johnnymk
11-02-2007, 10:38 AM
http://www.news.com/8301-10784_3-9809950-7.html?part=rss&subj=news&tag=2547-1001_3-0-10
Posted by Don Reisinger
(Credit: Crave)It looks like the bottom has finally fallen out of Blockbuster. After numerous failed attempts at attracting new customers, the company is finally spiraling out of control.
Sad as it is, the end is near for Blockbuster, and all that pressure it has been placing on Netflix will be lifted.
And in the end, Netflix will be left standing to fight another day.
Although Blockbuster tried everything it could to create a compelling reason for us to use the service, the company could not overcome its downfall. For years, it was hated by those people who saw it as a monolithic organization that enjoyed charging exorbitant late fees and had little or no care of what the customers wanted most. So when Netflix offered an entirely new service, the dynamics of the industry was inexorably changed, and Blockbuster was left playing catch up.
According to the company's third-quarter results released Thursday, Blockbuster's revenue slid 5.7 percent and the company harbored a net loss of $35 million. Worse, it has closed 526 stores in the past year, and the number of employees will be reduced to offset high overhead costs to the tune of $45 million. Blockbuster's injured stock price continues to fall and was priced at $5.06 at Thursday's close.
But if that's not enough to signal defeat, Blockbuster Chairman Jim Keyes admitted that his company's focus on Netflix was damaging and has decided to pull the plug on his demand for higher Total Access membership. Instead, he wants Blockbuster to focus on increasing overall membership.
Sorry, Jim, but I think you're out of luck.
Much like the print media and retail stores refusing to change, Blockbuster has been a victim on an online company finding new and inventive ways of bringing a product to a customer. And due to its size and outdated corporate culture, there really is no salvation for Blockbuster at this point. Try as it might, the future of Blockbuster is bleak, at best.
Sure, the company still enjoys revenue that climb into the billions of dollars, but with an ever-increasing net loss and a public refusal to focus on Total Access--the area where Netflix continues to dominate--what is the impetus for us to jump on the Blockbuster bandwagon?
Simply put, Blockbuster is doomed. And while many of us have known it for a while now, it's amazing to me that the chairman of the company admitted this in a not-so subtle way, as well.
For Blockbuster, there is currently no prospect for growth. Not only is it incapable of breaking the Netflix shell, the brick-and-mortar stores are failing, and there is little chance it will be able to capitalize on the future of movie rentals--downloading.
The way I see it, Blockbuster has two options: sell off the company as soon as possible or spend huge sums of cash on research and development and strategic partnerships with distribution companies to make downloading movies a viable alternative to Netflix.
But unfortunately, I simply don't see this happening. I think Blockbuster will try to stay the course in the hopes it can find a way out. It won't.
I'll give it two years before this company goes under.
Posted by Don Reisinger
(Credit: Crave)It looks like the bottom has finally fallen out of Blockbuster. After numerous failed attempts at attracting new customers, the company is finally spiraling out of control.
Sad as it is, the end is near for Blockbuster, and all that pressure it has been placing on Netflix will be lifted.
And in the end, Netflix will be left standing to fight another day.
Although Blockbuster tried everything it could to create a compelling reason for us to use the service, the company could not overcome its downfall. For years, it was hated by those people who saw it as a monolithic organization that enjoyed charging exorbitant late fees and had little or no care of what the customers wanted most. So when Netflix offered an entirely new service, the dynamics of the industry was inexorably changed, and Blockbuster was left playing catch up.
According to the company's third-quarter results released Thursday, Blockbuster's revenue slid 5.7 percent and the company harbored a net loss of $35 million. Worse, it has closed 526 stores in the past year, and the number of employees will be reduced to offset high overhead costs to the tune of $45 million. Blockbuster's injured stock price continues to fall and was priced at $5.06 at Thursday's close.
But if that's not enough to signal defeat, Blockbuster Chairman Jim Keyes admitted that his company's focus on Netflix was damaging and has decided to pull the plug on his demand for higher Total Access membership. Instead, he wants Blockbuster to focus on increasing overall membership.
Sorry, Jim, but I think you're out of luck.
Much like the print media and retail stores refusing to change, Blockbuster has been a victim on an online company finding new and inventive ways of bringing a product to a customer. And due to its size and outdated corporate culture, there really is no salvation for Blockbuster at this point. Try as it might, the future of Blockbuster is bleak, at best.
Sure, the company still enjoys revenue that climb into the billions of dollars, but with an ever-increasing net loss and a public refusal to focus on Total Access--the area where Netflix continues to dominate--what is the impetus for us to jump on the Blockbuster bandwagon?
Simply put, Blockbuster is doomed. And while many of us have known it for a while now, it's amazing to me that the chairman of the company admitted this in a not-so subtle way, as well.
For Blockbuster, there is currently no prospect for growth. Not only is it incapable of breaking the Netflix shell, the brick-and-mortar stores are failing, and there is little chance it will be able to capitalize on the future of movie rentals--downloading.
The way I see it, Blockbuster has two options: sell off the company as soon as possible or spend huge sums of cash on research and development and strategic partnerships with distribution companies to make downloading movies a viable alternative to Netflix.
But unfortunately, I simply don't see this happening. I think Blockbuster will try to stay the course in the hopes it can find a way out. It won't.
I'll give it two years before this company goes under.