Blockbuster brick and mortar biz dead?

It’s hard to believe the company that opened thousands of stores nationwide and lead the movie rental business soon after launching in 1985 could possibly go belly up. But video-on-demand, kiosks, and movies-by-mail may have toppled the giant.

247 Wall St. have named Blockbuster one of ten brands that may disappear in 2011. The article cites stiff competition from Redbox — providing $1 movie disc rentals at 20,000 kiosk locations, and Netflix —  providing movie discs by mail, or through their streaming over-the-internet service.

Blockbuster has also been hurt by cable and satellite company video-on-demand libraries, which have expanded substantially over the last few years and charge roughly the same fee to rent a movie.

The company is currently contemplating Chapter 11 to eliminate debt, after losing $65 million last quarter. At the same time, Redbox and Netflix have enjoyed substantial growth in the market.

But while Blockbuster’s brick and mortar business may be dead soon the company still has a growing kiosk business, one that has grown to about 7,000 in number including over 500 to be added to QuikTrip convenience store locations — news Blockbuster announced earlier this week.

Still, the company’s streaming business is far behind Netflix. For one, the streaming service only works on PCs running Windows XP or Vista. And two, their digital on-demand service is a-la-cart. Meaning, you’ll pay for each rental in contrast with Netflix which offers a buffet of movies to choose from for one flat fee.

Blockbuster’s trump card has been their affiliation with major studios who allow the company to rent out their DVDs and Blu-ray Discs day-and-date with release. Blockbuster’s CEO James Keyes even slammed Netflix saying their movie offerings were essentially “B-grade.” This is true of many of Netflix’s titles. Many of them are, shall we say, “obscure.” However, a recent deal with Relativity Media will bring more premium titles to Netflix’s library more quickly.

If Blockbuster’s rental store business does fall, they can still have a substantial kiosk business to compete against Redbox (which has about 20k stores vs. Blockbuster’s 7k). But on the streaming side, the only thing they have going is the day-and-date release of new films, which doesn’t compete directly with Netflix but rather with DirecTV, Comcast, and other video-on-demand providers who are already dug-in.

Other companies which the article mentions as facing trouble in 2011 include Reader’s Digest, T-Mobile, RadioShack, and Kia Motors Corp.

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Jeff Chabot

Jeff Chabot

Jeff Chabot writes about technology, broadcasting, and digital entertainment. You can also find him on Gameverse, Gadget Review, and Google+.

6 Replies to “Blockbuster brick and mortar biz dead?”

  1. Nomo Blockbuster says:

    I’ll wait the 28 days for Netflix before I set foot in a Blockbuster. Blockbuster deserves to suffer after all it has done to its customers in the form of unexpected late fees, frequent unavailability of titles, and clueless employees. Forget Chapter 11 and go Chapter 7 (liquidation) with Blockbuster: close all stores, cease Blockbuster Online operations and rid the world of its presence. Abandon Blockbuster just like Blockbuster abandoned the concept of innovation.

  2. miles says:

    Blockbuster set a collection agency after me for one movie which was late. The problem was, they had an old address of mine from over 10 years ago, they never bothered to update my membership address (which they are supposed to ask about – heck, it was a different state), and NEVER EVEN CALLED ME ONCE about me having the movie. Yeah, it was late. But the movie was lost and I would have gladly payed the $15 or whatever for the movie, rather than having a shady collection agency after me!

  3. Allzb Mauth says:

    All Blockbuster needs to do is replace its stores with blue kiosks, and in addition, provide ALL of its movies as downloads from the net. They could charge a single monthly fee for different plan versions. In order to use the kiosks, you could signup and use it like a redbox, and pay a buck(or $0.75 if they wanted to play shock and awe) per movie per night, or as a full plan member, you just swipe your Blockbuster card and take out what your plan allows.

    Netflix is ok if you only like watching a few movies per month 9 bucks, but their selection of downloadable films is atrocious, and Blockbuster should take full advantage of this. And their HD selection is even worse than that. It’s in 720p…laughable!

    They’re all scam artists IMHO though.

    Redbox won’t allow you to unreserve a movie once you reserve it online, essentially forcing you to pay whether you physically rent the movie or not. They run their business completely through a network…it takes literally milliseconds to unreserve a movie, and make a customer happy, but they would rather slap your hand, and possibly lose you forever. Also, where’s the Blu-ray???

    Netflix totes its download service as its main difference form its competition, but then provides only a handful of new movies that you’ll actually want to watch. And only a tiny portion of those will be available in sub-HD 720p format. If they would just let me download any movie EVER MADE, whenever I want and as many times per month as I want…I WOULD BE A NETFLIX USER FOR LIFE! And I could even possibly overlook the sub-HD thing.

    Blockbuster allows you to rent movies from the store, but they are not in addition to the movies that you get in the mail…they are in place of. So instead of being able to rent movies from the store while you wait for your next snail mail movies to arrive….Blockbuster will make you wait even longer. Also, for regular in-store customers that don’t use any online services, instead of bending over backwards for them in a time when Blockbuster is facing bankruptcy, they are still up to their old tricks of scamming customers for late fees. (And you KNOW Blockbuster SCAMS late fees.) It’s kind of like the band still playing as the Titanic sank.

  4. Petrey says:

    I’ve read so many articles claiming Blockbuster getting titles from Warner Bros. on day and date the retail version hits the stores thus giving them the advantage over Netflix. However you guys REALLY need to dig deep enough or actually visit a Blocbuster to see what version of a new film they are renting. From Warner you will usually see the word RENTAL on the cover or disc which only delivers the movie, no extras PERIOD. If I want the special features, Netflix’s later release date does me just fine.

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