• Disruption can come from the most auspicious beginnings. A $40 late fee at a Blockbuster – remember Blockbuster? – for keeping Apollo 13 out too long, for example. That was Reed Hastings’ impetus for the idea of Netflix, which has ultimately transcended its role as Blockbuster slayer and is currently trying to out-HBO HBO. It’s just the latest in a long line of unlikely revolutions that changed how we consume visual entertainment.

      In 1895, two sets of brothers in two neighboring European countries kick-started the film projection industry, leading a cinema-centric culture that stretches from Hollywood to Bollywood and beyond. When television invaded our homes after World War II, who knew that cinemas would strike back with a shark, a summer blockbuster, and using television’s persuasive power to drive people back to the theater? Now, it’s hard to imagine summers without popcorn and a sojourn to a dark, air-conditioned room with hundreds of strangers.

      Speaking of Blockbuster, the blue-and-yellow-tinged retail giant had quite the run: 60,000 employees and 8,000 stores. But then the red giant, Netflix, changed the game. With a first-class stamp, a DVD of what you wanted to watch came right to your doorstep. And when Netflix offered itself up to Blockbuster for $50M, they refused, and laughed the plucky upstarts out of the room. It was a fateful decision. Netflix is worth $60B today.

      In January 2007, Netflix got into streaming, and digital access to content became Netflix’s calling card. But to really ramp up their profits, Netflix released they needed to cut out the middle man and produce content of their own. From House of Cards, to BoJack Horseman, to Beasts of No Nation and 200+ pieces of original content since, Netflix has become a critically-acclaimed visual media studio faster than you can spell H-B-O – leading HBO to launch a successful streaming service of their own.

      And as for cinemas? Still moving the turnstiles, with the most immersive entertainment options they’ve ever had. It all goes to show you: Sometimes the most unlikely source of disruption, is when you have the willingness to disrupt yourself.

  • “The people at Netflix are very, very smart. They managed to disrupt themselves. They went from seeing themselves as a competitor of Blockbuster to a competitor of HBO.”

    Greg Satell, Writer Forbes & Harvard Business Review

  • What you’ll hear in this episode

      • What is a magic lantern?
      • The $40 late fee that started an entertainment revolution 
      • A $30M gamble that led to 24x7 content in our homes 
      • A shark attack sneak-attack 
      • You call them “late fees,” we call it “margin” 
      • Blockbuster’s blockbuster bomb
      • Doubling down on your strengths can mean doubling down on disaster 
      • Agility as the pathway to prosperity 
      • The House of Cards that keeps stacking higher and higher 
      • “We need to become HBO faster than HBO can become us” 
      • Cinema’s century of dominance 
      • Movie theater as white-knuckle thrill ride
  • Guest list

      •  

      Greg Satell

      Is a speaker, writer and innovation adviser. He helps companies grow their businesses by identifying the right solutions to solve the right problems. He is also the author of Mapping Innovation: A Playbook for Navigating a Disruptive Age. 

      •  

      Kim Masters

      Is editor-at-Large of the Hollywood Reporter and host of KCRW's The Business. A former correspondent for NPR, she has also served as a contributing editor at Vanity Fair, Time and Esquire, and was a staff reporter for the Washington Post.

      •  

      Mathew Ingram

      Is a veteran journalist and technology writer whose work focuses on the intersection between media, technology and culture.

      •  

      Dennis McDougal

      Is journalist and author of several books on including “The Last Mogul: Lew Wasserman, MCA, and the Hidden History of Hollywood”  

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