The Cloud is a Natural Evolution, Ask Blockbuster

As we enter the third decade of the 21st century, we’re seeing a shift in how the enterprise operates. Moving away from legacy, appliance-based solutions and a CAPEX model in a natural evolution to the cloud and an OPEX model. At a time when it’s cloud or bust for businesses, SD-WAN is proving key in underpinning the infinite enterprise.

An old friend used to say, “I made mistakes so you don’t have to,” and that’s why we tell today’s cautionary cloud tale.

For nearly 30 years, “Let’s make it a Blockbuster night” was a slogan known nationwide, adults and children alike flocked to the entertainment hub to rent the most recent movie and video game releases. Unfortunately, CEO John Antioco didn’t see the writing on the wall. Intently listening to a Netflix pitch seeking to partner, but instead of eagerly accepting the offer, he fought to hold himself back from laughing them out of the meeting.

The first Blockbuster opened in Dallas, Texas in 1985. Within a few years, the one store turned into many, and by the late 80s, an influx of cash propelled Blockbuster to the national stage and a buying spree of local video stores to scale the business.

In the 1990s, Blockbuster retail locations leapfrogged to 1,000, then 6,000. Viacom purchased the video rental chain for $8.4 billion in 1994. Some 10 years later, Blockbuster boasted 9,000 stores around the globe and $5.9 billion in revenue, marking the zenith of its journey.

When the change of heart occurred for Blockbuster in 2004, Hubris had already done Goliath in. Netflix possessed an insurmountable lead. Blockbuster spent nearly $200 million to launch Blockbuster Online, and cost the company $200 million in revenue by cutting late fees.

Bankruptcy was Blockbuster’s out in 2010, and in 2011, Dish Network bought the floundering business for $320 million, with the intent of keeping the remaining 600 stores open.

Today, there is one. No, that’s not a Highlander reference, that’s reality. There is one branded Blockbuster location remaining in Bend, Oregon where a loyal local customer base and Airbnb partnership keep the lights on.

In 1997 Reed Hastings and March Randolph founded Netflix, believing that renting DVDs by mail was an idea with legs – Long legs. In six short years, Netflix surpassed one million in memberships and issued a patent covering its subscription rental services. By 2006, membership reached five million subscribers and by 2007 its streaming site is launched.

The following year, Netflix expanded its ecosystem, collaborating with consumer electronics brands to enable streaming via TV set-top boxes, Blu-ray players, and Xbox 360s.

Streaming made its way to Canada and mobile devices in 2010, and by 2011, Netflix buttons began popping up on remote controls and services reached Latin America and the Caribbean. The following year, Netflix reached the UK, Ireland, Nordic Countries, and 25 million members – not to mention, released its first comedy special.

Fast forward to today, and there’s a pretty good chance you’re one of the more than 200 million subscribers in nearly 200 countries– or at the very least, using “someone’s” credentials – watching the new season of Ozark or finally viewing Squid Game.

Netflix reports $7.7 billion in revenue for Q4 2021, with a current valuation flirting with $300 billion.

There are a number of lessons learned from the above example. The one that stands out to me, “You can’t stop progress.” When cloud-based networking and SD-WAN arrived, many laughed these options off the table. Second-guessed the solutions, doubted the benefits, and couldn’t quite grasp the big picture.

Those “Blockbusters” are holding tight to legacy, on-premises, appliance-based networking, struggling to stay afloat in the digital era. Whereas, the “Netflix’s” of the world are looking to the cloud for solutions, leveraging SD-WAN as an onramp and supporting this software-defined shift with bottom-line results. We can’t be afraid of change; we must embrace it, and not laugh at what we don’t understand.

Learn more about SD-WAN, and how it can impact your business HERE.

About the Author
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Cammy Perry
Senior Content Marketing Specialist

Cammy is a Content Marketing Specialist at Extreme Networks, leveraging her expertise to craft thought leadership and engaging content.

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