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.