Sunday, October 3, 2010

Blockbuster Bankruptcy

It seemed to fly under the radar, but since I have spent some time in this store recently, I thought I would bring it up again.

In case you didn’t hear, Blockbuster has filed for bankruptcy protection in the United States.

The Canadian operations are not affected by the move.

Blockbuster, which at one point was the #1 video rental retailer, is reportedly carrying 900 MILLION dollars in debt.

How did this happen, you ask?

Well in many ways, Blockbuster had an auto industry approach to business – specifically comparable to the Big 3.

There was an arrogance to Blockbuster – sure there was Jumbo Video in the past and Rogers Video as their only current retain competition - but they forgot something – the wonderful world wide web.

Netflix popped up, as did the ability to order movies off your satellite provider with a click of a button, and Blockbuster did not adjust until it was too late.

Then, when they did, their marketing ploy was vacuous (vak-you-ous) and negligent.

They offered no late fees – an excellent idea for families on the run who aren’t able to find two hours in a night to sit down and enjoy their flick.

But then realized late fees accounted for 16% of their revenue and brought them back.

In place, they have come up with the 2-night and 7-night rental…without changing the prices.

You can order a movie on pay-per-view for around 5 dollars, you can use Netflix for anywhere from $5-$25 dollars a month – and that’s for as many movies are you want.

Blockbuster is still $6+ dollars a rental, and even more for Blu-Rays.

Like GM, Ford and Chrysler – I think Blockbuster got it in their minds that they were irreplaceable.

But they aren’t.

Like Honda, Toyota and other foreign brands – alternatives like Netflix and Pay-Per-View have been stocking up their army and have unleashed a wrath of opportunities for the movie watcher.

As I mentioned earlier, Blockbuster Canada is not expected to be affected by bankruptcy protection – but that’s for now.

Netflix has just arrived in the Great White North, so how long can Blockbuster keep up the charade before they are left out in the cold?

Like the Big 3, Blockbuster needs to get with the times or they will be as extinct as a character in one of their high priced Science Fiction rentals.