Comment by HillRat

Actually, I don't remember that particular insight in TID; what you describe is what I personally call "the Blockbuster effect" -- the idea that a company can quite rationally refuse to adopt a disruptive innovation because its current financial structure is adapted to a particular size market with particular revenues, costs and liabilities. In Blockbuster's case, the risk was that aggressively taking on DVD-by-mail and later streaming would have eaten into its revenue structure (late fees); render operationally worthless its physical stores and thus sink their capital investment and liabilities underwater; and shift the market to a lower-revenue level that would not generate the cash flow necessary for Blockbuster's continued existence.

Of course, they did go out of business while flailing about wildly, but to my mind that simply underscores the importance of knowing how to gracefully exit a market. Ironically, perpetually-beleaguered Yahoo isn't a bad model for that.