Although it was met with minimal fanfare or excitement from both analysts and the market in general, Blockbuster’s recent bid for consumer electronic giant Circuit City piqued my interest. The USA Today ran a short piece on the front page of their Money section today outlining the deal and the initial reaction to it which claims that Blockbuster has offered more than $1B for the struggling retail chain.
Whether or not this deal goes through is less interesting than the strategy itself. Companies are wrestling with how to create 360-degree experiences in an effort to keep up with growing consumer demand for integrated services and products that are unified under a single branded entity. It’s become all about immediate gratification, anticipating the needs of consumers and identifying synergistic relationships that enhance the overall experience with a brand. Given this context, I can imagine much stranger marriages.
On the surface, the potential union between Blockbuster and Circuit City may not appear intuitive, but when you examine the core competencies of each company – digital entertainment – you start to see the synergies and possibilities. Although clearly biased, Blockbuster’s CEO, Jim Keyes makes an interesting and accurate observation about the changing landscape and the requirement companies now have to deliver connected experiences to their customers: The magic in the Apple Store is bringing hardware, software and service all together…they make it easy for the consumer.”
Keyes reasoning underscores the direction the marketplace is moving towards – confluences, intersections and connected branded experiences that move seamlessly between rational, virtual and physical worlds. This merger may not go through, but you can expect deals like these in the future…the near future.
David,
Yes, this seems to be a trend in the marketplace right now. But what about the case where a beloved brand is acquired by a less-known brand, and the consumer perceives this as ruining the brand they loved? For example, going to Circuit City always seemed to be an “undefined consumer experience” and therefore Blockbuster acquiring/redefining them makes me go, “eh!” But, if Blockbuster was to go after Best Buy, which to me has much more brand appeal, it might cause some consternation with shoppers.
Comment by Mike Doane — April 16, 2008
I agree that the recent bid by Blockbuster for Circuit City is interesting in the context of what it portends for the future of branded experiences, but I think the real importance is the business necessities that are driving such a marriage.
Today’s consumer is bombarded on so many fronts by content, much of it of less than stellar quality, that they react by either tuning out or becoming much more discerning in their consumption of content. This extends beyond just entertainment and encompasses the changing way consumer approach the buying process, whether in an ecommerce context or simply going into retail stores.
The merging of Blockbuster, a supplier of content and Circuit City, a supplier of the hardware that enables the consumption of content, demonstrates the ying/yang between content and technology. And this is a lesson that all of us in the world of entertainment and marketing need to take notice of. If we don’t understand the technology that delivers the branded experience, we won’t be able to design, develop and deliver the content in a way that connects with today’s consumer.
Comment by John Kottcamp — April 16, 2008
As a consumer, there are certain brand marriages that simply feel awkward, forced and unnatural – I remember the guttural reaction I had to the news that Ford had acquired Jaguar. I think what’s interesting about imagining the merger with Best Buy – and your observation that they do indeed *have* a defined consumer experience – is precisely why a merger for a brand like CC with a poorly defined brand experience could help to position the new entity in a more relevant and appropriate way.
Ultimately, it’s the responsibility of these newly formed marriages to figure what the customer wants from each of the brands independently – and to of course retain and enhance those aspects – while focusing on potential synergies to create new branded experiences that exceed what either could have done alone.
Comment by David Blum — April 16, 2008
You need to get yourself higher up on the Google foodchain – some cat from South Africa is currently stealing your thunder…
Comment by Christoph Hinkelmann — April 18, 2008