Thursday, March 25, 2010

Blockbuster Flat Busted

A decade ago, Blockbuster Video was arguably the largest media player in the country.  Movie studios, distributors, marketers, game makers, they all lined up to get on Blockbuster's shelves as America's media store. They had an enormous amount of clout.  Everyone made them deals to stay number one and keep them number one.  And when you're number one, people come gunning for you.

How quickly things change.
Blockbuster is in a heap of trouble with nearly $1 billion in debt, and its latest fixes might not be enough to keep the company from filing for bankruptcy.

The movie rental company launched its newest enterprise on Wednesday, beating rival Netflix to the punch in mobile movies. Blockbuster is now offering on demand video via T-Mobile's new HTC HD2 smart phone. The new service is also expected to be available on Android and Windows Mobile phones soon.

That news follows the company's announcement on Tuesday that it signed a new agreement with movie studio Warner Bros., which is owned by CNNMoney.com's parent company Time Warner (TWX, Fortune 500). The deal will continue to allow Blockbuster to offer the studio's new releases about a month before its chief competitors, Netflix (NFLX) and Coinstar's (CSTR) Redbox.

Blockbuster's latest moves are steps in the right direction. But to overcome nearly $1 billion in debt, unprofitable stores and continued losses, what the company really needs is a major turnaround. Blockbuster said last week it may have to file for bankruptcy protection if it cannot lower its debt by other means. 
Video killed the radio star, but the internet killed Blockbuster.  America's video store is Netflix these days.  Netflix really is one of the great American success stories.  And now Blockbuster has ended up as one of America's great cautionary tales.

1 comment:

  1. We live within ten minutes of two different Blockbuster stores. But we got Netflix at Christmas time and we have never looked back. It's fast, easy, and inexpensive and not only can you stream movies as often as you like, many in HD, you can get them through the mail as well.

    I've seen more movies in the past three months than I have over all of last year. And we have no complaints with the service at all. One time we got a faulty disc, emailed them with our problem, and they sent out a new one immediately. We love it!

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