Blockbuster Inching Towards Bankruptcy

Even with years and years of late fees, it might not be enough to keep Blockbuster around much longer. The company's auditors now believe it's running out of cash, which could mean a bankruptcy reorganization is in its future. There are plenty of factors, chief among them a slow-to-the-draw response to NetFlix, which recently celebrated its two billionth rental. The surge of that competitor over the past half- decade and the growth of the more streamlined RedBox rental kiosks have put a huge target on the back of a company that was once the unquestioned industry leader. Even when Blockbuster gets with the times, as it did with a 2007 online rental launch and a recent agreement with TiVo, Blockbuster is still playing catch-up to other outlets, like iTunes. The PricewaterhouseCoopers assessment released this week revals that there is "substantial doubt about the Company's ability to continue" as a viable business. This news comes amid slashed advertising programs and other cost-cutting measures that might prove to be too little too late even though they're aimed at highlighting the company's new rental methods, like its own version of a RedBox vending machine and the online resources. What has really happened here can not be reversed by new business practices: Blockbuster lost its brand loyalty, and its prominence quickly followed. Pizza Hut lost its to Domino's in the 1980s because Domino's offered a 30 minutes or less guarantee. Then Domino's lost its advantage to Papa John's in the late 1990s, because of the catchphrase promise of a better pizza, a big hook since Domino's had to abandon the 30 minute guarantee over safety concerns. Once the only game in town, Blockbuster has seen itself attacked by cheaper, more convenient options, and over time, it has simply become a bigger hassle to go to the video store. Yes, Blockbuster does supply other methods of renting movies, but it doesn't matter. Their position in the market is the strip mall movie store. If you want to physically rent a movie, that's what you do. More and more people are turning to NetFlix, which has much less corporate overhead and more lenient rental policies. Even when potential customers are out shopping, RedBox locations are just as cheap, have no lines, and are usually a POP (point of purchase) decision made at the grocery store. That means one less stop, and the perception of Blockbuster simply can't defend itself from all sides.

Comments

[bankruptcy]

No matter what we do bankruptcy should not be overlooked and must be prevented.

[canadagirl08]

I used to work for blockbuster canada, they cut staff hours, then starting closing earlier during week, and now are having regular meetings about possible store closures. The have gone down hill as they cannot compete with shaw pvr, netflix, and illegal downloaders. they head office officials are very "old School" thinkers and cannot adapt to a changing market. Im amazed they've lasted this long.