Say goodbye to Blockbuster
The end is here
(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 And due to its size and outdated corporate culture, there really is no salvation for Blockbuster at this point.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.
Don Reisinger is a technology columnist who has written about everything from HDTVs to computers to Flowbee Haircut Systems. Don is a member of the CNET Blog Network, and posts at The Digital Home. He is not an employee of CNET. Disclosure.
So while Blockbusters online services have been pretty poor offerings it is too early to say it is over. In general, in my opinion, people in the computer business are way to fast to say something has changed i.e. the vast majority of consumers like the ability to plop a disc in and they like the ability to browse in a physical store.
I tried out Blockbuster's new offer to pre-order video games. I have pre-ordered alot of games in my time from gamestop and have never had a problem. Blockbuster failed their test, and in result of not getting the game through them, it will be on back order for weeks and I will get it late. Im not trying to whine here, but for god sakes a company that is in shamble's should represent it self a little better. Very dissapointed iv already got my subscription to netflix, as the merge with Tivo seems to be alot better than anything Blockbuster can pull out of their hat! praise Netflix!
They have since moved in store rentals to 2 per month without charge but even then it is a good deal. Clearly you have to live in close proximity to a store.
From an online experience, the UI is ok - not great but navigable and the great thing about ordering online - New Release movies shipped right to your house and you don't have to worry about the 2 day return policy.
As for the in store experience, they definitely have moved from "how are you enjoying the online service" questions to "how would you like to buy *upsell x*"
Just my 2 cents...
Blockbuster is changing its management team and nobody knows where it will go right now. CEO James W. Keyes (formerly of 7-Eleven) has only been in that position since July and the senior vice president and general manager of Blockbuster Online as well as vice president of strategic planning for Blockbuster, Shane Evangelist, just left last month. Keyes has brought in Keith Morrow to be the CIO (also formerly of 7-Eleven). So there are serious strategic changes to come.
But really you've got to remember, for Blockbuster, online rentals aren't their entire business. They, unlike Netflix, are primarily a B&M company. I expect what will happen is that Keyes, as the new CEO, will be much more concerned about overall increased revenues and do what he can to increase the overall revenues of the stores. After this, will they turn the heat back on Netflix with the online competition.
Also keep in mind that the video rental business is still in flux.
1) With the recent bankruptcy of Movie Gallery/Hollywood Video, the playing field is changing again. There is still a lot of market share to be had.
2) In its past quarter, Netflix reported its first-ever sequential customer decline. Is this the first data point of a trend? Only time will tell.
3) Also keep in mind that some analysts are predicting that within 3-5 years the entire traditional video rental business won't exist, that cable companies will become the predominant method people watch new movies.
So there is a lot going on in the industry right now. I don't think that anyone, with any reasonable assurance, can say that within 2 years Blockbuster will out of business.
I don't know if they are going to make it or not, but you won't see me darken their door step. My brother uses the mail order and gets rentals in the store. It takes there service an extra day to get to him. Everyone thinks it's a bonus to be able to go to the store. Why? I hate it. Bright lights poorly organized, screaming babies, and a rude zit faced kid at the register.
I'll just use the streaming video on the Netflix site.
Enjoy Blockbuster suckers!
I switched to Netflix 3 at-a-time. For $18mo I receive 3 shipments per week. They also ship on Saturdays! $18 for 36 rentals = $ .50 each and I don?t spend any time or gasoline driving to pickup and then return movies. I am not even counting the 50+ movies that I watch for FREE from my instant queue.
If you think Blockbuster?s Business Strategy is not doomed to fail, you need to rethink INCOME ? EXPENSE = PROFIT?
They've already started down this path by buying Movielink.
If your research didn't get that far, then you're incompetent.
If it did and you neglected to mention it, then you're negligent.
You may be right in the end, but you have more resources than the average blogger, you should have picked it up.
I returned to one of their retail outlets after 5 years. With so many mindboggling smorgasboard of distractions vying for our limited free time I just happen to aimlessly drift into a Blockbuster store to see what has changed and on a spur of the moment madness rented their holiday "Weekly special offer of 3 movies for Aus$ 10"
We do not have much "Free Time" as such to see the movies and of course, forgot about returning the rentals on time.
No phone or a note in the post as a reminder but the audacity to slug me Aus$ 35 for late fees.
Will anyone be surprised to hear Blockbuster has gone bust. They should not expect any flowers from me for their funeral.
are commenters who clearly know more about the topic than the poor,
semiliterate blogger does. Not only is he not a competent writer, his basic
premise is wrong. Downloading movies is still rare. If it had taken off, movies
on the ITunes Store would represent all studios. The number of households
downloading movies would be higher. Sometimes I suspect C/NET hires
people of nominal competence because they come cheap.
That being said, I left Blockbuster years ago because I didn't like they way they meddled in how movies were edited. They were so arrogant and large at one point that there was what's known as a "director's cut" vs. a "Blockbuster cut". Blockbuster was actually dictating to Hollywood what they could or couldn't put in their movies, even if they already passed muster with the MPAA ratings board.
Ever notice why you can't rent an NC-17 movie at Blockbuster? Or unrated director's cuts? At least at none of the ones I've been to.
Nope, I won't miss them if they go down the tubes.
Btw, the massive amounts of bandwidth needed for instantaneously downloading movies just isn't there and probably won't be for at least another 10 years. It will be the future, though...
In the meantime we have Netflix...
Blockbuster came along and boom, $17.49 a month for 3 movies at a time. That was the only time Netflix dropped back down to $17.99. And yes Blockbuster raised their rates by like a buck, but whoa, I still only had to pay $17.49 since that's what I agreed to in the first place.
And add to that, the ability to be impulsive and return a movie at a store, which happens to be within walking distance, and get something else, and be watching it 15 minutes later.
Plus, I don't know how they all work, but at the store I rent from, you get a 7 day grace period before charging late fees. If you're 7 days late, you deserve a late fee. And the people that work there are pretty nice and friendly. And lo and behold, some are also attractive and generally have fairly clear skin. And I don't care if other patrons have crying babies because I have one also. The world does not always play by your rules. Deal. Some of the rationales people have for not patronizing blockbuster are pretty stupid.
I get 3 videos via mail. When i'm done, I take them to the Blockbuster store and get 3 more. In the meantime, a Blockbuster store employee scans my videos I got in the mail, and their distribution center rushes me 3 more in the mail. That means I can have up to 6 videos in my posession at one time, all for $17.99 a month! Netflix cannot touch that!
Blockbuster offers flexibility which Netflix cant. And now with Blu-Ray titles for rent, Blockbuster is that much sweeter.
the fact that they constantly fiddle with their pricing structure and services.
For example: when Total Access premiered, you could rent a video in-store
for every single video you rented online; several months later, they changed
the plan again, so the in-store freebies are limited to your monthly plan.
Regardless of recent changes, I think they still have a solid competing plan to
Netflix. But their only way out of this is if they do some serious market
research, and find out why customers leave. The most significant thing will be
that Blockbuster has diluted its own brand. People don't like joining a service,
and finding out a month later that it's totally changed; they want something
stable and reliable.
- Blockbuster had it coming
- by gkamer November 8, 2007 4:42 PM PST
- So, some people believe Blockbuster is about to go belly up? Not a big surprise here..... They slammed a lot of customers for a long time with there outlandish late fees. I wonder how much money they socked away with that little scam.
- Like this Reply to this comment
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Showing 1 of 3 pages (48 Comments)When complaints over these late fees reached fever pitch, they launch a major advertising blitz. No More Late Fees banners hung from buildings proclaimed. People jumped for joy. They danced in the streets. Women cried. Men hugged.
What Blockbuster failed to tell their few remaining loyal customers, was that any video kept for more than 5 days was charged to their account, and now they never had to send it back, because they had become the proud owners of the video.
I don't think Netflix is a whole lot better even after having lost the class action suit against them. But if you screw enough people long enough you can't blame them when they jump ship on you.