Blockbuster to shutter up to 960 stores
A Securities and Exchange Commission filing has revealed Blockbuster's plans to close up to 960 retail store locations by the end of 2010 as it attempts to makes its operation more financially stable.
According to the company's filing, it plans to close all unprofitable stores, while refocusing its efforts "to improve four-wall profitability." To do so, the company first analyzed its over 7,000 stores to determine if they were profitable or not. A whopping 18 percent of Blockbuster's stores are unprofitable. The remaining stores are profitable.
Prior to making the decision to close some of its unprofitable locations, Blockbuster planned to close 280 to 300 stores as part of a grouping it calls, "normal closures." Stores added to the "accelerated closures" category will also be closed by the end of this year. According to Blockbuster, the number of accelerated closures will equal 300 to 385 locations.
Next year will be a slightly less active year for store closures. Blockbuster indicated in its SEC filing that 2010 will bring 100 to 125 normal closures and 130 to 150 accelerated closures. By the end of 2010, it expects to have closed 810 to 960 retail locations.
As troubling as that might sound, Blockbuster spokesperson Randy Hargrove said in a phone conversation that a certain amount of measured skepticism should be exercised. According to Hargrove, these figures are not guaranteed.
"All these stores are candidate stores," Hargrove said. "Although we may in fact close that many stores, if we can renegotiate leases or remodel stores to make them more profitable, that number might go down."
But Blockbuster's closure story doesn't quite end there. Further down in the filing, Blockbuster indicated that 275 to 300 stores are subject to the company's "lease mitigation/termination efforts." Another 250 to 300 stores might be converted into outlets. If successful, that would bring Blockbuster's grand total of rental store closures to 1,335 to 1,560, or up to about 22 percent of all the stores currently in operation.
Of course, there's a financial side to Blockbuster closing so many stores. The company claims that if it's successful in closing up to 960 locations, it can increase its earnings before interest, taxes, depreciation, and amortization (EBITDA) by $50 million to $60 million.
Kiosks
Although Blockbuster plans to close several stores, the company's kiosk business is expected to grow.
In a separate filing with the SEC, Blockbuster reported that it currently has 497 kiosk units available to consumers in the U.S. It plans to have 2,500 units available by the end of 2009. By mid-2010, it hopes to have 10,000 kiosks available to compete with Redbox.
Hargrove believes kiosks will help his company turn a corner. He pointed out that even though some stores will close, the company's kiosks "will increase the points of distribution, thus getting our product in front of more people. This whole plan is part of a multiplatform strategy to get those additional points of distribution," he said.
Although that might be a silver lining for Blockbuster, closing about 1,000 stores can't be good for business. And considering the company's stock price is hovering at about $1.40, while Netflix's price is over $44 per share as of this writing, it might only spell more troubles for Blockbuster's market appeal.
Unfortunately for Blockbuster, the bad news just keeps on coming.
Updated at 4:14 p.m. PDT to include Blockbuster spokesperson Randy Hargrove's statements.
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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.
Obviously is overused and in this case you left out many options. I can think up three off the top of my head. C.) They go to the movies. D.) They buy movies. E.) They do other things and movies dont' play as large a role. F.) They get the "who the heck moved this up the list" enjoyment. (not sure it counds as spontaneous but it is a suprise).
I'm not sure I understand what you're trying to say. What does this mean...?
They get the "who the heck moved this up the list" enjoyment. (not sure it counds as spontaneous but it is a suprise).
To clarify, I have BB and Netflix subscriptions as well but do enjoy venturing out. That's the point! Also, I never buy movies -- it's a complete waste of money --- and rarely go to the movies.
No, seriously - I remember as a kid when one of my parents bought a "lifetime membership" (for a whole 49 bucks) to one of the earliest video rental stores to come into existence. The damned things were popping up everywhere.
Now? With the long-ago death of VHS, and the impending doom of brick-and-mortar physical media rental altogether, we're finally seeing the few biggies left in the video rental biz start to shrink (though to Blockbuster's credit, it does have a fairly healthy online biz).
VHS prices plummet,
Gas prices continue to rise,
and bandwidth grows.
A physical store has always been nice for the spontaneous evening, but with Redbox it's not needed.
The larger selection isn't enough to save them.
And they aren't hovering at 1.40$ a share, they stormed up to it over the last two weeks, being at around .50 cents. People aren't as willing as you are to give up on a business, just because Netflix is doing well, doesn't mean that competition vanishes. Sheesh.
Da Worfster
I was wrong.
Their pressure on movie studios to censor movies before they would stock them was disgusting.
Good riddance to any organization that promotes any form of censorship.
I don't shop at blockbuster much either but this accusation that they are somehow censoring your lifestyle is complete BS.
Although that's not "censorship" in a strict sense -- i.e., actually editing the content of movies it carries -- it reflects a ideological reason for refusing to carry films irrespective of artistic merit. It also influences the movies we see and the movies that get made, which is something like censorship. I remember reading that serious filmmakers were frustrated that Blockbuster, by its stocking policy, had effectively made it impossible to make an NC-17 film. The studios wouldn't allow it, understanding that the biggest rental outlet would never carry it. As a side note, maybe that's part of the reason why we only see a "handful" of NC-17 films.
Yeah, Blockbuster's influence on ratings and what movies we can rent has surely dwindled given that it has lost its stranglehold on the rental market, but the poster nonetheless made a fair criticsm.
Does anyone happen to know if they carry Last Temptation now? Just curious.
Yes, they do. I checked.
Then I looked into Amazon's Video on Demand. Haven't tried it yet, but rental fees are on par with Blockbuster. More expensive then Redbox; but then again, I don't have to leave the house or worry about returning a DVD the next day.
Anyone have experience?
Havent' tried Amazon. Have tried Netflix which is shy on selection for streaming movies. I also buy series then resell them when I'm done.
"So why do I think Blockbuster will close all US brick-and-mortars within the year?"
So in other words BlockBuster would close all 7000 by the end of 2008. Now according to this article it'll only close 960 of 7000 by the end of 2010. A little off.
The SD versions of FiOS' VOD movies are the same price as those from BB; the "HD" versions (slow down, FiOS: they're really only DVD quality @ 480p) are $1 more. Still, we always opt for the HD version ($6), which today seem to be always available with their $5 SD counterpart. But, the former always looks far better on our 60". Sadly, we're contributing to the downfall of a 1980's/1990's nostalgia: going to the movie store. We still live in the same neighborhood and routinely walk by this same BB store. What we don't see any longer, even on a Friday or Saturday night? A line of renters waiting to check out. We're realized only recently that we're more than willing to wait a month or so after the DVD is first released to VOD it to see the trailer first before decided to fork over $6. Second, as a FiOS "HD Extreme" all-in customer, we have hundreds of channels, including all the premium movie channels, which are all simulcasting in HD, to pick something to watch.
Still...there's a downside to (potentially) losing our neighborhood BB. I have a PS3 (fat) I use for BD movies. I have a small library of "eye-candy" (e.g. Batman Returns, Ironman) titles, but still liked the convenience of being able to take advantage of BB's albeit smallish library of BD titles. If BB shutters, will the BD format itself be far behind except as a boutique technology? (Slow down, everybody: very, very few people have OC3-level service needed to stream even compressed BD grade feeds into their home today or anytime soon.)
If not already done so, BB should restructure their business model to sub-TV providers like DTV, E*, VZ, Comcast, AT&T, etc. to become their VOD host and manager, thereby bypassing the intermediate model from Netflix. (I was a Netflix when they launched, but quickly tired of constantly waiting for new release-movies while getting the older titles I placed in my queue. I'm sure thing have improved. However, I'm a GameFly subscriber today and still get the occasional "gold" (read: old) PS3 title in my queue over a release that's been out for a month or so.) Maybe if GameFly started doing BD movies, too?....hmmmm....interesting concept.
Anyhow, if you're a BB retail employee, you're probably in the buggy-whip business at this point: still suitable for rural communities, but a dead business model in urban/suburban areas.
- by llungster September 16, 2009 7:44 AM PDT
- My local BB closed and turned into a FedEx shop long ago, and like many, I barely noticed. As a Netflix customer since 1999, I couldn't be happier with DVDs by mail. Unlike others, I rarely receive a defective disk much less a broken one - the nearest Netflix service center is only about 10 miles away so transit time is low. But what drew me to Netflix in the first place was that BB was very slow in migrating from VHS to DVD. By the time they finally did the migration, I had all but forgotten they existed. They also raise their rental prices significantly with DVDs, so much so that the flat fee I pay Netflix made even more sense.
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