Auto Industry Disruption: Netflix, BlockBuster, UBER, LYFT, Taxis and Rental Cars

Nov 18, 2019

When Netflix started, Blockbuster thought the service seemed insignificant. Why would anyone wait for DVDs to arrive in the mail when they could pick them up at the store? Blockbuster didn’t anticipate where the future of watching movies was going, that streaming would become the next phase of home entertainment. Blockbuster didn’t realize it was threatened until Netflix tapped into streaming services, unlocking the brand’s immense profitability. By then it was too late. Today, Netflix is worth billions of dollars and Blockbuster is bankrupt.

Let’s look at the transportation industry, particularly ride sharing, taxis, and rental car companies where a major disruption is already underway! The other graphic to the right presents a simple yet powerful image of how fast a rapid technological disruption can occur within an industry. As early 2015, taxi and rental car receipts represented approximately 75% of all corporate ground transportation travel reimbursements in the U.S. By late 2016, Uber and Lyft reimbursements had grown to more than 50% of the total. By 2018, Uber and Lyft’s combined share had exploded to 71%, while the market share of taxi and rental car receipts have collapsed to less than 30%!

Disruption in the automotive industry is occurring at a much faster rate than at any time in the past, so we should not be surprised if more incumbent business models are disrupted by technological advances in the future. Some true disruptors will be BIG winners, while some “disruptees” will be BIG losers!

On a side note, because of this UBER/LYFT disruption of ground transportation reimbursement, prices of New York City taxi medallions plummeted to less than $200,000 each in 2018, less than five years after peaking at roughly $1 million.

Getting disrupted HURTS!

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