RIP Blockbuster

In the real world, where companies are allowed to fail, a big one is about to go down. Not surprisingly, Blockbuster is pretty much toast. It's the story of a company that wasn't nimble or forward-thinking enough to take advantage of its size and reach.

In a regulatory filing, Blockbuster says it will likely have to file for bankruptcy if it can't deal with its debt:


The "increasingly competitive industry conditions" have existed for years. Netflix started in the late 90's, and Blockbuster waited far too long to take the start-up seriously. In fact, in 2008, Blockbuster CEO Jim Keyes said: "I've frankly been confused by this fascination that everybody has with Netflix."

The fascination is pretty simple. People don't want to drive to the DVD store when they can get a DVD in the mail twice a week or download just about all the entertainment they can watch for $10 a month.

Keyes pinned his company's entire strategy on the assumption that customers would still flock to Blockbuster for new releases. Bad market research.

And then, lo and behold, someone came up with the idea of putting DVD kiosks in grocery stores, and Redbox drove the final nail into Blockbuster's coffin. Blockbuster does have a download deal with Tivo, but it's probably too little too late. From Daily Finance:

We'd bet that a big part of Blockbuster's problem is Keyes. The former 7-Eleven CEO joined the retailer in 2005, at a critical transition period for the company. Instead of embracing the digital revolution, Blockbuster has strongly resisted change. In 2008, at a time when in-store kiosks with $1 rentals started popping up everywhere, Blockbuster touted its brick-and-mortar business and dismissed the significance of new distribution models.

And while Netflix serves all-you-can-eat entertainment for a low, fixed rate, Blockbuster recently reinstated late fees and shortened the rental period for premium titles -- those aren't exactly the kinds of changes that will win new customers.

In fact, I'm pretty sure there are a few old Blockbuster customers who got screwed by overzealous late fee charges that will relish dancing on the company's grave.

Redbox is 20th century technology too. It will also eventually perish, unless it adapts to the creative destruction which has destroyed Blockbuster.

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I am one of those old Blockbuster customers who will gleefully dance a jig when this POS dies.

After being threatened with legal action for not paying a late fee for a movie I never rented, I paid it and was done with these non-customer service oriented twits for good.

Good riddance!

Netflix and Redbox meets the need of 90 % of the DVD view public with disply device of 47 in screens and smaller, but for those of us who have 77 in or higher displays (1080p projectors using Blu-Ray) the DVD and Netflix download (without 5.1 sound) is a step back. I love getting Blu-Ray from Blockbuster and showing movies on my 102 in screen with 7.1 sound. I know I am a small niche but everyone will soon get to that size and then DVD quality downloads with 2 channel sound will not cut it. Downloading 20 G Blu-Ray can not be done buy 95 % of the high speed services. Remember the service providers what to cap the amount of data you download.

That hi-rez may be here sooner than you think. With companies like Akamai, the forerunners to the technology may already be in place.

Big formats like blu-ray may not work for download services just yet, but would be trivial for either RedBox or Netflix (through the mail) to carry once demand is a bit higher. In fact, I'd say we're on the cusp of seeing them carry Blu-ray. This past holiday season was the first with affordable (for the masses) blu-ray players on the market; tipping point can't be too far off

Another 5-10 years and I bet download of hi-rez will be here as well, through more bandwidth, better compression, or both.

Excuse me not a twit. My store just closed down and we had many regulars and many happy customers. Except for the few hot heads who lost there tempers, and acted completely ridiculous about any late fees on their accounts. There is a difference between franchise and corporate branches though. Our blockbuster franchise will do anything to keep your account safe... id checks as well as commenting the account any time someone rents on the account. Well, thanks for doing your little dance while people lose their jobs.

This should be a case study for so many reasons. While the CEO should be blamed for much of this failure I think the Board of Directors should take the balance. I think anyone outside of a wood paneled room had the common sense and foresight to see that Blockbuster was doomed years ago. They pissed off their customer base and practically forced them to seek alternatives (Netflix and Redbox) by not embracing the realities of the marketplace. It amazes me that a ceo would actually stick his head in the sand instead of embracing or at least hedging against new technologies. So much for that MBA from Columbia. CEO with no vision = FAIL.

It's really in everyone's best interest for Blockbuster to be completely liquidated as opposed to filing bankruptcy.

Most people are sad to see a company die, but Blockbuster is probably one of the few where most will actually be GLAD to see it dead.

Anyone that still shops there is either a spoiled kid or someone who thinks the new millennium is coming. Time to get into shape and get out of Blockbuster.

I read the other Blockbuster article in Marketplace as well, but I find it more fun to post here. :D

Blockbuster was basically a dinosaur than couldn't adapt quickly enough to how the public consumes media. The same could be said for "Mom and Pop" video stores and smaller video store chains.

One of the smarter ideas Blockbuster had when imitating Netflix was to use their storefronts as drop points for their mail service. People who used and stayed with Netflix did so because they could get movies that a chain like Blockbuster wouldn't normally carry. Cult Classics and Obscure Foreign Films come to mind. Hell, they could have used that information to determine a local store's video inventory based on what was being mailed out.

Look at Gamestop which is another brick and mortar chain in roughly the same business. They make most of their money by reselling old games at $15 after buying them for $2. They also have a robust website that allows for people to order and pickup at the store to save on shipping.

Blockbuster didn't see that it's business model was no longer relevant in today's environment and it didn't have the clout to have laws written to preserve it's business model like the Telecomm and Cable industry does.

As for Redbox: I could see it being strictly a niche market for those who don't use/trust the internet/mail order and don't have some sort of Cable/Satillite service. Not something I'd bank on personally, but something people could still make money off of provided they get the real estate of Grocery Store/Walmart. (If they aren't bought out by those stores entire.)

I agree and disagree. Blockbuster didn't adapt, and a lot of mom and pop places also failed. But there is an independent video store here with about 3 locations that continues to survive and do well. They do this by stocking a lot of good movies, including a lot of niche films instead of just walls and walls of new releases. They also rent by the day, so you don't pay until you bring the video back. There are no late fees per se, you just pay like a per day fee for however long you keep it out. It's worked for them for years.

What your local stores did was adapt to the local Market which was something Blockbuster and Smaller chains refused to do. At least with the Netflix Model I can ask for really obscure things and it's likely they'll carry it or I can watch it online.

I've known individual owners, however, who didn't want to purchase obscure requested films because they didn't think they could get a return on them. Those owners also tended to run their store in the ground a lot quicker than Blockbuster did.


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