Blockbuster May Go Bankrupt Due To Online Streaming
Reports indicate that Blockbuster is preparing to file for bankruptcy within the next month, following many reports of their expected downfall. In an amazing turnaround from the glory days when Blockbuster bulldozed all competing video rental businesses, they are now being driven out by the new Internet movie streaming technology used by rivals Netflix and Redbox as Blockbuster failed to embrace the online streaming market.
Are Blockbuster restructuring or going down?
The LA Times report says that Blockbuster would be closing around 500 to 800 stores across the US as it hopes to restructure its debt and stay afloat after making a loss of more than $1 billion since fiscal year 2008. The writing has been on the wall for the last couple of years that it might need bankruptcy court protection as the company try to fight back from dwindling cash reserves and a business being attacked by fierce competition and its own store closings.
Blockbuster executives have held rushed meetings with six of the largest Hollywood film studios to discuss the crisis, as ongoing support from them is vital in any successful bankruptcy exit as Blockbuster must continue to receive new releases as well as exclusive titles to stay competitive, relevant and in business.
The plan for the bankruptcy would keep Blockbuster paying the majority of creditors and the movie studios, but could help them get out of store rentals at underperforming locations. The film studios would want to keep Blockbuster alive as the more competition in the market for their movies and DVDs equals higher licensing fees.
The Threat from Online Streaming
Experts are agreed that Blockbusters downfall was caused by online video streaming and mail order video rental such as the model operated by Netflix. After it became apparent that mail order and online streaming were here to stay, Blockbuster’s competing Internet and mail services never really got going even though Blockbuster did start a streaming service. Many thought the service was too little and too late.
A further issue is that many experts think that the DVD by mail format may be dead soon as streaming takes over. To that end, Netflix recently signed a new five-year deal to stream movies online from major film studios, MGM, Lionsgate and Paramount.
The big difference between Netflix (who made a 115 million profit in 2009) and Blockbuster is that Netflix has no store leases and staff to pay for. As Netflix run from an online store, overheads are low and stock levels always plentiful. Paul Dergarabedian, an analyst at Hollywood.com said:- “What happened is that Netflix and others have simply built a better mousetrap. In the same way that iTunes and file-sharing have killed the major record chains, technology is changing everything for movie rentals.”
And if Netflix were not taken enough customers, Blockbuster also has Redbox to compete with who use low cost ($1 per night) self-serve kiosk video rentals to achieve amazing growth. And of course the online streaming services such as Hulu, Youtube and iTunes with there planned $1 video rentals.
It seems that Blockbuster are in the last chance saloon just now and the decisions made next will make or break the once major player in DVD rentals.
Latest TV searches:
blockbuster streaming movies, why did blockbuster go bankrupt, blockbuster streaming video, does blockbuster have online streaming, blockbuster live streaming, why did blockbuster go out of business, blockbuster video streaming, what happened to blockbuster, does blockbuster stream, blockbuster streamRelated News:
- Blockbuster toying with its own set top movie streaming box
- Blockbuster Looking To Venture Into Online TV Market
- Blockbuster On The Chopping Block
- Blockbuster movies on demand coming to TiVo
- Blockbuster Offer Mobile Movies, But Is It Too Late?
Blockbuster’s situation may force the bankruptcy court to seek Chapter 7: liquidation. This is what happened to Movie Gallery/Hollywood Video and the public wants it to happen to Blockbuster. Hopefully the court will see how insolvent and irrelevant Blockbuster is and force liquidation.
Don’t fully blame competition or technology on the fall of Blockbuster. Blockbuster lost their way a long, long time ago. First, using pricing and the convenience of holding on to a rental tape for more than one day to put any and all local small establishments out of business and, second, to absolutely rape their customers with higher prices, confusing rental agreements and vicious customer service techniques where the words “no, you may not” were common.
Initially, we all fell for the wolf-in-sheep’s clothing approach to the movie rental business. With Blockbuster franchises opening up in many major strip malls in local suburbia the promise of 3 Days for $3 was very appealing in the late 1980’s and early 1990’s. A time when the locally owned Movie Rental Store had charged $5 to $7 a day and possessed a very limited selection. The ability to secure a new release at “Tony’s Tapes” was based on luck and timing. Purchasing a movie on VHS was not as common with prices approximately $30 and up.
Upon the death of the small rental shop Blockbuster pounced on the opportunity to capitalize on their customers’ lack of choices when it came to viewing relevant movies in the home. $3 for $3 days turned to $3 for one day on all new releases. In the next decade prices would rise to $4, then $5 and then $5.99 with perhaps the most confusing return policies that included having a new release returned by noon on the next day as opposed to the store’s closing time.
A call to customer service or a complaint to the store manager would forgive the customer one time on a late return. I recall that I missed a 12noon deadline for a return and was told “sorry sir, I see that we refunded you for a late return [3 years ago]. Our policy states that the customer is allowed just one refund for forgiveness.” “Forgiveness” was the exact word that was used – as in “take some personal responsibility for our lack of convenience or take your business elsewhere.”
Blockbuster is on life support because they forced their customers to seek alternatives. The company put their customers second to the opportunity to take their hard earned money, lazily gazed upon the emerging competition and reacted too slowly. When they finally realized they needed to change their image in the eyes of their customers it was too late. The average American consumer is less forgiving to a company that takes them for granted.
People have felt ripped off by blockbuster. Many people have found better alternatives. Some returned to smaller video renters, using dvd loans from libraries, mail order rental, streaming, and even internet piracy. Honestly, I am suprised were not out of business sooner. If It weren’t for people like my dad who will rent dvds from blockbuster till they close, they would be bankrupt. Then he will simply stop renting dvds forever, as he has not embraced the internet.
I read about a set top on demand box for blockbuster in a recent magazine. Well guess what they said when I inquired. Oh, we don’t do that any more. Thats another reason I dislike them. They didn’t even give there own product a chance.
Blockbuster won’t die soon enough if you ask me.
[...] the inevitable death throws, Blockbuster has (as expected) now filed for Chapter 11 bankruptcy as the reality of online streaming and cord cutting finally dawns on the men in suits. Although [...]
This is very sad news. It just goes to show that technology and the internet are costing people their jobs. What happens the day that we “can’t get online?” God forbid that we WALK to our local video store and start helping the economy
The long reply by Griff is very true. I was mad when they stopped the keep the video for 30 days policy, and then started charging late fee’s again. How is a company going to stop charging late fee’s officially, but then start doing it again after three years. I was so done with them when they did that. Streaming is the way to go, and Read is too expensive if you do not take back your movies promptly. A lot of people that I know end up paying way to much to rent Dvd’s if they rent more than one, and keep forgetting to return them.
Block Buster ripped people off. They got too greedy and someone smarter ( NetFlix)came along with much better offer.
Griff you are 100% correct!
People have been saying Blockbuster will go bankrupt because of (insert format change here) for the past twenty years. Bottom line is back in the 90′s Blockbuster opened a bunch of stores near other rental operations to muscle them into bankruptcy (Hollywood video/Movie Gallery/Etc.) Now that those business have gone under, Blockbuster slowly over time closes those stores. If the market is favorable, Blockbuster then expands to new, untapped markets. If the market isn’t favorable, Blockbuster just closes those stores that were put in place to compete and doesn’t open any new ones. The bottom line is, Blockbuster has been closing stores every year for the past decade and just because stores are closing doesn’t mean they’re going under. Also, blockbuster still gets new releases waaaaay sooner than redbox and netflix. This might change in the future with changes in licensing but for now Blockbuster has a healthy niche carved out for themselves.
It is true the stores will soon disappear and it will be no loss to our communities. What is one less vampire? I wish to comment on the ON-LINE Blockbuster. It is the worse service you can imagine. When you join and pay your cost. It takes them three days to send your first movie and three to four or more days for any to arrive. You made payment seven days before your first benefit from their service. I inputed 20 tites into my queve (titels I wanted to rent) When I first placed them in the list, all were listed as available. One week later 9 now carry a long too very long waits. The only ones that remain avaailable are the ones you can purchase for $2 at used stores. I assume this is deliberate as they want you to think everything is available until they get your first payment and then you tell you the truth. If you want a decent title. prepare to wait a couple of months.
It has been eight days since I joined and I have received one title. It was so scratched up it would not play peoperly. It arrived quickly on day five. The two others that were allegely sent on the same day have yet to arrive. I returned this one unplayable title to a local store the next day, three days ago. I rented nothing at the store to replace it. Although the site shows the return, they have not processed a new title to send. Three more days wasted. At this rate, for my 20 dollars, I will be lucky to receive the four or five titles by the end of the month. This means it will cost $ 5 for title and I keep them 1 day. DO NOT WASTE YOUR MONEY.
Although on-line streaming sounds very promising, Netflix in Canada has limited selections. Almost every title I searched for was UNAVAILABLE … which then led to Netflix’s “recommendation” of what “I might like” instead. If I search for a title, it means I want THAT film, not Netflix’s suggestion “box”. So until they have a broader selection, I won’t be signing up. As for Blockbuster, I only rent from them from time-to-time. So I’m not really a dedicated customer. If I really like a movie, I would simply buy the Blu-ray or DVD for my collection. With new releases … if you wait long enough, Wally World will have them cheap. Furthermore, streaming doesn’t give you the extra content that a Blu-ray disc will. For example, Iron Man 2′s in-universe “Shield Data Vault” on Blu-ray is very cool … with technical information on the various versions of the Iron Man armor with virtual CGI “walk-arounds”. The Blu-ray’s “Footage Scan Mode” integrates portions of the “Data Vault” CGI’s into the movie as it is playing. I doubt that viewing Iron Man 2 as a streaming media from Netflix will give you that level of interactivity.
Blockbuster Customer Service and game-playing antics were was there biggest downfall – both on-line and in-store service was horrible!
[...] It seems that Dish the Satellite TV broadcaster are one of three parties that are interested in the bankrupt former giant of video chains. Dish Network who are controlled by Chief Exec Charlie Ergen, and billionaire Carl [...]
[...] is a funny old world we live in when a former bankrupt DVD rental company can give Netflix a bloody nose. But that is happening as Blockbuster hoover up disgruntled Netflix [...]