Blockbuster Goes Bust (Surprise!)

By  |  Thursday, September 23, 2010 at 10:45 am

Blockbuster has filed for bankruptcy.  The company is staying in business and apparently doesn’t plan to shut down any stores at the moment, but the fact that it’s in deep trouble does not exactly come as a gigantic surprise. Between Netflix DVDs-by-mail and Redbox kiosks and various streaming and download services and cable-TV on-demand services, the whole concept of driving to a large store to rent a movie on a shiny disc is an inherently antiquated concept.

Of course, for Blockbuster, the fact that it doesn’t face immediate liquidation may count as good news: Its biggest retail rival, Hollywood Video, went bankrupt in February and closed all its stores a few months later.

Blockbuster was founded in 1985, grew rapidly for years, and, at one time, made a lot of sense. I certainly spent a fair amount of time trolling its aisles for VHS tapes at one point. Let’s face it, though–it was never a particularly pleasant place to be, nor one that treated its customers all that well. The more options that people got for avoiding Blockbuster, the more they tended to do so.

(Side note: Not too far from where I live, there’s a venerable independent video store called Le Video. It’s amazing–it pretty much feels like everything ever released on DVD and/or VHS is in there, all on fastidiously organized shelves. It’s run by people who obviously love movies. Unlike Blockbuster, it seems to be doing fine.)

Like many once-mighty business enterprises, the company doesn’t seem to have a clue about how to evolve as its customers’ needs did. What can you say about an outfit that tried to buy Circuit City in 2008, just before that company collapsed? It quickly realized that was a bad idea, but couldn’t anyone who was paying attention have told it that?

The thing is, it’s not that people don’t want to watch movies anymore. In theory, the Blockbuster name should be a major asset for an online service along the lines of Netflix’s Watch Instantly or Amazon Video on Demand. Blockbuster does have an online service, but it’s an embarrassment–it requires Internet Explorer and a Windows download, uses flaky Microsoft copy protection, doesn’t seem to be compatible with Windows 7, and is overpriced. It’s as if the company isn’t even trying to be part of the 21st century.

It’s not Blockbuster’s fault that video-rental stores are largely obsolete. But it is its fault that it’s not in better shape to survive the end of the business model that made it famous.

So how long do you think it’ll be until the last Blockbuster store puts GOING OUT OF BUSINESS signs in its windows? I give it three years, but I could be overly optimistic…


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13 Comments For This Post

  1. Otto Nordpol Says:

    Schumpeterian creative destruction at work, albeit somewhat slowly. Yay, capitalism!

  2. GM in MA Says:

    Three years? I don't give them more than three months.
    The store nearest where I work has had closing down signs for weeks, and I can't think of where I've seen another Blockbuster. They're already gone as far as I know.

  3. Sawyer Says:

    We also have a local independent video store here in Portland, Videoport that seems to be doing fine, for the same reasons you cite: They have EVERYthing and they have a knowledgable and friendly staff.

    I never liked going into BB's, there was always a long line for seemingly no apparent reason, the selection was poor, and the uniforms were ugly – can't say I'm sorry to see them go.

  4. Cathy Says:

    Maybe they're not closing because they already have–the store down the street from us closed a week after our VP said–"Why is the library buying popular movies, people can go right down the street to Blockbuster."

  5. Dave Barnes Says:

    I have always called them BlockTurd.
    Crappy selection and crappy clerks.
    Netlfix has destroyed: BlockTurd, Amazon (movie rentals) and Wal-Mart (movie rentals).
    Pretty good for an upstart.

  6. Phil O. Says:

    It's true — I never enjoyed going to a Blockbuster. No matter what city, there was always a long line, a poor layout, and a dearth of catalog/older films. Good riddance.

  7. Marcos El Malo Says:

    I used to work for Catherine (the French Lady) at Le Video in the Sunset around 1989! It's great to hear they're still in business, and if it's still owned by her, doubly great. She was a great boss who treated her employees like valued human beings. The foreign film selection was unbeatable. I'm really glad you mentioned it, Harry. It makes me all nostalgic. (Is Beard's Books still there?)

  8. adamco Says:

    the independent video stores have ALWAYS been better than blockbuster. having grown up somewhere with only local stores, i remember the first time i stepped into blockbuster around 1999 or 2000. even then new releases were like $5 and the selection was bad. i was used to paying $2.50 for twice the selection!

  9. cmryle Says:

    I read somewhere that Blockbuster had an opportunity to buy Netflix when it was just getting started and they turned it down. Evidently they forgot rule number one in business: buy your competition before it buries you.

  10. @morganwick Says:

    I liked it when they introduced a Netflix-like service, and in fact saw it as a model for what companies in soon-to-be-obsolete businesses should be doing instead of twiddling their thumbs or trying to inhibit progress, but I haven't heard anything about it for a while. And I'm shocked they haven't introduced Blockbuster-branded Redbox competitors. I mean, I've seen comfomercials (1-2 minute infomercials inside regular ad breaks) for someone trying to get you to get into the Redbox business or something (that wasn't Redbox).

  11. Fy Br Says:

    I use Blockbuster Online, and it's great – it works like Netflix, but rather than always mailing the disks back, you can also take them to the store and do an exchange for a disk in the store, which just counts against your limit. When you do an exchange it takes the matching disk out of your queue automatically. I think it's also tied into their kiosks now, though I haven't tried doing anything with that. Your queue definitely shows how many copies of a movie are available at the store, so you can check that before you go. You can also rent games via mail, they count against your limit just like movies so no extra charge. No free streaming is included. I think it might be more expensive than Netflix, though. I'm not sure because my monthly price of 3 @ $20 was grandfathered in when they raised prices.

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