Blockbuster Deathwatch

Blockbuster is filing for Chapter 11. Of course, as savvy folks know, filing for bankruptcy is not neccessarily the end of the line (see K-Mart or Sears) but it’s not a sign of econmic health, either.

The question is, can Blockbuster turn it around?

The answer is, no, they can’t. Streaming will kill brick-and-mortar (God, that term seems so 20th century) media outlets of all varieties. See: Tower Records, Hollywood Video.

And wow, what is this Megavideo thing? I am perfectly happy paying for Netflix streaming and I don’t pirate (I work for the Borg, ferfucksake), but this definitely seems like the beginning of the end for all video-based revenue models, the same way rampant piracy has already ended almost all audio-based revenue models.


Blockbuster’s only chance was to completely revolutionize it’s business model. It could have been Blockbuster instead of Netflix or Redbox - now, it’s too late.

You can imagine scenarios on how to make a much reduced Blockbuster survive, after a fashion; say, in a handful of urban, college town markets as a reinvented indie company, with say, 20 or 30 locations nationwide. But such a reinvention would be such a cultural shock it just would never happen.

Really, the best they could do now is rebel and try to overthrow the government. A one in a million shot, but it’s better than their odds now!

There is… however, from an investment point of view… a very slight chance they may convince some useful idiot to buy them out.

I’m bummed, I really like the in-store swap aspect of Total Access and I’ve been a subscriber for a couple years. I think it’s their own fault for failing to leverage the dirt-cheap nature of DVD rentals to reduce rental costs to increase volume. There’s no reason a DVD rental should have been more expensive than VHS since they were cheaper.

I’m doubtful that Blockbuster can turn it around as well. It would take a miracle at this point. They really missed the opportunities both times. The first was when they tried to enter the mail-back rental market by charging more for a smaller selection of titles and longer mail turnaround, and the second was their way too little too late effort at video streaming.

Not sure how widespread it is, but I have noticed a lot of Blockbuster DVD vending machines popping up in grocery stores to compete with Redbox. Too little, too late?

I think this (along with stupid prices) describes Block Buster’s business strategy for the last decade or so.

When Netflix launched BB was easily big enough that if they launched their own rental by mail they would have crushed them. They’re just way too late on everything and charge way too much at their stores.

More importantly will I be able to remove the Blockbuster App from my Droid X if Blockbuster ceases to exist?

Pricing is what’s killing Blockbuster. Renting a movie for like $6 is ridiculous to begin with then add in Netflix or and you have an even less of a reason to want to rent from Blockbuster. Also there are numerous video stores in the suburbs the Fraser Valley / Lower Mainland area in BC that offer amazing deals on video rentals and I see why no-one goes to Blockbuster anymore.

Piracy didn’t kill Blockbuster, Blockbuster killed themselves.

I look forward to picking their bones clean. Cheapo Blu-rays, here I come!

Zip seems like a missed opportunity. Their kiosks are fine but their mail order stuff is just so stupidly expensive that they’re just asking to be trounced by someone else. Though it could be nobody will bother as streaming seems to be the next big thing for movie rentals. Doesn’t seem like Netflix is planning a mail service here in Canada.

I think the mail service part is pretty difficult to do, and my understanding is that Zip is in partnership with Canada Post so it’s doubtful you’ll see anyone else stepping in to that field. I think if Zip did a price drop and added in streaming much like netflix it could do well, but the Canadian market just isn’t big enough with it being 1/10th the size of the US and that’s what I think hinders us a fair bit.

I have a few friends who were avid renters that went to Zip and even though they said it wasn’t the greatest, it was cheaper than their current rental costs at the video store, and a lot more convenient.

The thing that absolutely killed BB is rent/leases. They don’t own their locations, they rent/lease them. Their operating costs were just ridiculous. Developing a streaming business wouldn’t help them because they had all those stores hanging around their neck like a ship’s anchor.

Netflix locates its distribution centers in cheap towns just outside of major metropolitan areas. Hell, they probably even get tax breaks from some just so they get some kind of jobs.

To mug one of Tycho’s analogies: BB is the horse-n-buggy company which not only failed to adapt to a changing marketplace after the Model T showed up, it actually thought people would pay more for the privilege of sticking with their antiquated product / service. By the time they realized the error of their ways, the writing on the wall had long since faded.

They will not be missed (at least by me).

It’s not the online vendors that are killing Blockbuster (though it doesn’t help). It’s the DvD rental machines in places like Wal-Mart. Much cheaper prices for basically the same selection without all the hassle - what does that leave Blockbuster, other than video game rentals and their ever smaller selection of older movies?

I haven’t rented a movie (other than Netflix) for 5-6 years. When I hear coworkers talk about it I feel like I’ve entered a time warp.

I knew things were getting bad when they changed their policy to giving you coupons for free rentals instead of just giving you free rentals. They have online rental that can be linked to your store account, but the selection is crappy compared to Netflix.

They could probably do okay if they reduced their stock and switched to mostly game rentals, but their stores are way too sprawling.

so i guess that’s why netflix stock broke $160. sell today?

I used to work there back in my high school/early college days (too many decades ago). Good times for sure, and the stories I could tell … wow. There’s more than a little bit of me that feels sad and nostalgic about their impending doom, but quite frankly it’s been long overdue and I’ve been a little shocked that they’ve been able to stave off the inevitable for so long.

Blockbuster could still completely reorganize their business model, but the current store format is worthless. As already noted, the overhead from the stores is insane. It was great for easy expansion that was used to drown out competition back in the day, but this is the price you pay for it. The actual price points had to be so high in order to meet goals, and that along with the advent of Netflix and streaming video was the recipe for disaster.

My guess is that you’ll likely see the name for some time to come, because I believe upper management will reorg into something streamlined. However, the stores will fade away completely where they haven’t already and the “new” Blockbuster will start its rebirth squarely behind the 8-ball and probably won’t last.

Blockbuster has to be the worst video rental outfit I’ve ever dealt with. Stupid prices, terrible selection, terrible organization, terrible corporate policies like censoring the movies they rent to you (Ebert used to write about it in his Answer Man column). I was never clear on how they were successful to begin with, but yes, I would definitely say their stores are on the way out. Even -good- video rental stores have a hard job staying afloat between Netflix for massive selection and delivery to your door at bargain basement prices and Redbox for impulse rentals. I guess I could see them staying around in some capacity if they found a way to compete in a viable sector of the rental industry (like mail order or vending machines) but I dunno what they could possibly do to compete with Netflix at this point.