Blockbuster Files Bankruptcy

Blockbuster Files Bankruptcy

When I was little, the weekends that my mom did not have to work were the best weekends ever. She would cook a big meal and my dad, brother, and I would go to the local video store and pick out some movies for us to watch together. It was fun, getting to walk through these rows and rows of videos, picking out the VHS and then looking forward to fighting over the first movie to be watched.

It makes me sad to hear that Blockbuster filed for Chapter 11 today. It’s really upsetting to see that some companies that are burned into my memory aren’t making it through the tough economic times. Blockbuster reports more than $900 million dollars in debt and can no longer pay interest to their lenders, and while things seem bleak for them now, it wasn’t always this way.

Blockbuster had an opportunity to battle back when they started to offer their online services. You could pay a monthly fee with Blockbuster, have DVDs shipped to you in the mail, and exchange them in the store, with no waiting for new releases—something that Netflix can’t do. Since Blockbuster has exclusive rights with many of the movie production companies they get first pick at new releases, putting them on shelves nearly a month before the competition.

This had great potential to step into the market that Netflix has the hold on, and provide some legitimate competition. This could have been the move that saved Blockbuster; this could have been what brought them up to speed with what people want – no waiting.

Where Blockbuster went wrong is they realized the potential they had with their online/in store marriage, raised the monthly rate, and then kept raising it. They were in debt, struggling to stay afloat, closing down stores, and saw a way out. So they raised rates, again and again, driving people away and into the arms of their competition.

NetFlix doesn’t really have competition for this part of the rental market and anyone who can come in and do it better; they have a chance to give NetFlix a run for their money. Blockbuster had a chance, they knew it, they got greedy, and their customers left.

What do you think has been one of Blockbusters biggest failures? Did they drive away business with high rates for the DVD to mail service, or have they just become a dinosaur in the battle of the movie business?

What do you think drove people away from Blockbuster? What do they need to do during their restructure to bounce back?