I found this article about the demise of Blockbuster to be quite interesting. In particular, note this comment by Michael Pachter, an analyst at Wedbush Morgan Securities, in an excerpt from the article in the New York Times:
I called Mr. Pachter, who is now managing director of equity research at Wedbush Securities. “Blockbuster should have won — and didn’t. I was wrong,” he said. He ticked off the ways that Netflix executed flawlessly and Blockbuster stumbled when it tried to replicate Netflix’s online service.
“I honestly believe most consumers would like a bricks-and-clicks solution,” Mr. Pachter said. “The reality is, they do have it. It’s just two different companies: Netflix and Redbox.” With video-rental vending machines that sit within grocery stores, drugstores and other retail hosts, Redbox uses the bricks of its partners.
Here is a great learning point for strategists. Yes, it is two different companies, and that is NOT surprising. The fact is that executing two fundamentally different business models within the same corporation is VERY difficult. Thus, it should not shock us that we have two "pure plays" who have done better than Blockbuster, which tried to create a hybrid model of bricks and clicks.