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NEWS > BUSINESS > BLOCKBUSTER BANKRUPTCY SWEET REVENGE FOR APPLE AND NETFLIX
BLOCKBUSTER BANKRUPTCY SWEET REVENGE FOR APPLE AND NETFLIX
August 28 2010
Dallas, TX – In the early days of home entertainment everyone got in on the game. Small Mom and Pop stores helped fuel the early adoption of video which helped bring incredible prosperity to the movie studios. For more than a decade and half that 
balance had been equitable to both sides but by the mid-1990’s things had changed. Along with the introduction of DVD, many of those smaller stores started to fade out, faced with the expense of turning over inventory and most notably faced with the behemoth of video mega-chains, the biggest of which was Blockbuster.
Eventually Blockbuster would take over almost everywhere, driving smaller shops into extinction and dictating the entire home entertainment market. In recent years however fortunes have changed. Faced with the exact same issues that they presented to small shops across North America, Blockbuster has been faltering. The rise of downloads, both legal and otherwise, has eroded to model that Blockbuster perfected and driven the company ever downwards. Now comes word that the company will finally declare for bankruptcy protection in September as they make an effort to restructure their business model to meet modern appetites. However not everyone has faith that the blur giant will be successful especially with so many smaller shops already so well established on the web and all of them hungry for revenge.
“The extension of our forbearance agreement is a strong sign of support from our
senior secured note holders as we work toward putting in place a more appropriate capital structure to support Blockbuster’s long-term growth. … Our discussions continue to be productive and we have every reason to believe we will come out of the recapitalization process financially stronger and more competitively positioned for the future,” said a spokesperson for the company. “We believe that the future of the company is strong and that despite any difficulties we may be currently facing, the company will stay strong and will continue for the near and long terms. The Blockbuster brand remains strong.”
Company officials have reportedly been taking meetings with the major studios in an effort to find a new model in the wake of companies like Netflix, iTunes, and other upstarts that have eroded their business.
“In any business the biggest issue is brand erosion. The product is almost secondary in a lot of cases. The harsh reality is that people, particularly younger people, have already migrated to other areas and forgotten the Blockbuster name. It has fallen out of the common language and been replaced so even if they were to offer a download service, people are already using something else. That spot has been filled,” said Scrape TV Business analyst Ken Green. “The whole process of going out the store, choosing from limited selections, dealing with clerks, having to rewind discs and then return them is something that people simply don’t want anymore but it is something people connect to the Blockbuster name and that is a huge chain around their neck.”
DVD’s do not require rewinding.
“The company is so out of touch with the way people think these days. They have convinced themselves that people are still interested in that old model and stuck to it even as new services came around. They are dinosaurs, they didn’t adapt and have no likely lost the impetus because that space has already been filled,” continued Green. “Luckily for the smaller companies like Apple and Netflix this means opportunity. This very much a reversal of everything that happened in the 80’s and 90’s and is really sweet revenge for a lot of these people. One would hope that those stores which were driven out will get a cut, but either way it is a form of poetic justice.”
Blockbuster officials did not reply to our emails addressed to their Hotmail account.
William Ashford, Business Correspondent
NEWS > BUSINESS > BLOCKBUSTER BANKRUPTCY SWEET REVENGE FOR APPLE AND NETFLIX
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