Blockbuster Holding On By A String
Posted by Craig Kessler on March 4, 2009 at 5:30 am
Blockbuster, the nations leading movie rental company is falling, and it is falling hard. Of course this is great news for Netflix. Started back in 85, it made a name for itself being the premiere movie rental only to struggle to make a buck ever since. After closing at $.22
by the close of the day yesterday, the future of the company looks gleam. And to be honest, I’m not surprised and could care less.
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I am a perfect example of why this company will go south, and fast. I rent movies on the regular and had no problem forking over the $5 for a good rental. To be honest, I enjoy the experience of walking into the store, browsing the selection, and eventually picking my rental for the night. The shopping experience of deciding on a movie night and making it happen kept me a fan for years. But I have recently been converted to Netflix, and I won’t be the last person.
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Netflix offers multiple pricing plans and basically an unlimited selection of movie selections. I have the 1 DVD rental per month and also have the upgraded version that includes Blu-Ray because I can watch Blu-Ray through my PS3. I have a long list of movies in my queue and the social interaction of getting recommendations from others is great. Blockbuster has tried to match the success of Netflix with their own online subscription based programs, but it has not has nearly the success they would have liked.
1. Video On-Demand
People want their movies when they want their movies and it’s NOW.
2. Streaming movies
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Netflix/Amazon/Tivo steaming along with sites like Hulu and youtube possibly making waves into streaming over the internet make it difficult
3. Redbox
$1 rentals through kiosks in supermarkets and other areas make it difficult.
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4. Brick and mortar stores
The fact that Blockbuster still has so many large stores with high rents are driving the costs up.
Blockbuster has invested millions of dollars to re-adjust their business model to compete with the top competitors, but will they thin themselves out too much? It certainly looks like they will.
What can they do to help themselves out? I like how they are focusing more on renting games and will be starting an online service like gamefly. The gaming business is booming and combining games with movie rentals can add to profits. I think they should take away from some of their stores. Mainly they need to reconnect with users, give them a reason to stay loyal to Blockbuster. In today’s world customers can easily be swayed and Blockbuster needs to show their personal side and get in touch with their customers if they even want a chance to stay alive. Otherwise the grim reaper will be knocking on their door very soon. Do you think Blockbuster will survive in the future?
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I had made a similar comment over a year ago when Blockbuster started pouring their resources into switching to Blue-Ray. Streaming video is the wave of the future and if Blockbuster wants to compete they are going to have to ante up. I have been a die hard Blockbuster fan for many years (in fact, I am a gold member – alarming but true). As I am drawn to all things “new release” I was also an early Netflix customer. At this time I subscribe to both. Netflix for the one out at a time option with unlimited online movies and because they often have that hard to find movie that Blockbuster doesn’t. With Blockbuster I have two or three out at a time depending on how busy life is. I use the envelopes to get my new releases for free in store on Tuesdays each week then my queue is used by my kids to get the movies they want. We also subscribe to GameFly – giving them some competition could also save BlockBuster. I’d hate to see them go but so much capital being applied to brick and mortar marketing will have the same result as waving “Bye” to their customer base and revenues.
@km I agree with you, internet streaming movies is the wave and will slowly pick up. It already is with Netflix and they have deals with Xbox and Tivo. Soon they will be charging subscriptions for movie streaming, and that will do well because why not? Who wouldn’t pay a small fee to be able to stream movies at will whenever they want to watch them. If the movie selection grows, it will be a huge success. I have always enjoyed Blockbuster, and the envelope system is a good one. But most people don’t consume that many movies where it is such an effective system. If anything, they will lose money on the free releases and not necessarily gain new subscribers. The gaming niche is definitely where they are heading now to compete with GameFly and earn market share. But not sure if it will be enough. They have been doing poorly for years and have always been on the brink of closing down. Now more than ever it seems like that may become a reality.
I agree of course that streaming is the wave of the future, but I don’t think it will come *that* fast. People will still go to video stores (as we still go to cinemas) and order by mail for the foreseeable future. If Blockbuster is savvy, they have plenty of time to transition.
@Phoebe Blockbuster may not fall tomorrow, but it definitely is on a fast moving downward spiral. Because of the economy look at how many named franchises are out of money or going bankrupt. I didn’t think Circuit City would fall either. Blockbuster has their strategy of focusing more on in store sales and game rentals. This may help initially, but going to the movies is a complete different experience than watching at home. Also, other than The Dark Night, the movies have been decreasing every year, which is why they keep rising the prices and are trying new methods (3D) to get people back in the seats. Blockbuster may have some time, but I wouldn’t consider it plenty. It will be interesting to see in the near future how things develop. Thanks for the comment.
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