This Could Be the End for Blockbuster

The Blockbuster chain that was once a dominant force in the movie industry could be close to shutting its doors, according to Two Way Web on Twitter:

Today the video-rental giant admitted that if it cannot complete the financing deals that it is currently working on, there is a good chance the company may be forced to shut its doors. While the company last week said it was in the process of getting a $250 million revolving loan from creditors, that may be in jeopardy.

Why? The loan apparently has some conditions to it, and Blockbuster is now not sure it can meet them. Even worse, whether the loan goes through are not, it is not even sure that would be enough to save the company.

As a former Blockbuster member, I hope that loan has confusing and excessive late fees.

A couple years ago in Slate, Edward Jay Epstein wrote about how Blockbuster was doomed by two bad decisions -- one on not sharing profits with movie companies on new DVD rentals, and the other on not buying Netflix for $50 million:

The other shoe dropped with the emergence of Netflix as a major online competitor for what remained of the rental market. (Blockbuster turned down the opportunity to buy Netflix for a mere $50 million, instead entering a disastrous home-delivery deal with Enron.) Netflix signed up over 3 million subscribers by 2005 by offering DVDs that could be kept as long as renters liked for a monthly fee. To compete, Blockbuster had to do away with its single biggest profit-earner: charging late fees to customers who kept videos past the due date.

These days, with Netflix, pay-per-view, DVR and Internet viewing of new movies, driving to Blockbuster to rent a movie is becoming as antiquated as popping a tape into the VCR.

danbutton says...

I wonder if Blockbuster could survive by adding comics and non-video games to its stores. A lot of cities lack a decent comics and games store. I avoid renting from Blockbuster because of its ridiculous late-fee stunts, but I'd be unable to resist the pull of new comics. :-).

rougy says...

I hate to see any business go under, but I can't say this will break my heart.

And I'm really glad they didn't buy Netflix, because the Blockbuster website is about as clunky as clunky gets.

I tried Blockbuster once, since I live out in the boonies and you can bring the DVDs right back to the store instead of having to wait for the mail cycle, but it still sucked because they had a crappy selection and the employees were totally clueless and sometimes flat-out rude.

Blockbuster really should have had the edge since they've got physical stores; they could have kept a short stack of discs from people's queue's right there onsite.

They had the advantage of physical presence and they still blew it.

dag says...

Comment hidden because you are ignoring dag. (show it anyway)

Good riddance. The writing has been on the wall for years that home video rental is a twilight industry. Blockbuster didn't adapt in time and continued to gorge itself on punitive late fees. They will not be missed.

Deano says...

How does this affect the branches in the UK? I can't stand them. I went back once after not renting for many months and they wanted me to register again to which I said fuck that pile of red tape.

I realised then that I didn't really NEED to rent. DVDs are dirt cheap to buy anyway and once you have a DVR you find yourself with programmes you actually want to watch.

swampgirl says...

Netflix teaming up w/ Microsoft is the death nail for Blockbuster and any other competitor imo. For one fee, I can rent hardcopies and keep them as long as I like, watch movies online, or through my xbox360. Blockbuster can't compete anymore.

lucky760 says...

Ditto the good riddance sentiment.

It's pretty interesting to see the physical media rental industry coming to a close. When Netflix started it was a popular fad that before too long started seeing a bit of financial trouble. At the time I found myself figuring Netflix was an experiment that would fail and video rental stores would never go away. (In the early days of iTunes I also couldn't imagine people giving up on owning the physical property of music CDs to trade it for worthless, intangible electronic music files.)

Now here we are just a few years later and we're actually witnessing the vanishing of video rentals for the interim of rental-by-mail, which will be a placeholder as the real future of electronic delivery becomes king.

There will probably remain mom & pop video rental shops to serve small and/or poor communities where high speed Internet isn't very common, but it's quite interesting to be here on the brink of a new age.

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