Notice the difference. What they missed is that their customers were buying the experience of watching a movie - maybe with some popcorn. The problem was that it made most of its money on developing film, a business that completely disappeared.
Some were reluctant at first, they actually liked being able to browse movies at the store and pick one up at a moments notice, but others jumped right in. As a result, Cook decided that his superstores would offer customers quick services and long operating hours.
Using the five forces against its chief competitor Netflix, Blockbuster could have copied the Netflix subscription service model quite easily to begin delivering videos from local shops. The only company that really seems to have profited from digital photography is Facebook and it's hard to see how Kodak would have had a competitive advantage in building social networks.
This is not necessarily true however. If you believe that Blockbuster, Kodak and Xerox were run by stupid, silly people then you can avoid their fate simply by not being so silly and stupid.
Most importantly, Blockbuster lacked clear vision to guide it through these problems. Blockbuster was managing their business by a combination of burying their head in the sand and looking into the past while defining their business strategy.