A company specialising in disc-based products… facing financial troubles and going into administration/bankruptcy… three syllables. It is a fairly unique criteria for a story, but in January 2013 this has happened three times with major companies, as the UK division of movie rental specialists Blockbuster have announced that they have fallen into administration, days after the same fate occurred to disc retailers HMV, and a week after American game developers THQ were forced into announcing their individual assets for an open auction.
The movie and game rental chain’s 528 stores in the region currently remain open (with the company under the control of administrators Deloitte), but are under the very real threat of immediate closure, along with the loss of up to 4,190 jobs.
Deloitte claim to be searching for a buyer for the struggling company immediately, but unlike rivals HMV will not let the threat of closure affect customers’ deals with vouchers and gift cards.
Lee Manning of Deloitte’s Restructuring Services division explained the situation: “We are working closely with suppliers and employees to ensure the business has the best possible platform to secure a sale, preserve jobs and generate as much value as possible for all creditors. The core of the business is still profitable and we will continue to trade as normal in both retail and rental whilst we seek a buyer for all or parts of the business as a going concern. During this time gift cards and credit acquired through Blockbuster’s trade-in scheme will be honoured towards the purchase of goods.”
Having been a presence in the UK region since March 1989 with their first store in London (England), the company (claimed as the UK’s ‘largest DVDs and video games rental service’) has primarily been victim to poor business decisions against the fast-developing medium of unlimited online streaming through companies such as LoveFilm and Netflix.
Professor Ajay Bhalla from Cass Business School (England), said of the developments, and of the poor performance of such retail stores: “The company, like HMV, failed to transform its business model early enough. When it did, it found a fundamentally altered competitive landscape where the platform model had destroyed the traditional retail one. Firms like Blockbuster failed to face up to the enormity of the change and altered their business model on the fringes (e.g. selling second-hand products), rather than coming up with an innovative offering. It is shocking that the board and executive management failed to make bold choices.”
The main incarnation of Blockbuster in America was saved in 2010 by Dish Network and have since shifted a lot of their focus towards online streaming in the hopes that their brand name will help them compete, but will the UK version be given a second chance? While purchases of discs are proven as not being a customer habit consigned to the history books for a while yet, rentals of DVDs that are anything other than ‘postal’ seem to have headed that way now…