Everybody says Blockbuster laughed at Netflix. The truth is stranger: Blockbuster fought back, and for a short time it was winning.
Harder version: read this lesson at C1 level →
Look at each word. Say what you think it means. Then tap the card.
Tap a card to see the meaning.
Write one word from the cards in each gap.
1. I pay a monthly for music on my phone.
2. The bank charged me a of twenty euros for the late payment.
3. She the job because the salary was too low.
4. Learning a language needs a lot of .
5. He tried three times and then he .
6. We only have twelve , but they buy a lot.
1. subscription · 2. fee · 3. refused · 4. patience · 5. gave up · 6. customers
Read each part. Then answer the questions before you read the next part.
In the year 2000, Netflix was small and losing money. It sent DVDs to people by post.
Two of its founders flew to Dallas to meet the boss of Blockbuster. They made an offer: buy Netflix for fifty million dollars, use it as your internet business, and let us run it.
Blockbuster refused.
People love this story because it sounds stupid. But look at the numbers of that year. Blockbuster had about nine thousand shops. It had tens of millions of members. "Blockbuster night" meant a family evening at home.
Netflix was a small service for people with DVD players. It was losing money. At that time, internet companies were failing everywhere, and serious companies were proud that they had not bought them.
But inside Blockbuster there was a secret. A very large part of the company's profit — hundreds of millions of dollars a year — came from late fees.
Think about what that means. The company earned its best money at the exact moment when the customer was angriest with it. Everybody inside knew this.
And Netflix was built to attack precisely that. One price every month. Keep the film as long as you like. No late fees, ever.
True or false? Click your answer.
1. Netflix was big and profitable in the year 2000.
2. Blockbuster made a lot of money from late fees.
3. Netflix charged a late fee for every film.
Here the famous story stops being true, and the real story is much better.
Blockbuster did not sleep. In 2004 it started Blockbuster Online. In the same year it did something genuinely brave: it stopped charging late fees.
Think about how hard that was. The company cut off its most profitable business, on purpose, because customers hated it. It cost hundreds of millions.
Then in 2006 it played a card that Netflix could not copy. It was called Total Access. You ordered a film online, and you could return it to any Blockbuster shop and walk out with a free film immediately.
The nine thousand shops were supposed to be the problem. Blockbuster had turned them into a weapon.
And it worked. For a period, Blockbuster was getting new members faster than Netflix. People at Netflix later admitted that this was a frightening moment for them. They had serious meetings about whether they could survive the fight.
The old company, five years late, was winning.
True or false? Click your answer.
1. Blockbuster ignored the internet completely.
2. Blockbuster stopped charging late fees in 2004.
3. For a short time, Blockbuster was signing up members faster than Netflix.
Blockbuster was winning, but it was very expensive. Every free film lost money. The end of late fees had left a permanent hole in the profits. And the company already had large debts.
The final blow did not come from Netflix. It came from upstairs.
A powerful investor called Carl Icahn had bought a big part of the company in 2005 and taken two seats on the board. His argument was simple: this internet adventure is burning our money.
The board started fighting — about the strategy, and about the boss's pay. In 2007 the boss left.
The new boss changed everything within months. Total Access was stopped. Prices went up. The money went back into the shops.
The customers Blockbuster had fought so hard to win went straight back to Netflix.
And Netflix did something Blockbuster could never do. In 2007 it started streaming films over the internet — while DVDs were still making all its money. In 2013 it started making its own programmes, attacking the studios that sold it films.
Twice, Netflix damaged its own healthy business before somebody else could.
So the real lesson is not "they laughed". Blockbuster saw the danger, built the right answer, and briefly won. It was stopped by its own owners, its debts and its shops.
The hard question is not what is the right plan? Blockbuster found the right plan. The question is: who has to keep saying yes, and for how long, before a good plan is allowed to work?
True or false? Click your answer.
1. Netflix defeated Blockbuster's Total Access in the market.
2. The new boss of Blockbuster continued the online strategy.
3. Netflix started streaming while DVDs still made its money.
This story is full of surprises. Blockbuster was huge, but it lost. Although it found the right plan, its owners stopped it. These words are how you show that something is unexpected.
but joins two parts of one sentence. It goes in the middle. → "Blockbuster was winning, but it was expensive."
although also joins two parts, but it can go at the start. → "Although Blockbuster was winning, it was expensive."
however starts a new sentence. It needs a full stop before it and a comma after it. → "Blockbuster was winning. However, it was expensive."
The mistake almost everyone makes: using however like but, in the middle with a comma. In careful writing, however begins a new sentence.
| Word | Where it goes | Example |
|---|---|---|
| but | middle of the sentence | Netflix was small, but it won. |
| although | start of the sentence, or middle | Although Netflix was small, it won. |
| however | start of a new sentence | Netflix was small. However, it won. |
| even though | stronger than although | Even though it was small, it won. |
Write but, although or however. Look at the punctuation — it tells you the answer.
1. Blockbuster had nine thousand shops, it still lost.
2. Netflix was losing money, it had a better idea.
3. Blockbuster's plan was working. , it was very expensive.
4. The company stopped its late fees, the profits never recovered.
5. the new boss changed the strategy, the customers went back to Netflix.
1. but · 2. Although · 3. However · 4. but · 5. Although / After
Each sentence has one mistake. Say the correct sentence out loud, then check.
1. Blockbuster was big, however it lost.
2. Although Netflix was small, but it won.
3. Netflix was losing money. But, it had a better idea.
4. Even though the plan worked. The owners stopped it.
5. Blockbuster fought back, although too late.
1. Blockbuster was big. However, it lost. (however starts a new sentence)
2. Although Netflix was small, it won. (do not use although and but together)
3. Netflix was losing money, but it had a better idea. (no comma after but)
4. Even though the plan worked, the owners stopped it. (this is one sentence, not two)
5. Blockbuster fought back, but too late. (although needs a subject and a verb after it)
Take your time. Short sentences are fine.
Tell me the real story of Blockbuster and Netflix. Six or seven sentences is enough.
Tell me about a good idea at your work, in your family or at school that never happened.
Who stopped it, and why?
Blockbuster earned its best money from angry customers.
Do you know a company like this today? How do you feel about it as a customer?
Netflix damaged its own successful business, twice, on purpose.
Could you do that? What would make it possible?