra is: No channel left behind, no title left behind."

This kind of bold statement is characteristic of Lewis, who spoke with Fast Company about the company's plans to transform its brick-and-mortar business for the digital age. In part one of this two-part interview, Lewis discusses Nintendo and Netflix, and explains why he finds Apple "unconscionable."

Tomorrow we switch our focus to the company's financial future and new Droid X app. Will Blockbuster's aggressive digital strategy be enough to save the crumbling video-rental giant from bankruptcy?

Blockbuster CEO Jim Keyes told me recently that figuring out how to get movies from his "Nintendo machine to the screen" makes his "head hurt to think about." Is he less optimistic about the company's digital strategy?

Jim is fully supportive. If there's a difference you hear between us, it's more the vocabulary we use than the concepts we articulate. Our job is to simplify the process [of watching movies via the Nintendo Wii] so it's like using a DVD. You shouldn't have to learn all this crazy stuff. Why does it make sense to go to your den, boot up your computer, then log into Netflix to program old movies into a separate queue before you can wander back to press play?

Does Blockbuster have plans to come to the Nintendo Wii or other consoles?

I would love to be on game consoles, but the challenge is that Sony and Microsoft consider themselves movie retailers, and haven't made the PS3 and Xbox platforms available to third parties yet. They don't care about Netflix with its five- to seven-year-old content. But we'll get there eventually, even without their cooperation.

Does Blockbuster have plans to be on the Mac?

We have plans to bring Blockbuster On Demand's streaming and download services to the Mac later this year.

Does Blockbuster have plans to be on the iPhone or iPad?

Again, my gosh, I would love to bring our products to those devices in a way that makes sense to our consumers. But Apple reserves the right to block anything that conflicts with iTunes.

Do you have the iPad? What do you think of Netflix's app and digital strategy?

We have devices that we share among the digital team. I have an iPad, and a Netflix and GameFly subscription. What do I like? I really appreciate that Netflix is helping consumers understand that movies can be delivered through the Internet. What I don't like about Netflix is that they've diminished the user experience and movie quality. They're doing a minimum to get that HD stamp, but they've done all the tech-wizardry in the background to make the file smaller and quality lower.

I'm actually surprised by how little some of our competitors get away with doing. Netflix told their consumers: Sorry, we didn't ask you, but we're actually not going to let you rent movies from two-thirds of the studios for a month. Hope you don't mind. Redbox is only a buck, but you have to wait a long time. I just think that's wrong.

I look at Apple--and I love Apple for a lot of reasons--but I find it unconscionable that Apple forces you to buy their hardware and their content from a single provider in order for it to work. That's not the way the world should work. We've said: Buy movies from us, play them anywhere. We think that's the right model.

But doesn't Blockbuster have the same problem? The fact is, I can't play a movie on my Nintendo, or my Xbox, or my PS3, or my iPad and iPhone. I can't watch on my Mac. To play, I need a Samsung Blu-ray player or a Droid. Isn't that the same problem?

The difference is strategy versus timing. Eventually, we're going to be pretty much everywhere. That's our strategic intent, and it's fundamentally inconsistent with Apple.

You say it's the company's intention to be everywhere, but if Blockbuster conflicts with Apple, Sony, and Microsoft, among others, isn't the company's business model, unlike Netflix's, interfering with its digital strategy's success?

I never said Sony--I said PS3. Companies speak with many voices. Look, it's not that our business model is challenged--again, I'm amazed at how little these companies do for their consumers and how for-granted they take their consumer relationships.

Again, couldn't Blockbuster customers say the same thing? I mean, I can't even use Blockbuster on a Mac.

You'll be able to use Blockbuster on a Mac. What you may not be able to do is have a movie-download app on your iPad. Look, we could've just thrown something out there in the app store--that would've been a hell of a lot faster, but it's not the right consumer experience. We want to tune every application for each device it's on. So with our new Droid app, we optimized it for that experience. That's the Blockbuster brand promise. We've been hesitant to go with disc-based or app-based solutions because you don't get that optimization between the hardware and software.

Let's put it this way: Would you rather have a streaming app on an iPad? Or would you rather have an embedded application on the Droid? That was an easy one for us.

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9 Comments

  • Gregory Pierce

    "I would love to be on game consoles, but the challenge is that Sony and Microsoft consider themselves movie retailers, and haven't made the PS3 and Xbox platforms available to third parties yet. They don't care about Netflix with its five- to seven-year-old content. But we'll get there eventually, even without their cooperation."

    I'm curious as there are movies less than a year old on Netflix Watch Instantly that are available on the PS3, Wii, and XBox platforms today. Other major players seem to be getting onto relevant platforms just fine.

    "Again, my gosh, I would love to bring our products to those devices in a way that makes sense to our consumers. But Apple reserves the right to block anything that conflicts with iTunes."

    It is strange then that Netflix is able to offer their product on both the iPhone and the iPad.

    "We've said: Buy movies from us, play them anywhere. We think that's the right model."

    I bought some movies from you guys and it only worked on my PC in a web browser and only after it had downloaded the content.

    "I never said Sony--I said PS3. Companies speak with many voices. Look, it's not that our business model is challenged--again, I'm amazed at how little these companies do for their consumers and how for-granted they take their consumer relationships."

    Your business model isn't challenged yet you're closing stores left and right and delisted from the stock market?

    "You'll be able to use Blockbuster on a Mac. What you may not be able to do is have a movie-download app on your iPad. Look, we could've just thrown something out there in the app store--that would've been a hell of a lot faster, but it's not the right consumer experience. We want to tune every application for each device it's on. So with our new Droid app, we optimized it for that experience. That's the Blockbuster brand promise. We've been hesitant to go with disc-based or app-based solutions because you don't get that optimization between the hardware and software."

    In other words your technology solution doesn't work on those platforms?

    "Let's put it this way: Would you rather have a streaming app on an iPad? Or would you rather have an embedded application on the Droid? That was an easy one for us."

    As someone who streams movies in bed onto both a BluRay player and an iPad yet hasn't seen the Blockbuster embedded application on any Android device except the DroidX, the decision was even easier.

    Maybe a digital strategy where you engage consumers on the platforms that they own instead of the platforms you want them to own might be a better winning strategy given that the market is so heavily shifted towards Netflix and Redbox that Blockbuster isn't even mentioned in casual conversation ...

  • David Mullings

    Using Netflix on a Nintendo Wii is so easy that no one's head should be hurting. Blockbuster let Netflix beat them in so many ways and now they are trying to downplay what Netflix has accomplished.

    Doesn't come across so well when your company is known for late-fees and that competitor basically killed your business.

    If customers are really what matter and Blockbuster really believes in doing more rather than less for them, why isn't there an iPad app, streaming on Macs and more? Let customers decide how they want to watch.

    Some people actually like the Netflix experience on iPad or on their Wii and Xbox360. Better to give that option than badmouth it and make excuses as to why you aren't trying.

  • Scott Byorum

    Wow. Another article within 2 weeks promoting a johnny-come-lately movie rental dinosaur trying to claw its way out of the grave it dug for itself. Must've shelled out some advertising bucks to FC.

  • Olivier Redmont

    Love how Lewis hates on Apple for not wanting to share their platform with blockbuster's content. Perhaps if their business was more robust and Apple felt that it could benefit their bottom line as well, they might consider partnering up. Blockbuster is overly concerned about the non-existant "user-experience." Blockbuster needs to do a much better job of listening to whatever few customers they have left. It seems counter intuitive to worry about the user experience but then alienate customers by not giving them even the option to stream on an iPad if they wish. Providing that choice, in my opinion, is another way of enhancing user experience.

    To answer your question Mr. Lewis, yes I would rather have a streaming app on an iPad than an embedded application on the Droid.

  • Thom Mitchell

    If Mr. Keyes can't figure out how to watch Netflix on his Wii without his head hurting maybe he should consider stepping down as CEO, unless of course his head is hurting because of how easy it is for Netflix customers to stream movies - onto their Wii, their Xbox or device of choice. Blockbuster sat back and raked in late-fee based profits for too long and the media consumption marketplace has changed.

    I find it especially funny that the head of digital strategy, Mr. Lewis, is complaining about companies taking their customers for granted because Blockbuster is the poster child of a company taking its customers for granted while ignoring new business models. This might explain why most of my friends, and I, have a Netflix subscription while all but one of the Blockbuster locations have been closed where I live. Watching a business thrash around in its death throes is never pretty.

  • alex randolph

    I agree with you %100. Here's a line that bothered me

    "We want to tune every application for each device it's on."

    The development team should do this for every application, no matter what it's on. That's why we have development cycles. Why doesn't the guy in charge of Digital Strategy's know that? I don't think he understands the technologies he's planning for.