Interesting to see a report in Marketing Magazine that Tesco is "considering selling off or shutting down its video-streaming service Blinkbox to focus on its core business".
Three months ago I posted here suggesting that Tesco had been distracted from its core business: "There is the move into high-tech, with the purchase of the Blinkbox streaming service. Here, you wonder if an easier move wouldn’t have been selling/promoting better known brands at affordable prices, rather than trying to become a technology product and service provider?"
1. Not respecting the competition
Did Tesco fully respect the competition when trying to stretch into video-streaming? Sure, they have a huge data base of customers through their Clubcard. But they were taking on several key players for who video streaming is part of their core business, such as Netflix, Spotify and Amazon-owned LoveFilm.
2. Stamina to stretch
Its one thing to launch into a new category with all guns blazing. Innovation is sexy, exciting and makes great headlines. The real challenge is fighting in the trenches against formidable competitors in years 2, 3, 4 and beyond. Could Tesco make a success of video-streaming? Perhaps it could if it had the stamina, and deep enough pockets, to stick at it for 10 years. But given the problems on the core, new CEO Dave Lewis has concluded that he doesn't have this luxury. As the Marketing piece says, "Investors pressure Lewis to shed "non-core" activities."
3. Distracting from the core
Brand stretching often takes budget away from the core. But just as damaging is the way it steals time and attention of senior management. Every minute spent discussing and debating what to do with video-streaming is a minute less working on revitalising the core business. A better focus for digital could be back on the core business, so its good to see that "Blinkbox co-founder Michael Comish is expected to stay on at Tesco in the guise of group digital director."
In conclusion, I do expect Tesco to re-focus on the core. And Blinkbox won't be the last bit of brand stretching to be sold or closed. I expect the upmarket coffee shop Harris+Hoole and the restaurant chain Giraffe to follow in the next 12-18 months.