 |
| The Renaissance Tower in Dallas Blockbuster Headquarter. |
Since the first opening of the business back in 1985, the company grew to more than 4,500 rental stores with 47 million strong customers daily, making it the largest movie rental company in the US.
Reviving the Empire
There had been several attempts to revive the company to compete with big players in the movie rental business. In 2009, Blockbuster had secured $125 million in financing and partnered itself with NCR to offer online rental movie services and in-store kiosks similar to Redbox and Netflix. But as early as February, 2010, Blockbuster had to shut down most of its outlets in Portugal and closed more 2,000 stores which includes 1,500 rental stores that were already closed last year in the US.
Despite its best efforts to compete, the company loses again more than $550 million in 2009 and around $375 million in 2008. This is according to the recent 10-K filing with SEC. This prompted Price Waterhouse Coopers, an independent public accounting firm which the company had hired to audit its books, advised the company that it is has become a big concern and may be unable to service the $1Billion debt from its lenders and investors.
 |
| Redbox retail rental kiosk |
Premature Demise?
By July 2010, the New York Stock Exchange had delisted the company due to the share price trading of less than $1 per share. In August, Blockbuster was planning on filing a pre-packaged chapter 11 bankruptcy on September with a carrying debt of about $900 million. As analysts and investors watch the inevitable downfall of a giant enterprise, Netflix from Los Gatos California reached $156.97 intraday trading, so far the highest record since the company began in 1997.
For Redbox, the company is enjoying its position in the business. It just entered into an agreement with Warner on February 2010, followed by Universal and Fox on April of this year.
It is just unfortunate that a business like this size will end this way. I've been a long time customer of the company for straight eight years now, and I thought that the company was great and I really appreciate their business. Will we be able to see a comeback of the company in the near future, or this will be the ultimate extinction of another giant in the struggle for economic existence?
Related Post:
Top Retail Stores Closing in 2010
You may like these related links:
- Blockbuster files for bankruptcy
- Blockbuster gives in to Netflix and Redbox
- Bankruptcy: from Cornell University Law School
You may also like:
47 million customers is a lot of subscribers that Netflix and Rredbox can absorb. I used to be a Blockbuster customer but I switched to Redbox just last year.
ReplyDeleteWhen the online video rental has popularized by Netflix, Redbox follows the trend. But Blockbuster, despite its enormous customers, didn't anticipate the power of online services and the DVD retail rental kiosk and simply stick with the traditional movie rental thru its local video stores.
ReplyDeleteI believe its one of the reasons why its downfall became imminent: It did not adapt itself or venture itself into online rental services AND dvd kiosk services.
When it realized how effective and profitable are those services, it was too late for the company to respond to the competition. In my opinion, adaptation and the willingness to to respond fluidly to current market trends are two key factors that Blockbuster lack in its survival.
Size does not matter in survival. It is how you fit and adapt yourself to the evolving times. After all that is the gist of Social Darwinism and the struggle for existence.
Great post Seattle Mariner.