Blockbuster? We knew it was dying, courtesy Redbox, Netflix and the changing ways people consume their entertainment, but when will it finally expire? Probably next year, according to one analyst and the company’s own balance sheet.
It’s a balance sheet that’s continually losing money, with the latest blow coming last quarter, when Blockbuster bled $US65 million, reported 24/7 Wall St analyst Douglas A. McIntyre. Life’s become so dire, in fact, that Blockbuster is mulling Chapter 11 to eliminate debt.
While the remaining 6000 stores is nothing to sneeze at (my late hometown one not amongst them), there is precedence for massive, simultaneous closures in rival Movie Gallery. That company had 2400 stores, you see, and it shuttered them all back in February.
Ending on a positive note, the company could have a Redbox/Netflix hybrid future with its existing supermarket kiosks and mail service. So here’s hoping that happens, some people can keep their jobs, and Blockbuster’s predicted “demise” in 2011 is merely a metamorphosis into something a bit leaner and meaner. Competition is good, and all that.
Update: Reader Josh writes in with an additional bit of depressing news for Blockbuster:
[W] hen considering the future of Blockbuster kiosks, Blockbuster doesn’t actually own any of kiosks. NCR owns and operates all of them. Blockbuster just gets a small licensing royalty for them. So, Blockbuster definitely doesn’t have a chance at sustaining itself on those kiosks.
matt
Monday, July 12, 2010 at 10:15 AMwell that will be a shame, digital distro IS NOT GOOD ENOUGH YET!
Simon Potts
Monday, July 12, 2010 at 12:28 PMThis is only for Blockbuster USA. Blockbuster here is owned by Franchise Entertainment Group, who own Video Ezy.
They are completely separate identities. The only way this will impact on BB down under (financially) is bad PR due to bad press about the US.
Darren G
Monday, July 12, 2010 at 2:33 PMIt’s unfortunate that video stores are dying. Everyone talks about the effect of piracy on the cinema industry, but it’s the video stores that are the true victim. People will ALWAYS go to the cinema, it’s more about having a night out. Nobody is going to watch a camcorder divx copy of Iron Man 2 at home on to impress someone on a first date.
The US has a good digital distribution framework. Australia by comparison has a crap one. Until then we still need video stores.
I work at a VideoEzy and I think about this alot.
The only way I can imagine a video store saving itself from closing down is to re-brand themselves as a leading DVD, BluRay, Music, Movie Merchandise, and Games retailer, that also rents, and sells ex-rentals at a competitive price. Remove the stigma from everyone’s mind that its a one trick pony (DVD rentals only).
Put in a rental pricing scheme that beats digital distribution so that people have a justification for getting in their car.
Implement massive member benefits (such as 10% off retail stock for members, regular special offers on rentals) and put them on an email mailing list so that they don’t forget that the store exists. Integrate with social networking sites so that people hear that new releases are in-store on their news feeds. Make members feel like members and not like they just hold a plastic card that allows them to rent.
Merchandise! People go bat-s**t insane over twilight t-shirts and beach towels. Why aren’t video stores capitalizing on this?
Also implement a late fee system that is both fair to the customer and the store. For example, a lot of customers rack up a $100 fine and never return to the store, and of course because we don’t have the money to afford debt collectors anymore, not much can be done about it. On top of that video defaulters charge a ridiculous amount to the customer which only serves to scare people into never renting a movie ever again. I reckon stores should offer a scheme were late fees are “Half price” provided the customer authorizes their credit card to be billed if the late fee isn’t paid, like how those new kiosks do it. Also, like kiosks, cap the late fee at a certain dollar amount after which the movie is theirs to own.
Hope a video store owner somewhere out there reads this.
Darren G
Monday, July 12, 2010 at 2:43 PMAlso, most video stores are missing some of the biggest blockbuster movies of all time. Usually the story is that we used to have them, but no longer due to scratches, theft, or whatever.
I’m sure a video store could easily source most, if not all, of the top 1000 most successful films according to IMDB from their suppliers. If I over-estimate the average cost price of those films to be about $10 (I’m sure MOST are less than that), that’s a $10,000 investment which will ensure that every customer leaves with a movie that they wanted. (90% of customers who ask for a certain movie are asking for one on that list, I assure you). $20,000 will ensure 2 copies of each.
Simon G
Monday, July 12, 2010 at 8:46 PMRising lease and labour costs in a mature industry is the problem. For good stores, revenue is quite stable .. but rising costs are putting them out of business. Shelfless is the way .. http://applebox.com.au gives you an idea of the future (Disclaimer .. it’s my store!)
Steev
Wednesday, July 14, 2010 at 1:22 AMLooks awesome Simon, cant wait to see this in Sydney. Im so sick of all the bullshit my local video ezy pulls
Steve Des
Monday, July 12, 2010 at 8:57 PMBB and Video Ezy here in Australia are owned only in name by the Franchise Entertainment Group (FEG). Most stores are owned by people like me trying to make a living. This can still happen the only thing that will shut my doors is the moronic decisions being made at the top level. Every cost in our industry has gone down except for the fees we have to pay to the(FEG). You would think they would have a vested interest in keeping store doors open. It would seem they want doors to close so they can reclaim territory for their own pay per view box.(nothing like not having to share your profits your franchisees). All I’m doing now is waiting to file my own chapter 11 so Paul and Eddie won’t get a cent. Rest of my creditors will get paid.
Simon G
Tuesday, July 13, 2010 at 10:48 AMSteve, get in touch (info@applebox.com.au) – I’ve got a solution for you. Once your FEG contract expires, pickup with applebox and never look back.