johnnymk

http://www.news.com/8301-10784_3-980...47-1001_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 And due to its size and outdated corporate culture, there really is no salvation for Blockbuster at this point.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.

Daedalus

Very interesting. I wonder how much of its demise is actually related to Netflix, and how much is related to bad management and/or people choosing things other than movies.
If NFLX kills BBI, then it would validate the thought that consumers don't need a local store, and that they're willing to wait a couple days to receive a movie on their watchlist. But if that's the case, then what barriers to entry are there for online video distribution? It takes a good while to download a HD movie over the web, but it's still faster than the postal service. Once content provides figure out the security issues, NFLX could soon join BBI as BK.

Cubsfan

I've been a Blockbuster Online (I guess they call it Total Access) for a couple of years now. Honestly, I've never actually had any problems with it. The movies arrive in a reasonable timeframe, and best of all, I'm grandfathered in with 2 Video game coupons a month.

That being said, if they made me change to a plan where I didn't get 2 video game coupons, I wouldn't have any particular reason to stay with them. But then again, I don't think I'd have any particular reason to go to NetFlix.

RoniMan

"Ad hoc, ergo, propter hoc"

After this, therefore, because of this.

I don't think Netflix IS the reason, but I do believe it played a major role in changing that industry.

I saw a Hollywood Video near where I work having a "going-out-of-business" sale, and I was wondering if it's just that store, or the whole company.

DarkFury

More or less, video stores will need to provide some kind of additional benefits in order to survive.

Look at what McD's is doing with their $1 per night movie rental in those Red Boxes. You can get a movie, get your food go home watch it and take it right back for next to nothing.

Who knows... vending machine movies might be the next "big thing".

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InfiniteNothing

That's pretty clever. While you're going back to return your movie, they getcha buying another burger.

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InfiniteNothing

I like BB online. The coupons and the other free rentals are usefull for when friends come over and you want to browse movies instore with them.

Thesifer

(Hollywood Video / Movie Gallery)
They are closing a ton of their stores, and they were de-listed from the NASDAQ. I had a little bit of stock in their company, it's worthless now. They filed for bankruptcy also.

It wasn't that long ago that Movie Gallery purchased Hollywood Video, they lost a lot more money then they planned trying to bring HV into their system of renting though.

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Post hoc ergo propter hoc, means after this therefore because of this. This fallacy is one in which cause and effect are misidentified simply because two things occur in a particular order.


Ad hoc ergo propter hoc means with this therefore because of this. Sometimes people confuse two thing that occur together with a cause-effect pair.
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thresher

My thought is this: 78759 is my zip. I lost my video store at one end of the grocery store mall (Hollywood) and the other is doomed (Blockbuster). Am I to blame? Sure, we watch On-Demand here. I rented a movie at BB the other day (first time apparently since I graduated college more than 12 years ago as that was the address they had). One movie (Omega Man if you must know). And this total jerk of a manager gave me the HARD SELL on BB Rewards or whatever they call it. He said "all you have to do is rent 3 movies a month" and he held up 4 or 5 customers to grind this hard sell into my poor wife and I even as she was politely saying "no". Finally I loudly asked the guy how many times I had rented videos from BlockBuster in the last decade. When he came up with "Well, once" I said "and with this stellar customer performance do you expect me to come back again in the next ten years?". I actually got applause from a couple of people waiting behind me.
Blockbuster killed themselves.

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renovation

i have a blockbuster not far from my home . I never signed up for a membership .gone in looked around seen the rental fees listed .looked at the used movies for sale .walked out thinking over priced .and drove to the other side of the parking lot. were walmart is and came out smiling with new movies for a little bit more then blockbuster wanted for there use copys.
and old movies a lot of times i just hit the $5 bin in wallyworld .sometimes i hit a winner in there. but i have to admit i do enjoy the digging in the bin .its like digging for gold. you never know what be in there

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Napoleon54

*happy dance*

Rot in hell, BB. You suck.

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VTGreg

Call me crazy but I'll be disappointed if BB goes under. I don't have a Netflix membership and don't watch movies consistently enough to warrant one. I enjoy being able to go and pick up a movie on a whim and not have to plan it out. RedBox is great for new releases but they have a very limited selection.

I have to imagine that there will always be a place for a B&M store.

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Napoleon54

That's what I like Hollywood Video for, their customer service is MUCH better IMO. My hatred for BB stems from them trying to charge me late fees when I know I returned the movies on time.

ski

I don't like Netflix. I've tried BB Online and Netflix twice each. I felt like I got more from my BB Online membership first with the free rental coupons, and this past year the 1-for-1 trade in at the store.

Oh well!

There's a 4-5 person line at the $1 grocery store DVD rentals every time I go in there, so I'm trying to avoid that for now.

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InfiniteNothing

They are closing stores too.

renovation

Hollywood Video closed all the stores by me 2-3 years ago .and there were 3 of them . now all thats left is blockbuster.

jerryf1443

I am still looking for a company who will rent hd-dvd and blue rays for a cheap price. The blockbuster by my home is now a Verizon Wirless store.

Napoleon54

Yeah, I'm sad to see that. They're certainly not going to survive on my business though. I hardly ever rent a movie, maybe once every one or two months, if that. Haven't tried Netflix and not sure if I want to.

VTGreg

I've got to imagine that those types of experiences vary greatly from one store to another. I've been to Blockbusters where the employees were great and also to some where the customer service was abysmal.

InfiniteNothing

Both online companies offer them. My local BB has a good Bluray collection. Not a bad HD-DVD collection too.

wonkatania

Well, I did use Blockbuster for quite a few years before I next it to go with Hollywood Video, and I am now currently with Netflix. I wonder if I am just following a trend or if my changes ARE in fact justyfied.

Well, whatever the case may be, it appears that I am not the only one who has travelled that road, defenitely NOT the road less travelled.

Prngr44

I've got a BB online account and I just pitch my monthly coupons... are they linked to my account or can anyone use them?

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redcolours

buckbuster to me was great for selling those used DVDs for cheap. thanks in part to them my collection has grown a lot when i was buying DVDs.

but now i dont care for renting/buying DVDs anymore. when the movie that was just out 3 months ago in theatres is now in DVD, and another month later is on VOD or even on a premium channel (in HD no less), why bother renting?

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des1969

I think it's due to Netflix and Video on Demand. Why rent movies when you can just get them from your own tv? VOD is awesome

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