Partner or Perish

If you’re lucky enough to jump on a winning trend, hope you’re lucky to jump off on time.

Remember when Blockbuster came to your town and shut down nearly every Mom & Pop video store around? At its height in 2004 it had over 60,000 employees and 9,000 stores. But just six years later it filed for bankruptcy.

Just as VHS rentals killed movie theater attendance – subscription and on-demand video services killed the video store.  It’s not that they didn’t see them coming, Blockbuster Laughed at Netflix Partnership Offer.

Going In Blind

Strategic joint ventures can be costly, complicated and prone to failure for a number of reasons. And if they succeed you have to share profits.

Co-Marketing Deals are much simpler. In co-marketing one company with a large, loyal customer base endorses and promotes another company’s product for a share of revenues. The promoter exploits its own brand reputation and reach to sell a complementary product to its own in-house list.  When promotional messages are included in current customer communications (including a promotional link in an email, a buck slip insert with a monthly bill, a sales brochure with a shipment) the promoter can earn substantial additional revenues without incurring any overhead.

In addition to short-term revenue, the promoter gets to learn more about its own market and can make smarter decisions about acquisitions or new products. If Blockbuster had simply Co-Marketed Netflix to it’s huge customer base it would have been able to enter the market faster. Instead, it decided to halfheartedly build its own version of Netflix, too late.

 

Via: Online MBA Programs