Not great news at Blockbuster
Last week in my post about Redbox, I reminded readers that video retailer Blockbuster is always rumored to be circling the drain, yet somehow always survives. So I wouldn’t count it out. However…
Yesterday, they filed with SEC, noting “substantial doubt” about their ability to continue:
The risk that we may not successfully complete this refinancing and obtain the related amendment of certain financial covenants included therein, and/or the risk that we may not have adequate liquidity to fund our operations as a result of not meeting our projected financial results, even if the refinancing is completed within the time and upon the terms contemplated, raise substantial doubt about our ability to continue as a going concern.
That’s a very long sentence.
I’m not rooting against Blockbuster. If they’re going to fail, I’d rather they do it at a time when the economy was healthy and their many employees could find jobs. But I’m curious what happens if they do go under.
That’s a tremendous number of used DVDs suddenly flooding onto the market, and a huge DVD buyer that suddenly disappears.
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April 7th, 2009 at 1:43 pm
Hope Blocky’s don’t go under, I do like them. Though like most people out of work at the moment, I spend very little on DVD’s and luxuries nowadays!
April 7th, 2009 at 2:01 pm
There’s a lot of room for doubt about Blockbuster, but I wouldn’t rely too much on that one sentence. Lawyers fill up a filing like that with a laundry list of every conceivable risk factor. It doesn’t mean they’re likely to happen. But I do share your concern about what would fill the void if they did go under.
April 7th, 2009 at 3:40 pm
Hollywood Video just about vanished. Blockbuster Video is going to die, and soon. I just can’t see itself sustaining the way media is going.
Although I wonder what that means for direct to video filmmakers. How will they effectively market their product?
April 7th, 2009 at 3:41 pm
Would they actually disappear, or declare bankruptcy and reincarnate I wonder.
I dunno, I don’t rent movies anyways really. I just buy DVDs, they’re cheap really, and I watch most of them a a ton of times over a few years so shrugs
Although even then I’ve just been DVRing movies lately for free. Mwahahah
April 7th, 2009 at 4:10 pm
Love the colours in your “States in which I’m probably married” maps.
April 7th, 2009 at 4:56 pm
John, totally off topic (though totally relevant to the preceding entry which has comments off). Thought this might interest you: http://paulapuryear.blogspot.com/2009/04/one-state-at-time.html
And maybe this, since it mentions you (hope you don’t mind): http://paulapuryear.blogspot.com/2009/04/states-where-john-august-is-probably.html
April 7th, 2009 at 4:59 pm
I would think they could reinvent themselves into something like Netflix. Maybe parts of their business is failing but there’s got to be parts that are still doing okay like online video rentals and stuff.
I’ve been using Netflix’s on demand service latley and as long as my internet connection stays strong (my wireless router is a little sketchy so it doesn’t always happen) I can stream the movies into my living room and the quality is watchable and it’s pretty much instant. That sure seems to me where it’s all headed – and Blockbuster needs to be pushing that direction while they still have time.
April 7th, 2009 at 6:10 pm
I think a big part of the problem is that Blockbuster has been consistently behind the curve. After Netflix comes around, they get into the same business, only to alienate their customers by making the system less convenient. They get into online distribution only after Netflix, and Apple, and Amazon, etc do, and tie the service to a new piece of hardware to buy.
In the past the CEO of Blockbuster criticized Netflix for carrying so much older stock. Apparently the long tail is a concept that eluded him.
Blockbuster had the opportunity to innovate along the way, and they never did.
I don’t want to see blockbuster fail, but I also can’t think of the last time I went into blockbuster or hollywood. It has been at least three years. As John so rightly points out, it is a shame they are in their dire straights at a time when the economy and the job market is bad. But ultimately blockbuster is failing because they couldn’t get ahead of the curve, and deliver a product that enough customers wanted.
Redbox however does. They are easy to use, in a number of locations near my home and office, and at a reasonable price. I have a hard time arguing with that.
April 7th, 2009 at 6:21 pm
I wonder if the “mom and pop video store” business model, which was killed off by Blockbuster, could make a comeback. They’re small, lean and local, and they could cater to their clientèle in a way that Blockbuster couldn’t.
April 7th, 2009 at 6:51 pm
I would love it if the small independent video stores made a comeback.
April 7th, 2009 at 8:34 pm
Blockbuster has been hanging by a thread for a decade now. They always seem to be on the cusp of disaster. Part of me, as an ex-Mom n’ Pop Video store clerk, sees this as pure justice. I think a great deal of the trouble the film and video industry is in was created by Blockbuster’s business model. However, another part of me would mourn the loss of the last actual “get out of your house to get a video” possibility. I’m in a small town and I do like our Blockbuster… the clerks, the shelves, the New Release wall that snakes around the perimeter of the store, the crowds on a weekend clamoring for some sort of escape… I’d miss that.
Call me the sentimental luddite that I am…
April 7th, 2009 at 9:20 pm
A very close friend of mine’s father owns a small video rental store so I’m not too sad to see Blockbuster go. They are lucky in that the store is in a small town and they happen to not have a Blockbuster anywhere nearby, or any other competition. However, if Blockbuster does go under, the DVD market will not suddenly fail as there are plenty of other businesses ready to snap up the customers and inventory.
Netflix will increase its marketshare and the local video rental stores will get a resurgence of business in the short term. Long term things will go towards electronic distribution and the eventual demise of all tangible video product, except for the “vending machine” style kiosks of Redbox for the people who don’t have or can’t get a video rental card.
April 7th, 2009 at 9:56 pm
@Jock
Completely! They had all the time in the world to get with the program and now they’ll be left behind. Who the hell needs late-fees anymore?
@Barkalounger
I’m not sure about the mom and pops coming back. The reason they went out of business in the first place was due to their inability to service such a large consumer base. People got tired of going into the store and everything’s checked out. Well Blockbuster & Hollywood took care of that problem. It’s true the base is smaller now but with Netflix, who needs the store?
April 8th, 2009 at 7:07 am
Makes you wonder if Quebecor will absorb the franchises in Canada if blockbuster tanked stateside.
April 8th, 2009 at 7:09 am
Wow, you mean the company that’s been ripping their customers off for YEARS by charging $6+ per rental is having financial trouble? Big surprise! Other rental stores are cheaper, and some people just download for free off the internet. A big reason (but not the only one) for all the illegal downloads is because nobody wants to pay that much $ for a one-night rental. It’s not the only reason they’re failing, but this doesn’t surprise me whatsoever. I’m sorry that more jobs will be lost, but i stopped going to Blockbuster years ago. Cause & Effect. You started charging too much, so we all found cheaper ways of getting the goods.
April 8th, 2009 at 9:04 am
Here in Dallas, Blockbuster’s home base, there is still a thriving mom-and-pop video store approximately 1.5 miles from a thriving Blockbuster store. The mom-and-pop will keep older/hard-to-find/obscure videos on the shelf, whereas Blockbuster has a minimum number of rentals required before removing a particular movie from the store’s circulation.
What’s sad is the number of people that will lose their jobs not only in the stores, but also in the corporate offices. It’s also sad that Blockbuster had an exclusive distribution deal with Sundance that allowed a lot of indy filmmakers mainstream exposure and this may no longer be in effect. Hopefully, Netflix has/will pick this up. ?? Anyone know about this?
I remember reading the annual reports for both companies a few years ago (it was for school – I really do get out of the house sometimes) and noticing that Netflix mentioned Blockbuster in nearly every paragraph on every page. Blockbuster mentioned Netflix ONCE. Netflix made BB its primary target and focus. BB ignored them. Dumb.
April 8th, 2009 at 3:58 pm
The biggest thing I always hated about Blockbuster was that they always shelved their movies in ridiculous categories. Not just Comedy/Drama/Action, but Action, Action Comedy, Action Adventure, Adventure Action, etc. It would never be obvious what category a movie was in so you’d have to look in upwards of three or four places to find it. Looking at their website, it looks like they never moved on from that.
Seriously, would it have killed them to go with a handful of categories instead of their ridiculous system? My favorite was always the mom and pop stores that had no categories at all and just put every movie in alphabetical order.
April 8th, 2009 at 6:51 pm
The bookstore monsters are already bidding on the flood of stock I’m sure. Soon we can have a 8$ latte, stale cookie, read some Cheever and also rent The Creator (at a discounted price. Life is good.
April 10th, 2009 at 5:04 pm
“I wonder if the “mom and pop video store” business model, which was killed off by Blockbuster, could make a comeback. They’re small, lean and local, and they could cater to their clientèle in a way that Blockbuster couldn’t.”
I worked at a Mom & Pop video store in suburban Philly, right around the time my little town got its first Blockbuster.
Our customers (who hated us) would come in the store and laugh at us and tell us we were “f**ked” because of the Giant Blockbuster that opened down the street.
You would think that our little shop would get “Walmartized” by the giant rental chain.
But we only lost about 15% of our business.
TAKE A WILD GUESS WHY.
We had a certain “section” in our store. Four-letter word: Starts with a “p” and ends with an “n”.
Yessir! The majority of our business was in renting (and selling) those little nudie cuties, while our old releases, indies, and foreign flicks mostly collected dust on the shelf. But at least they were there should the customers have an interest.
But yeah. We stayed in business and I’m surprised the mom and pop shops didn’t go that route. It’s the only type of rental Blockbuster ISN’T allow to stock, and you’d be SHOCKED at how many people rent that stuff (We had customers rent 8 at a time [our limit], and bring THEM ALL back before closing, only to rent 8 more)…
As for Blockbuster, hardly ever rented there. Their selection sucked. No indies, no gay & lesbian, unwatchable foreign flicks, and hardly any Criterion. Netflix and TLA Video (indie retail chain in Philly) for me!
I’m sad for the employees that will be losing their jobs, but its Blockbuster’s own fault for being so anti-culture, and for being so out-of-touch with that culture.
Instead of stocking 60 copies of the latest Hollywood Blockbuster alongside “HEAD CHOPPERS PART IV” & “THE SNAKES ARE EATING US”, perhaps they should’ve diversified their stock with a little less junk and a little more of an indie, LGBT, and Criterion selection. I know DTV filmmakers need to make a living too, but that doesn’t mean everybody’s gonna watch it.
Even when I lived in L.A. it was the same thing, and there’s a place with a plethora of indie video stores. Those places were always packed by the way, while the Blockbuster on Sunset & Western with its horrible selection, was always near-empty.
April 18th, 2009 at 11:39 pm
Regarding Austin’s post… come on, Indies/Gay & Lesbian/Foreign flicks are all niche’s. They’re niche’s that Mom & Pop stores can take advantage of in very particular, smaller markets, but over all, if Blockbuster relied on those niche’s they would have failed much sooner. Blockbuster isn’t failing because of their selection of movies, they’re failing for their reluctance to adapt to the changing market.
I agree they overcharge, which is why I’ve been a bargain hunter with using their netflix knock off program which allowed in-store trades ins. Also their older releases are only $1.99 & $.99 cents, which is handy when Redbox isn’t an option and I want a movie right now.