December 14, 2010, 3:32 PM — This post from CNET News is a few days old, but what Greg Sandoval writes about is so amusing, I had to pass it on to ITworld readers.
On Monday I wrote about how major media companies and broadband providers are becoming increasingly resentful of video-on-demand star Netflix, which is growing revenue, profit and mindshare at a dizzying rate. But just a few years ago, hardly any of these companies took then-upstart Netflix seriously.
Including, much to its ultimate dismay, former video-rental market leader Blockbuster, which filed for Chapter 11 bankruptcy in September, its business ravaged by nimbler competitors such as Netflix and Redbox, the emergence of video-on-demand (which Netflix is now heavily betting on), strategic missteps and about $900 million in debt.
As Sandoval writes:
Blockbuster CEO John Antioco was approached in 2000 by Netflix CEO and co-founder Reed Hastings about forming a partnership, recalled (Netflix chief financial officer) Barry McCarthy in an interview he gave to the Unofficial Stanford blog two years ago. ...
"I remembered getting on a plane, I think sometime in 2000, with Reed [Hastings] and [Netflix co-founder] Marc Randolph and flying down to Dallas, Texas and meeting with John Antioco," McCarthy said in the (podcast) interview. "Reed had the chutzpah to propose to them that we run their brand online and that they run [our] brand in the stores and they just about laughed us out of their office. At least initially, they thought we were a very small niche business. Gradually over time, as we grew our market, his thinking evolved but initially they ignored us and that was much to our advantage."
There's an understatement for you.
By the way, Antioco came under fire from financier and new Blockbuster board member Carl Icahn in 2005 for his outrageous compensation, which topped $51 million in 2004 alone. The dispute between the two men spelled the beginning of the end for Antioco, who left Blockbuster just two years later, probably with a bruised ego and definitely with a $24.7 million severance package, which would render any bruised ego slightly more tolerable.
Since then, of course, things have only gotten worse for Blockbuster. But Sandoval's post takes us back to a time when laughter (and arrogance) filled the conference rooms and corner offices of the now-humbled video rental chain.