Blockbuster, Kodak and De Beers

Remember Blockbuster, the video rental chain that once boasted more than 9,000 outlets globally?

Or Kodak, the company that sold a billion rolls of film a year? Or Borders, Nokia, or BlackBerry?

How are the mighty fallen. They innovated and they dominated their markets, only to be left behind by advances in technology.

Now think about De Beers, which once sold nine out of10 diamonds globally. Today it's about three.

And according to credible reports this week, the company could now be sold for just $1 billion.

To put that figure in context, just three years ago owners Anglo American said the business carried a book value of $9.2 billion.

It paid $5.2 billion for a 40% stake of De Beers in 2012, which gave the then-thriving diamond miner an implied equity value of around $13 billion.

A decade earlier, in 2001, De Beers was valued at even more - over $18 billion - when Anglo and the Oppenheimer dynasty took the diamond giant private.

But it has been on the slide. Since the end of 2023 Anglo has reported three write downs - $1.6 billion announced in February 2024, $2.9 billion announced in February 2025 and $2.3 billion in February 2026, taking the current book value down to around $2.3 billion.

But even that figure now seems like an overly generous estimate. As the two-year sales process crawls limps towards the finish line, Bloomberg this week reported a likely price tag of just $1 billion for an 85% stake in what was once the jewel in the diamond industry's crown (Botswana owns the remaining 15%).

Anglo's preferred bidder is said to be Global Diamond Consortium, a group led by former De Beers CEO Gareth Penny. The Bloomberg report suggests it will make an upfront payment of around $750 million, with a further $250 million to follow.

That's small beer, given the near-monopoly De Beers once enjoyed until Russia, Canada and Australia muscled in.

The rise of "new diamond nations" together with the collapse of the Soviet Union, U.S. antitrust lawsuits, and scrutiny over "conflict diamonds" are all bumps in the road. They are part of normal to‑and‑fro of business and geopolitics.

But lab growns are something else, a game changing technology that fundamentally undermines the value of what De Beers does.

Blockbuster is gone. Nobody pays to watch a grainy video now that they have Netflix.

Kodak is all but gone. It invented the digital camera in 1975, but hid it in a cupboard, fearing it would kill film and paper sales. From household name  - "You press the button, we do the rest" - to niche supplier in a generation.

Borders could never stock as many books as Amazon, the smartphone killed Nokia and BlackBerry (both survive, but as small companies with a focus on software and infrastructure).

Does De Beers fit the Blockbuster/Kodak model? Recurring themes here are a near-monopoly, followed by a failure to pivot.

Blockbuster and De Beers both built global systems around a scarce thing, that was then replaced by a less scarce thing (streaming, lab growns).

Like Kodak, De Beers saw the threat (digital photos, lab growns) early but was slow to embrace it, aside from its ill-fated Lightbox flirtation.

Like Borders, Nokia and BlackBerry, De Beers was a default, trusted name, although that wasn't enough to stop brides-to-be picking a lab grown whopper instead of a smaller, natural stone.

But here's what distinguishes De Beers from all of the above. Natural diamonds have a cultural and luxury cachet that will never disappear, whatever new-fangled discoveries come along.

Nobody's going to pay good money for a much-borrowed VHS tape, or an obsolete phone.

There is, however, a finite supply of real diamonds, the ones you dig out of the ground, and one way or another they will always hold their value.

Yes, De Beers is a shadow of its former self, down from a $18 billion valuation to $1 billion (approx) in two and a half decades.  

But it has a core product that still commands desire and premium prices. The challenge for De Beers, under new ownership, will be to adapt to a very different environment, to evolve, survive and thrive.

Have a fabulous weekend.