- Real estate needs to let go of old practices and blame, and embrace innovation.
Do you remember this company? You would walk into one of its more than 9,000 stores and turn to the right as you walked to the new releases, usually in backward alphabetical order.
You would then proceed to walk counter-clockwise along the outside walls around the entire store, viewing every single VHS or DVD and storing in your memory the ones you might want.
You’d discuss it with your friend or family member. Most often, you would end up going back to the beginning again before making your selection. Most of us remember all the warm nostalgia that those Blockbuster Video days invoke.
But ask yourself this: Where is it now? What happened to Blockbuster Video that it has shuttered almost every single store (with a few rare exceptions)?
Although there are many factors in its eventual and meteoric demise, probably the no. 1 cause in its downfall was its inability or unwillingness to keep up with what the consumer wanted.
Competition shows its face
Two major companies began to compete with Blockbuster in the 2000s: Redbox and Netflix.
Instead, Blockbuster sat on its hands for more than two years before finally offering something to compete with Netflix, but by then, it was too late to gain traction.
Netflix offered a way to find new videos you might like, unlimited rentals, no late fees and delivered it right to the consumer’s front door, all for a low monthly fee.
In response, in 2005, Blockbuster tried to sell a new “no late fees” policy, which was an attempt to answer the consumers who despised late fees. The problem was that it wasn’t really offering no late fees; it would charge the full cost of the video to the consumer after eight days.
Consumers were outraged in what became a PR nightmare, and many states filed false advertising lawsuits. Blockbuster lost these lawsuits and ended up returning customers’ money.
About the same time that Netflix rose to prominence, a small company called Redbox was exploding, renting DVDs for $1 per night and setting up easy-to-use kiosks in places that consumers were already shopping for other things.
It also advertised that you could return the video to any other Redbox kiosk, which took away the hassle of going back to the same location to return DVDs.
Redbox tried to sell its business to Blockbuster (and Netflix) early on, but neither company was interested.
As of Q1, 2013, Redbox owned 48 percent of the total physical video rental share. It found a way to get consumers video faster, easier and cheaper than anyone, and its value has soared.
As companies like Netflix and Redbox continued to innovate and look for new ways to get the consumer what they wanted and how they wanted it, online giant Amazon began to offer streaming video for purchase or rent.
Suddenly consumers no longer had to even leave their home to rent a movie, and there were no returns to be made — ever.
As all of these companies innovated, Blockbuster continued to put its head in the sand, adapting too little, too late, and it was soon completely irrelevant and buried as a video rental company.
Who would have ever guessed in the early 2000s that Blockbuster Video wouldn’t even really exist 10 years later?
Are we stuck in a Blockbuster state of mind?
I get the distinct feeling that we, in the real estate industry, are beginning to have a Blockbuster Video mentality as the world around us adapts and grows.
The number of startups in real estate innovation and companies working to bring consumers a new and better experience has skyrocketed.
Everywhere we turn, there are entrepreneurs creating new products and services that call out to our customer base and entice them to change to an easier or better way.
When I got into this business 15 years ago, controlling the information was a very important thing for agents. When someone suggested broker reciprocity, giving consumers instant access to our full MLS listing data, the industry melted down.
It turns out that it was exactly what consumers wanted, and it didn’t eliminate the need for real estate agents as many of us feared it might. However, the change was scary and hard for many of us at that time.
Does complaining accomplish anything?
I’m on the Agent Advisory Committee for our regional MLS in my local market. We meet quarterly, and in the two years I’ve been there, I don’t think a meeting has passed where internet giant Zillow wasn’t brought up by someone.
The conversation usually moves toward lots of complaining about Zillow, its bad data, and agents who are leveraging sites like this to gain a competitive advantage in the marketplace. I too used to be in this boat of haters, never missing a chance to bad-talk Zillow to my clients.
However, I imagine that many an insecure Blockbuster employee took verbal shots at Netflix and Redbox back in the day.
What was the consumer response?
Well, these new services gave them the products they wanted in ways that were easier, cheaper and more innovative, which lead consumers to believe everyone else was behind the times; they took their business elsewhere.
And Blockbuster died.
Listen friends, there’s a reason that millions of homebuyers and sellers go to Zillow every day rather than to our brokerage websites — because they like Zillow, even if we don’t.
Zillow has found a way to give consumers what they want, how they want it, and it made it very easy for them to get it. Thousands of agents pay Zillow every month for the opportunity to get connected to those buyers and sellers.
Rather than fighting what the consumer wanted, I joined them where they were and signed up with Zillow too. Thankfully, at this point that’s still an option.
What have we learned from Blockbuster’s failure?
As an industry, we have a choice each day to innovate and seek new solutions that give our customers what they are looking for, or we can try to force our current solutions on customers because “it’s the way we’ve always done it.”
The second option could send us the way of Blockbuster. Innovation is crucial to the health of our industry. It’s important to always be watching and looking for the next thing and to embrace change when it makes sense.
I think buyers and sellers will always need agents — this is a people job.
However, there are too many of us who have refused to adapt and learn new technologies and systems because “the old way works fine.”
No, it did work fine, but does it still? And if you aren’t ready, willing and able to grow and change in this business, it might be time to consider another vocation.