Legacy companies risk being disrupted by AI: Lessons from Blockbuster and Netflix

The article discusses the potential for AI to disrupt various industries, citing the example of Blockbuster rejecting the opportunity to buy Netflix in 2000. The author argues that legacy-minded individuals often fail to see the potential of new technologies, leading to missed opportunities and eventual obsolescence. The article concludes that tech bulls are often criticized for their optimism, but history shows that they are more likely to be correct in their predictions.

Artificial intelligence (AI) is transforming industries at an unprecedented pace, with the potential to disrupt traditional business models and create new opportunities. The example of Blockbuster and Netflix in 2000 illustrates how legacy-minded individuals may fail to recognize the potential of new technologies, leading to missed opportunities and eventual obsolescence. This article explores the potential for AI disruption across various industries and the lessons that can be learned from historical examples.

AI Disruption Across Industries

AI has the potential to disrupt a wide range of industries, from healthcare to finance, retail, legal, and manufacturing. According to StayModern [1], AI adoption is accelerating, with 78% of respondents using AI in at least one business function as of July 2024. The healthcare industry is a prime example, with AI tools enhancing diagnostics, administrative tasks, and drug development. In finance, AI is used for risk mitigation, regulatory compliance, and customer segmentation. Retailers are leveraging AI for personalized customer experiences, while legal firms are using AI for document review and compliance tasks. Manufacturing is seeing significant improvements in predictive maintenance, generative design, and supply chain optimization.

The Blockbuster and Netflix Example

In 2000, Blockbuster had the opportunity to buy Netflix for $50 million, but they declined. At the time, Blockbuster saw Netflix as a niche player in the market, failing to recognize the potential of online streaming. This decision highlights how legacy-minded individuals may overlook the transformative power of new technologies. Netflix, on the other hand, embraced the potential of online streaming and went on to become a dominant player in the entertainment industry. This example underscores the importance of recognizing and embracing new technologies to avoid obsolescence.

Lessons for Investors and Financial Professionals

The potential for AI disruption presents both risks and opportunities for investors and financial professionals. Early adopters of AI technology are gaining efficiency, improving accuracy, reducing costs, and moving faster across the board. However, there are also risks to consider, such as bias in AI models, data leaks, and black box decision-making. To mitigate these risks, companies should start small with focused pilot programs, educate their teams in AI literacy, and design for scale and scrutiny.

Conclusion

AI is no longer in the experimental phase; it is the core infrastructure for many companies. The disruption is already happening, and tech bulls, often criticized for their optimism, are more likely to be correct in their predictions. The choice is simple: Lead the change with AI or rush to catch up with competitors who started first. By recognizing the potential of new technologies and embracing AI disruption, investors and financial professionals can position themselves for success in the future.

References

[1] StayModern. (2025, August 13). 5 industries that are ripe for AI disruption. Retrieved from https://localnews8.com/news/2025/08/13/5-industries-that-are-ripe-for-ai-disruption/