What a Video Rental Store Can Teach Product Managers
Not to go out with me or anything, but can anyone else remember going to the video store on a Friday or Saturday night? She would wander the aisles and check out every movie on the “newly released” shelf to decide which video or two to rent. Netflix and the internet have pretty much killed the video store these days and so what’s a video store product manager to do?
(Broadcast) Video killed the video store
Being a product manager for a video store in the 1990s was the bomb! Everyone finally had a VCR in their home, and movie studios were churning out movies, both new and old, on videotape from left to right. His only real problem was trying to get the right level of stock to meet the needs of the majority of his customers.
Almost overnight everything changed. Those damn DVDs came out. Sure, it could start replacing the tapes in its stores with DVDs, but suddenly Netflix product managers figured out they could cheaply use US mail to ship DVDs to people’s homes. Oh oh, now your store was under threat. There was nothing in anyone’s product manager job description that indicated how to handle this situation.
As if things couldn’t get any worse, they did. With so many consumers now having high-speed Internet service at home, Netflix product managers moved to the next stage of their game: offer streaming video and make it no longer waiting by your mailbox.
Given all these superior ways to get your hands on the latest and greatest videos, why would anyone make the trip to the store and risk incurring late fees? There are some people for whom a weekend video is still a spontaneous purchase. These last remaining people were sucked in when Redbox product managers placed their self-service DVD rental kiosks outside of 7-11 and other stores. That’s it, game over for video stores.
How Video Stores Are Reviving
But wait, all the stores haven’t disappeared. Sure, sure, the big chains like Blockbuster and Hollywood Video have been closing their doors left and right. However, several independent video stores are still open to the public. What have your product managers been up to?
Several stores have changed the products they offer to their customers. Some have started offering events. Nicole LaPorte of the New York Times reports that these have included a film studies program, classes on anime mythology, filmmaker conferences, and spoken word events. Clearly, this is not your father’s Blockbuster store.
What you’re starting to see is that place where we used to go to rent videotapes is becoming more of a community hangout or a cultural hub for people who really like movies. Store product managers are positioning their products to be different from Netflix, which clearly has no soul: no name (who sends me those videos?) and no face (where exactly is Netflix located?).
Video Store 2.0
All this “connect with your customers” strategic management stuff is a good short-term product manager positioning. However, what should video store product managers do to prepare for the long haul?
Dr. Peter Fader is a very smart marketing professor at the University of Pennsylvania who thinks he knows the answer. This is the most important point he makes: as easy as it is to do, video stores that want to survive should not view Netflix as an adversary. Netflix is too easy to use and if you position them as the enemy, you will force your customers to choose and in the long run the video store will lose.
Dr. Fader has a different suggestion. He believes that video stores should position themselves as an alternative to Netflix. Yes, when people want to see the latest action movie of the summer, they will turn to Netflix. However, when they want a movie that might not be in the mainstream, one that’s a little harder to find and one that Netflix doesn’t have, that’s when the video store can step in.
Video stores’ current efforts to offer in-store movie-based events are another great way to supplement what their customers get from Netflix. Instead of thinking of video customers as having to choose between Netflix or the local video store, start thinking of the video store as part of a video watcher’s portfolio of video sources. This is the path to long-term success for a video store.
What all this means to you
As product managers, we all seem to spend our time trying to figure out how we can make our products more successful. We plan and plot ways to capture another 1% market share. What we rarely spend time thinking about is the very real possibility that one day our entire market will disappear.
This happened to video stores with the arrival of Netflix and Redbox. The video clubs that were not adapted are no longer. Those who realized what was happening and who have been transformed are still here. To survive long term, these stores will have to carve out an entirely new market for themselves and find a way to co-exist with new video delivery services.
Product managers should learn from this story that the game is never over, even when their account manager or business development manager begins to panic. The rules may change, the players may change, and the way we score may be different. However, as long as it has the ability to adapt to shocks, your product can handle almost any change that comes its way and will emerge from the other side stronger and better for adventure. Now put that on your product manager resume!