Blockbuster sure did f things up---500 stores to close

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wildcpac

Banned
Blockbuster Collapses: Shutting Down 500 Stores In Desperate Bid To Save $200 Million
Source: Business Insider

Feb. 25, 2010, 3:42 PM

Blockbuster is losing big when it comes to at-home videos, so they are cutting back on expenses and on advertising in the U.S. to make up for it.

US same-store sales fell 15.9% in the 4Q and revenue dipped 18% to $1.08 billion compared to last year.

By closing its 500 weakest stores, the video-rental company hopes to reduce expenses by $200 million, the Financial Times reports.

Jim Keyes, chief executive officer, said the company was working with Rothschild, its financial advisors, on ways to increase its liquidity, including a possible recapitalisation.

Under Mr Keyes, Blockbuster is seeking to establish its brand in rapidly emerging new channels such as digital downloads and vending kiosks.

But they've already been beat to the punch. Netflix and Redbox dominate market share when it comes to digital downloads and vending kiosks, and Blockbuster will have a difficult time growing in those segments.

http://www.businessinsider.com/block...million-2010-2


Blockbuster was the monopoly giant on the video rental. I remember my friend getting Netflix back in 2000/2001 and thinking that it was the first nail in the blockbuster coffin. I still cant believe that bb didn't come out with anything simliar for a good 4-5 years. I last rented from BB around 2008 because I had a $10 gift card. That came out to two rentals. We all know that Netflix just kills BB in terms of pricing. Most netflix plans come out to anywhere between $1-$1.50 per rental based on your plan and how often you watch movies. It's funny that Netflix did to BB what BB did to all of the mom and pop local stores.

Couple of things I have wondered about since Netflix came out almost a decade ago. How come BB didn't follow suit right after? How come BB didn't think of it first? How come BB didn't lower their prices or offer a fixed price with unlimited rentals for a month? BB could have used their local stores as service stores for shipping and receiving. I know that some people hate the turn around time for Netflix and or want something now instead of having to wait. I also understand that Netflix loses money on shipment. BB could have had more walkins to trade rentals. 3-4 Rentals at BB was around 15-20. A person could get 18-24 rentals from Netflix for that same price. 3 rentals out at a time, watch right away return the next the day comes out to 6 rentals a week, 24 for the month or a couple less if there was a holiday, etc.
 
[quote name='wildcpac']Couple of things I have wondered about since Netflix came out almost a decade ago. How come BB didn't follow suit right after?[/quote]
Companies built on the economics of things gone past can't see the train comin right at em. They look at their balance sheet, revenue, market capitalization, and believe it could never happen to them. Their boards often turn to veteran leadership to provide steady growth with the occasional low risk taking activity to keep things spicy.
How come BB didn't think of it first? How come BB didn't lower their prices or offer a fixed price with unlimited rentals for a month? BB could have used their local stores as service stores for shipping and receiving. I know that some people hate the turn around time for Netflix and or want something now instead of having to wait. I also understand that Netflix loses money on shipment. BB could have had more walkins to trade rentals. 3-4 Rentals at BB was around 15-20. A person could get 18-24 rentals from Netflix for that same price. 3 rentals out at a time, watch right away return the next the day comes out to 6 rentals a week, 24 for the month or a couple less if there was a holiday, etc.
Click to expand...
They had brand recognition good will worth hundreds of millions of dollars (at least), capitalization enough to seriously consider buying Circuit City in the near past, and affiliates as well as franchises virtually everywhere in America. They had a small upstart competitor whose business plan clearly meant their death. Netflix was totally unable to defend itself from a serious attack early on, were BB to take them on directly or buy them in what would have been one of the most reasonably synergistic takeovers imaginable.

This is a business fail of epic proportions. I bet the BB CEO's grandkids use Netflix.
 
Fellow finance nerd, speedracer? Could you help me learn how to use discounted free cash flow to value a merged company? I'm studying for a finance exam right now...
 
I have Blockbuster Online so I hope they don't cave all the way in.

$19.95 for 3 movies at a time, free unlimited store exchange, and two free coupons that can get anything including games.

Netflix can blow me, fuck their new release delay window and charging more for Blu-Ray access.
 
Depending on how you look at it you could say they 'won'. They were the last huge B&M video rental chain to go belly up.
 
Not surprising. BLockbuster has been steadily going down the shitter for years circling the drain.

I dont know about others but the ones around here are run by rude kids thats dont really give a shit and arent helpfull, Im sorry but even if BB had a awesome selection and unbeatable rental prices I wouldnt go if the customer service is shit. Ive turned down free things before because I didnt like the customer service, Ive paid more for stuff from one place vs another because of customer service. Hell thats why I wont shop at the bestbuy near me or any gamestop store ever again because of the people who run the place.

It also ticked me off they would never rent unrated movies. I always drove past the BB near me years ago an extra 10 minutes to this little hole in the wall video store because they always caried unrated movies.
 
They're on their deathbed, I don't know why they're still trying to recover when its clear they're finished.

Even though the rentals are horribly overpriced, their selection is bad, and the employees don't give a crap anymore, I'll still miss those stores when they finally shut down. There's a great feeling in browsing a rental store on a weekend and coming home with something, a feeling you can't emulate with something like Netflix.
 
[quote name='Broken Scout']They're on their deathbed, I don't know why they're still trying to recover when its clear they're finished.[/QUOTE]

Actually, from what I heard, their Gamerush stores are keeping them alive and making massive profit.
 
[quote name='Sporadic']Actually, from what I heard, their Gamerush stores are keeping them alive and making massive profit.[/QUOTE]
That may be true but it still didn't stop them from closing a Gamerush store near me recently.
 
[quote name='wildcpac']Couple of things I have wondered about since Netflix came out almost a decade ago. How come BB didn't follow suit right after?[/QUOTE]

Aside from what Speedracer said, I think some of it was also them underestimating the appeal of an online service. They seemed to think if they ignored Netflix it would go away, because it was a model that would fail.

It's really too bad they weren't the ones to think of the Redbox model though. The way things are going, it looks like that'll be the future of "brick and mortar" movie rentals. Hell, my parents have a Netflix account and they still frequently pick up movies from the Redbox on the way out of Walmart.
 
[quote name='Sporadic']Actually, from what I heard, their Gamerush stores are keeping them alive and making massive profit.[/QUOTE]

Do you have any data to back this up? From everything I've read for a very long time, Gamerush stores barely turn a profit and many have been closed.
 
[quote name='Lieutenant Dan']Fellow finance nerd, speedracer? Could you help me learn how to use discounted free cash flow to value a merged company? I'm studying for a finance exam right now...[/QUOTE]
I loved finance as a college student, but my profs were so bad I couldn't get over it. I can't even think about time value of money without getting pissed off about how awful the University of Houston finance profs were. I went in loving the numbers and left running like my hair was on fire.
 
I haven't been to Blockbuster (or any other B&M rental place) in years, Redbox is the way to go. What do they charge now, 4 bucks a movie? Redbox is a buck a day.
 
[quote name='redline']I haven't been to Blockbuster (or any other B&M rental place) in years, Redbox is the way to go. What do they charge now, 4 bucks a movie? Redbox is a buck a day.[/QUOTE]

Yay. Let's replace all jobs by computers and machines who can do it cheaper.
 
[quote name='gargus']It also ticked me off they would never rent unrated movies. I always drove past the BB near me years ago an extra 10 minutes to this little hole in the wall video store because they always caried unrated movies.[/QUOTE]

WTF? I rented the unrated Van Wilder back when it first came out on DVD.
 
Doesn't surprise me. It was destined to fail. Lets look at some of the blunders I have seen...
1) the used game promotions; how much money did they lose in that. Everyone traded things in high and saved credit to buy New product or games when they were extremely low i.e. there is no way they turned a profit on them. Thats how I was (used for PS3 and DS and the B1G1 promotion) and noticed other like me in this forum
2) pricing structure; personally I have a pass with them in store... it is somewhere around 30-35 a month for 2 games/movies out at a time (I got frustrated with Gamefly's horrible turnaround time). Single rentals are pricey... movies are around 4 if bluray add a dollar... games are more in the 7-8 dollar range. When you can do Redbox for $1, why would I go to Blockbuster and rent a movie for $4?? If Netflix adds games, I will easily be gone.
3) availability; my blockbuster and their ordering tendencies are the worst. For instance, the bluray selection... my store received 15ish copies of I Hate Valentines Day (a movie I don't think even hit major theatres) yet they only receive 2 copies of Cloudy with a Chance of Meatballs (a movie that was very popular with kids that rank in lots of money in the major theatres). More recent examples... my location now no longer rents Rock Band Beatles because they turned all rental copies into used copies. It was music game of the last year yet my location still has a rental copy of Rock Band Metal Pack and GH:WT... how about that they didnt get their copies of Heavy Rain on release date... just some examples of bone headed ordering and pulling.
4) mediums; again, like the OP stated, not hitting the kiosk or mail mediums first or even within a year or two range of their competitors. To me, its a little too late for them to go into the kiosk range... their mail service to me took off badly IMO as I could never get what I wanted... it sounded like it got better but how many others were like me who swore off the service.
 
[quote name='Chuplayer']Yay. Let's replace all jobs by computers and machines who can do it cheaper.[/QUOTE]
If Blockbuster could add value by having employees, I'd be all for it. But it's not like they employ film majors.

CAGs should be BB's best customers. Renting games is by far the most cost effective way to sample what's out there. Hell, you can beat most games in a weekend. But their pricing (especially on games) is absurd, their stores are not particularly inspiring, and 95% of their employees can't recommend a movie worth a shit.
 
No skin off my nose. I quit using them years ago and wouldn't rent from them (physical or online) if they were the only rental company. Too many bad experiences with their stores.
 
They banned me from trading because I traded in too many 360 games (seperate releases, although I may have done a double or two spead out over a year) But when they banned me, they didn't even cite the dupes. They questions that I had "new release" games and were trading them in (so far from the truth it's ridiculous-- they just don't realize some games tank within 3 months and drop in price at Gamestop)

So, me 1, Blockbuster 0.
 
[quote name='Sporadic']I have Blockbuster Online so I hope they don't cave all the way in.

$19.95 for 3 movies at a time, free unlimited store exchange, and two free coupons that can get anything including games.

Netflix can blow me, fuck their new release delay window and charging more for Blu-Ray access.[/QUOTE]

I have the same plan and it's great getting those two free game rentals. I don't want to have to get a netflix AND a gamefly account to get less than what I get with my $20/month.
 
Cant really add anything else that hasnt already been said.

Although there is a blockbuster around the corner from my house that has been "closing," for about 2 years. The closing sign is ripped to pieces its been up there so long.
 
[quote name='speedracer']If Blockbuster could add value by having employees, I'd be all for it. But it's not like they employ film majors.

CAGs should be BB's best customers. Renting games is by far the most cost effective way to sample what's out there. Hell, you can beat most games in a weekend. But their pricing (especially on games) is absurd, their stores are not particularly inspiring, and 95% of their employees can't recommend a movie worth a shit.[/QUOTE]


They could have added value to the employees by adding to their job. They should have treated each BB location like Netflix treats their shipping centers. Most of the times that I have been at BB it has had employees standing around waiting to do something. Best Buy could have had them receiving orders and shipping orders.

They could have remodeled the stores into a 30 percent showcase area and a 70 percent stockroom/cashier whatever. You go to your local BB and pick out what you want at the front (have a computer kiosk to show what is in stock and what is available, have like a netflix querie) and the worker places the order.
 
[quote name='Sporadic']I have Blockbuster Online so I hope they don't cave all the way in.

$19.95 for 3 movies at a time, free unlimited store exchange, and two free coupons that can get anything including games.

Netflix can blow me, fuck their new release delay window and charging more for Blu-Ray access.[/QUOTE]
If I get blockbuster online with the 1 dvd at a time for 9$ can I go instore and rent a game?
 
▲▼ Company name▲▼ Price▲▼ Change▲▼ Chg %▲▼ d | m | y▲▼ Mkt Cap▲▼
BBI Blockbuster Inc. 0.301 +0.001 0.33% 58.53M
NFLX Netflix, Inc. 66.55 +0.94 1.43% 3.56B

Damn. Hard to think that restructuring woulnd't have a pretttty, pretttty big upside.
 
One of their stores around here was closing, so they had a "blowout" sale. A few weeks later I see it is still open, go inside, and hear the manager there explaining to someone that "Our sales were so good, they've turned us into an outlet, so you'll get great savings all the time now!"

You know how when you've been a CAG for a while, and you go into a place that says it has great prices, and the prices are ab-surd, and you just start laughing at how bad they are, because your scale of how-good-a-deal-is rocks the shit out of the pathetic excuses you're looking at?

That's how I felt. Here's some two year old 360 games for $37 bucks each. If I hadn't gotten out of the store quick I imagine I would have died from laughter.
 
[quote name='GUNNM']If I get blockbuster online with the 1 dvd at a time for 9$ can I go instore and rent a game?[/QUOTE]

No, back when they first started, they had a 3 out plan that also included 2 free in store game or movie rental coupons. They changed the plan so that you can't get games anymore with the coupons, but some of us were grandfathered into the plan and were able to keep the coupons.
 
Not surprised at all.

But Blockbuster couldn't have matched Netflix right away, but within 4-5 years later? Pretty slow.

Blockbuster has a retail chain vs Netflix didn't have to bother, they were massive warehouses full of movie pickers.

So the investment to swing that way for Blockbuster would be huge.

I would have thought that Blockbuster could have at least hybrid their system to be like GoHastings where their retail chain, individually, ships games across the country. Still allow the walk in trades and be better than netflix.

Sadly though Blockbusters around here are no where to be found, netflix has been awesome till lately.

Their Long Waits are pissing me off and they are skipping DVDs in queue and blows my mind because these are series shows. :bomb:
 
I actually had a Blockbuster employee tell me I shouldn't buy used games if I can't handle scratched discs when I returned the POS they sold me.

They also accused my brother-in-law, his wife (my sister), and their two kids of stealing. The problem is that my sister was at home talking to me and had one child, a 12 month old, and the woman in front of my brother-in-law in the line was a stranger with two kids that were doing the stealing. My sister and brother-in-law actually met with the District Manager to complain about that treament.

Blockbuster can fade into "Bolivian" ala Mike Tyson for all I care.
 
You gotta admit it will be sad looking at all the empty storefronts. I'd rather have some kind of business there rather than an empty building.
 
holy sh..

A local store here closed overnight. They're just.. gone, literally. Everything inside, from the wire racks to the cases to the interactives.. gone. I drove by it tonight and the lights were off and the entire store was empty. It was crazy. I was going to stop in to see if they had any more of those awesome movie posters. Even their window vinyls were gone. They had notes plastered all over the building, dunno what they said, I didn't stop by. I did see people stopping, getting out of their car, then looking around like they're confused. Customers are great.
 
Well the problem with Blockbuster was not so much netflix, but the evolution of netflix and creation of redbox almost simultaneously.

People rent online, big whoop. There will still be people who want nothing to do with it. I remember selling netflix subs for best buy in 2003. Most common response was something to the extent of "I don't want to wait for a movie in the mail! What if I randomly wanted to make it a movie night??"

Push forward and redbox now takes those customers. They are placed inside of grocery stores so they are HIGHLY convenient and they cost a measly dollar to boot. Walmart has them too now, that's a deadly combo of rental locations with great hours of operation.

Now netflix fixes that common customer need by providing streaming movies to watch instantly. Not only on your computer but they sink their way into every high source media entertainment such as xbox360, and bluray players you can hook up to HDTV's.

They've become obsolete in every sense and the only thing keeping them in business for now is a small market of customer loyalty...hence the closing of the weakest stores.

I'd like to add that while I never go to Blockbuster, I don't see how they could have done much to compete with the likes of stop&shop + walmart operating rentals at no true extra cost of their own. They had a good ride but that's coming to an end which is always sad because it only means employees will lose jobs.
 
[quote name='pinebarrens']You gotta admit it will be sad looking at all the empty storefronts. I'd rather have some kind of business there rather than an empty building.[/QUOTE]

Sadly, that's becoming more and more the norm near where I live. Yet, oddly, they keep building new strip centers, which just means even more empty storefronts...
 
I'll have to cruise by my local Blockbuster and see if they're still in business. I think I rented one game there once in the past 3 1/2 years I've lived in my current house.
 
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