The 10 Most Costly Business Flops Ever

Do you think outside of the box? Has your boss ever asked you to think outside the box? How many conference calls or presentations have encouraged you to think this way?

When it comes to business, thinking outside the box is a mantra that has long since been passed down from upper level executives to management and hourly staff. This way of thinking is usually good advice to follow since business advancement rarely occurs without taking a chance or risk. If you look around, much of the products and businesses you see are the result of thinking outside the box, from taking chances. These ideas have made millionaires and billionaires around the world.

What happens when thinking out of the box fails miserably? We usually focus on success, but today, let’s focus on a few brand new ideas that backfired so badly, shocks were felt around the world to the tune of $30 million in losses. Some of these ideas are just plain awful while others were good but did not catch the interest of the public. Regardless of the reason, these business flops were a huge pain in the wallet.

Which business ideas were the most costly flops? We found 10 of the most expensive failures that range from sodas and free hamburgers to perceived rip-offs. Interestingly enough, there is a product that many of us use today but failed to catch on when it was originally introduced over 25 years ago. What made the list and how much did these failures set the companies back? Let’s start with a simple recipe change that ignited death threats.

#10 – New Coke ($30 Million)

Coca Cola had been a successful company for a very long time when they got the idea for ‘New Coke’ in the mid 1980’s. The best kept secret formula was changed in April 1985, and the backlash was so negative that some people boycotted drinking the company’s products ever again. In the midst of the “Cola Wars” with Pepsi, Coca Cola started to lose the market share when they decided to shake things up with New Coke.

Many people felt alienated and personally attacked because of the change due to the fact that Coke’s southern roots were being replaced with artificial sweeteners and more “northern” gimmicks. The people that worked at the hotline for Coke were so stressed from all of the calls that the company had to bring in a psychiatrist to make sure the employees were emotionally and mentally alright. Thankfully, the voices of concern and ongoing threats were heard and acknowledged as Coca Cola quickly changed the formula back to what is now ‘Coca Cola Classic.’

#9 – Qwikster ($35 Million)

Netflix has been doing very well for itself over the past 10 years thanks to making movies and TV shows available for people straight from their phones, tablets, computers and even video game consoles. Netflix originally started out mainly as a disc rental service, but the aspect of streaming grew as new technology boomed and handily took over the majority of Netflix’s business. Because Netflix wanted to hang on to the disc rental aspect of their services, they created Qwikster with the hopes of ongoing future success.

Qwikster was planned to operate as an entity of Netflix, but work only with DVD’s and video games while operating on a totally different website. The change (accompanied with an increase in prices) made customers very angry, causing nearly 800,000 members to cancel their accounts immediately. This sent stock prices plummeting and the plans for Qwikster were scrapped almost on the spot. Netflix is doing fine now, but that gaffe cost them $35 million.

#8 – The XFL ($70 Million)

In the late 1990’s and the early 2000’s, people started to notice a big change in football. The game itself was getting further away from the brutal blood sport that it once had been and was turning into a game of finesse where money determined ability and plays. As this change occurred, World Wrestling Federation owner Vince McMahon got the idea to make a brutal football league that was far different than the NFL. McMahon planned the new league to play in the offseason when fans clamored to see the sport.

The anticipation was huge for the league and they even netted a deal with NBC for the broadcasting rights. The first week of the season saw huge ratings, but they quickly dropped dramatically and the XFL was disbanded after just one season. Vince McMahon regards the project as a colossal failure, and serves a lesson to other people that you simply cannot replace the NFL in America.

#7 – Arch Deluxe ($100 Million)

McDonald’s had a reputation of being a family friendly fast food restaurant for the first few decades that they were around, but the reputation eventually transformed into that of catering to riff-raff who only had a few bucks to spend on a meal. McDonald’s wanted to bring the ‘upper crust’ back into their clientele, so they added a new item to their menu in 1996: the Arch Deluxe. The sandwich itself was a quarter pound beef patty on a sesame seed bun with all of the toppings you would normally expect.

What people did not expect, though, was just how much McDonald’s would actually market this sandwich. After spending millions to appeal to the upper class, the sandwich was not gaining interest. McDonald’s had already spent the cash on marketing and ingredients, but a lot of it was for waste as no one wanted to pay the extra money for what was basically a newly named Big Mac. McDonald’s spent $300 million on research alone. Yikes.

#6 – Olympics Giveaway ($200 Million)

The 1984 Summer Olympics were held in Los Angeles during the final stages of the Cold War. Since relations between the Soviet Union and the United States were starting to cool down, it seemed like the Soviets would make their way to the Olympics. At least, that is what McDonald’s (yes, them again) thought would happen. Instead, the Soviets boycotted the 1984 Olympics and refused to send their athletes over to the States.

This was very costly for McDonald’s as they gave away Big Macs for every gold medal, French fries for every silver medal and a drink for every bronze medal that the United States won. Without the Soviets in action, the United States cleaned up at the Olympics and took home nearly 150 total medals. The amount of free items that McDonald’s had to give away set the golden arches back $200 million. You know the loss is bad when there is a “Simpsons” episode about it.

#5 – Microsoft Zune ($289 Million)

In the mid 2000’s, Apple saw a huge resurgence in their company’s stock after coming out with the iPod, an mp3 player that was capable of holding thousands of songs on their largest model. Microsoft wanted to get in on the action (with the hopes of replacing the iPod) when it released the original Zune in November 2006. With the Zune Music Pass, customers would be able to download all of the music they wanted and keep it on their device as long as they had a membership.

While the device itself was actually pretty neat (and did more than the iPod at the time), it never caught on with users. People still preferred their iPods, most likely because they hit the market first. The Zune was seen by many as a knockoff or a copycat device, leading many to never bother with buying one. Had people owned both, the Zune might have won out, but the marketing and unsold product set Microsoft back over a quarter billion dollars.

#4 – RJ Reynolds Smokeless Cigarettes ($300 Million)

We all know that the public cigarette backlash has reached a fever pitch now, but the whole campaign actually started in the early 1980’s. As people were learning about the risks of smoking, alternative nicotine products gained momentum in the form smokeless or e-cigarettes. Today, the market is saturated with tons of E-cigs and vaping devices on the shelves, but RJ Reynolds was the first to hop on the bandwagon in 1988 with the Smokeless Cigarette.

The product was essentially what you see in e-cigs today, but the ‘Premier’ by RJ Reynolds did not actually work. People would toss them out after trying it just once. Most consumers even went as far as to call the company immediately to tell them how much they hated the product. After not having any repeat customers (which is huge for tobacco companies), the Premier smokeless cigarette was scrapped after four short months. The failure cost over $300 million in losses.

#3 – Ford Edsel ($400 Million)

Ford had been on a roll for the first half of the 20th century and could seemingly do no wrong, but when General Motors and Chrysler started to get a big bump in the market share, Ford wanted to shake things up to keep their momentum rolling. This is when Ford developed the Edsel, which is now one of the biggest cases in marketing flops ever recorded. The car itself was pretty good looking, but never caught on with Ford’s targeted market.

Ford invested $400 million into making the Edsel for three years (which translates into over $1 billion in today’s market), but it was deemed just “too big.” People were starting to become more gas conscious and did not want to spend the money on the Edsel when they could get a car that was just as good for much cheaper. Ford was adamant about a rebound after a terrible first year in sales, and finally stopped producing the model in 1960.

#2 – HP TouchPad ($500 Million)

Just like the Microsoft Zune, HP had the same plan as Microsoft: try to kill off the Apple product that was dominating the market. Also like Microsoft, HP failed miserably and even harder in 2011 with the HP Touchpad. The device was supposed to replace the new iPad, but only 25,000 were sold in the nearly two months that it was on the shelves. Also like the Zune, the device was not bad, but simply could not compete with brand loyalty to Apple.

It also did not help that the starting price for the Touchpad was $500. The company spent millions on creating their own mobile operating system that unfortunately never caught on like the iOS or Android systems. This is yet another expensive lesson in a long line of people that have tried to do things better than Apple’s original idea. It seems like egos will still get in the way of people trying to nudge their way into the market.

#1 – HD DVD ($600 Million)

In the mid 2000’s, it seemed like it was the perfect time for a new format to watch movies. Back in the 1970’s, there was a big fight between Betamax and VHS to see who would come out on top, at which time VHS reigned supreme. A similar battle happened when the HD DVD went head to head with the Blu-ray, but the HD DVD ended up costing a lot more than the Betamax ever could have. Toshiba pretty much funded the development of all HD DVD’s and the marketing was equal between the two formats.

After Blu-ray became more accessible and had a lot more compatible devices (including the PlayStation 3) on the market, it was clear that Blu-ray was going to come out on top. In 2008, Warner Bros. even stopped using HD DVD in their production and signed an exclusive deal with Blu-ray, which only served to put the final nail in the coffin. Just a few weeks later, Toshiba had finally tapped out and stopped making HD DVD’s altogether. Today, HD DVD’s can be found on shelves next to Beanie Babies, both of which are collector’s items that no one really wants.

#9 – Qwikster ($35 Million)

Netflix has been doing very well for itself over the past 10 years thanks to making movies and TV shows available for people straight from their phones, tablets, computers and even video game consoles. Netflix originally started out mainly as a disc rental service, but the aspect of streaming grew as new technology boomed and handily took over the majority of Netflix’s business. Because Netflix wanted to hang on to the disc rental aspect of their services, they created Qwikster with the hopes of ongoing future success.

Qwikster was planned to operate as an entity of Netflix, but work only with DVD’s and video games while operating on a totally different website. The change (accompanied with an increase in prices) made customers very angry, causing nearly 800,000 members to cancel their accounts immediately. This sent stock prices plummeting and the plans for Qwikster were scrapped almost on the spot. Netflix is doing fine now, but that gaffe cost them $35 million.

#8 – The XFL ($70 Million)

In the late 1990’s and the early 2000’s, people started to notice a big change in football. The game itself was getting further away from the brutal blood sport that it once had been and was turning into a game of finesse where money determined ability and plays. As this change occurred, World Wrestling Federation owner Vince McMahon got the idea to make a brutal football league that was far different than the NFL. McMahon planned the new league to play in the offseason when fans clamored to see the sport.

The anticipation was huge for the league and they even netted a deal with NBC for the broadcasting rights. The first week of the season saw huge ratings, but they quickly dropped dramatically and the XFL was disbanded after just one season. Vince McMahon regards the project as a colossal failure, and serves a lesson to other people that you simply cannot replace the NFL in America.

#7 – Arch Deluxe ($100 Million)

McDonald’s had a reputation of being a family friendly fast food restaurant for the first few decades that they were around, but the reputation eventually transformed into that of catering to riff-raff who only had a few bucks to spend on a meal. McDonald’s wanted to bring the ‘upper crust’ back into their clientele, so they added a new item to their menu in 1996: the Arch Deluxe. The sandwich itself was a quarter pound beef patty on a sesame seed bun with all of the toppings you would normally expect.

What people did not expect, though, was just how much McDonald’s would actually market this sandwich. After spending millions to appeal to the upper class, the sandwich was not gaining interest. McDonald’s had already spent the cash on marketing and ingredients, but a lot of it was for waste as no one wanted to pay the extra money for what was basically a newly named Big Mac. McDonald’s spent $300 million on research alone. Yikes.

#6 – Olympics Giveaway ($200 Million)

The 1984 Summer Olympics were held in Los Angeles during the final stages of the Cold War. Since relations between the Soviet Union and the United States were starting to cool down, it seemed like the Soviets would make their way to the Olympics. At least, that is what McDonald’s (yes, them again) thought would happen. Instead, the Soviets boycotted the 1984 Olympics and refused to send their athletes over to the States.

This was very costly for McDonald’s as they gave away Big Macs for every gold medal, French fries for every silver medal and a drink for every bronze medal that the United States won. Without the Soviets in action, the United States cleaned up at the Olympics and took home nearly 150 total medals. The amount of free items that McDonald’s had to give away set the golden arches back $200 million. You know the loss is bad when there is a “Simpsons” episode about it.

#5 – Microsoft Zune ($289 Million)

In the mid 2000’s, Apple saw a huge resurgence in their company’s stock after coming out with the iPod, an mp3 player that was capable of holding thousands of songs on their largest model. Microsoft wanted to get in on the action (with the hopes of replacing the iPod) when it released the original Zune in November 2006. With the Zune Music Pass, customers would be able to download all of the music they wanted and keep it on their device as long as they had a membership.

While the device itself was actually pretty neat (and did more than the iPod at the time), it never caught on with users. People still preferred their iPods, most likely because they hit the market first. The Zune was seen by many as a knockoff or a copycat device, leading many to never bother with buying one. Had people owned both, the Zune might have won out, but the marketing and unsold product set Microsoft back over a quarter billion dollars.

#4 – RJ Reynolds Smokeless Cigarettes ($300 Million)

We all know that the public cigarette backlash has reached a fever pitch now, but the whole campaign actually started in the early 1980’s. As people were learning about the risks of smoking, alternative nicotine products gained momentum in the form smokeless or e-cigarettes. Today, the market is saturated with tons of E-cigs and vaping devices on the shelves, but RJ Reynolds was the first to hop on the bandwagon in 1988 with the Smokeless Cigarette.

The product was essentially what you see in e-cigs today, but the ‘Premier’ by RJ Reynolds did not actually work. People would toss them out after trying it just once. Most consumers even went as far as to call the company immediately to tell them how much they hated the product. After not having any repeat customers (which is huge for tobacco companies), the Premier smokeless cigarette was scrapped after four short months. The failure cost over $300 million in losses.

#3 – Ford Edsel ($400 Million)

Ford had been on a roll for the first half of the 20th century and could seemingly do no wrong, but when General Motors and Chrysler started to get a big bump in the market share, Ford wanted to shake things up to keep their momentum rolling. This is when Ford developed the Edsel, which is now one of the biggest cases in marketing flops ever recorded. The car itself was pretty good looking, but never caught on with Ford’s targeted market.

Ford invested $400 million into making the Edsel for three years (which translates into over $1 billion in today’s market), but it was deemed just “too big.” People were starting to become more gas conscious and did not want to spend the money on the Edsel when they could get a car that was just as good for much cheaper. Ford was adamant about a rebound after a terrible first year in sales, and finally stopped producing the model in 1960.

#2 – HP TouchPad ($500 Million)

Just like the Microsoft Zune, HP had the same plan as Microsoft: try to kill off the Apple product that was dominating the market. Also like Microsoft, HP failed miserably and even harder in 2011 with the HP Touchpad. The device was supposed to replace the new iPad, but only 25,000 were sold in the nearly two months that it was on the shelves. Also like the Zune, the device was not bad, but simply could not compete with brand loyalty to Apple.

It also did not help that the starting price for the Touchpad was $500. The company spent millions on creating their own mobile operating system that unfortunately never caught on like the iOS or Android systems. This is yet another expensive lesson in a long line of people that have tried to do things better than Apple’s original idea. It seems like egos will still get in the way of people trying to nudge their way into the market.

#1 – HD DVD ($600 Million)

In the mid 2000’s, it seemed like it was the perfect time for a new format to watch movies. Back in the 1970’s, there was a big fight between Betamax and VHS to see who would come out on top, at which time VHS reigned supreme. A similar battle happened when the HD DVD went head to head with the Blu-ray, but the HD DVD ended up costing a lot more than the Betamax ever could have. Toshiba pretty much funded the development of all HD DVD’s and the marketing was equal between the two formats.

After Blu-ray became more accessible and had a lot more compatible devices (including the PlayStation 3) on the market, it was clear that Blu-ray was going to come out on top. In 2008, Warner Bros. even stopped using HD DVD in their production and signed an exclusive deal with Blu-ray, which only served to put the final nail in the coffin. Just a few weeks later, Toshiba had finally tapped out and stopped making HD DVD’s altogether. Today, HD DVD’s can be found on shelves next to Beanie Babies, both of which are collector’s items that no one really wants.