Blockbuster Video Declares Bankruptcy

Published 5 years ago by , Updated April 4th, 2014 at 10:00 am,

blockbuster1 Blockbuster Video Declares Bankruptcy

We all knew it was inevitable, but the news that Blockbuster has filed for chapter 11 bankruptcy protection still feels like the bittersweet end of an era. The company did attempt to implement some changes to keep pace with shifting media platforms and market demands. They eliminated late fees, and developed an online/mail in service to compliment their brick and mortar stores in an attempt to compete with Netflix. The changes were, unfortunately, a case of too little too late.

It is likely that hundreds of stores will close as the company redoubles its efforts to stake a claim in digital distribution. The goal is to reduce the company’s crippling debt of almost one billion dollars to a theoretically more manageable 100 million dollars.

Jim Keyes, Blockbuster’s chairman and chief executive, says the company will, “continue to transform our business model to meet the evolving preferences of our customers.”

Netflix shares enjoyed a more than six percent increase on Wednesday as a result of Blockbuster’s rumored bankruptcy, and another 3.45 percent increase on Thursday when the declaration of bankruptcy became official. Billionaire investor Carl Icahn, who was once Blockbuster’s largest shareholder, has now “reduced his ownership shares in Blockbuster Inc’s Class A shares to below 5 percent”, according to CBC News.

Chairman Jim Keyes, however, remains positive about Blockbusters ability to rebound from this crisis. Keyes says that Blockbuster has several factors working in its favor: “a well-established brand name, an exceptional library of more than 125,000 titles, and our position as the only operator that provides access across multiple delivery channels — stores, kiosks, by-mail and digital.”

For many on the outside it is easy to see how Blockbuster simply did not move fast enough to keep pace with the changing times. In our rapidly transforming world, it is so important for a business to stay ahead of the curve. In Blockbusters defense, the curve moves pretty fast and shifts around quite a bit.

Sources:  CBC News, AFP

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  1. They got what they deserved. After years of burning there customers with tremendous late fees (sometimes many times over the value of the movie if it were purchased new) they are finally going bankrupt. Yes they have multiple distribution channels and a well known name but I don’t think there well known name is very well liked. Many many of their customers jumped ship at the first chance due to the way they were treated.

    Good ol’ capitalism set it right though. Maybe they can transform into a better company and maybe not.

  2. so who sneezed to push them over the edge?

    for the last year, BB reminded me of Mr. Plow on the Simpsons, when Homer’s truck is teetering off the edge of a cliff and he moves the radio dial to shift the weight.

    Fact is BB failed to see the potential of mail order movie rental and online streaming and by the time they figured it out they were too deep in debt to really make any strong investment

  3. I just noticed in the picture, kinda funny how there’s the big Blu-Ray displays but they have old tube TVs hanging from the ceiling (circa 1995). Even the hole-in-the-wall pubs in downtown Baltimore have flatscreens

  4. Actually Panda it hasn’t done the same to those. Netflix has put every power player in the rentel buisness in to bankrupt with only one that still has it’s doors open but even it’s dying now.

    Banks are still all over the place most people still go to the banks and don’t feel comfortable doing banking online. On any given day I walk walk in to a bank and be stuck in a long line because every one is still using them.

    Every major news paper is still alive out there those companies gave an online alternative which created more jobs for people to run the site while still keeping existing employees and still putting out newspapers. Even small towns still have news papers mine has two.

    Stores like Best buy, game stop, borders and barnes and noble are all not only still open but still doing very well despite places like Amazon, eBay and craigs list.

  5. @Daniel,
    actually Best Buy is doing well since Circuit City liquidated, and now Best Buy is even saying how they’re reducing floor space for DVD and CD sales because online alternatives are offering too much competition. They make their money these days from home theaters and computers, not CDs and DVDs and by offering more services like PC repair.

    Local newspapers are filing bk left and right and some have even gone to online only. Of the major newspapers, Washington Post has shown steadily declining profits over the last 4 years, and the Chicago Sun Times filed bk last year. NY Times and Wall Street Journal both credit growth in online readership and WSJ is part of a media conglomerate (i.e. diversification).

    Banks have trimmed down staff at branch locations in favor ATMs, then debit cards, and now online services (I worked in commercial banking since the late 90’s when internet banking was just starting and I saw firsthand how customers who would never do business online later decided it was the only way to go). Small community banks have trouble competing with online-only banks for deposit rates and the larger banks have diversitified into the hated monstrocities they are today making an ever growing percentage of profits from investment services rather than traditional lending.

    My point earlier was that it’s not Netflix that has caused businesses like BB to suffer, it’s changing technology. before DVDs, Netflix could have never been conceived when VHS was the dominant home movie media and now streaming on-demand video is the new horizon (which Netflix has already made a foothold, smart move). The points you mention about offering online alternatives is the same thing I said BB failed to do early enough.

    BB failed by investing too much in the wrong areas, let them restructure into something more viable and trim some of their assets so they can be allocated where they’re used more efficiently instead of implying we should not use Netflix so people don’t lose their jobs at BB – but follow your own path. BB failed their employees, not the consumers who chose progress

  6. I never said you shouldn’t use netflix I said I don’t and never will I refuse to. That’s my decision if you don’t care about the failing economy and job market that’s up to you.

    I realize it’s more about the Internet than netflix specifically in fact I brought that point up in my very first post. The Internet has alot of very useful things and is a huge step forward but it also is the death of the economy since the Internet got more wide spread the economy has been on a decline and the larger it spreads the more the job market plummets for every 6 people employed by a site like netflix or something else another 25 people lose their because their company shut down.

    Netflix happens to be the subject at hand but it’s not the only site I reject. The only exceptions I make are Ebay and amazon. I only use eBay for rare hard to find items. I only use Amazon If it’s an amazing deal . I still use retail much more.

    Bestbuys sakes on DVDs and Blu Ray are still very strong however yes they are losing lots of CD sales but that’s because of single song sales which is usefull cheap and smart. Plus with Idevices taking off you can’t buy a cd and put it in your iPod.

    Newspapers have indeed saw a decline but the vast majority are still making profits and the main ones even still have more employees now than they did say 12 years ago. By adding web based content they created more jobs while still keeping the old ones for printing.

    Most small towns are nothing but churches and banks so not sure what makes you think that smalltowns are hurting for banks. Most of banks money problems of very little to do with the Internet. In fact it’s more about the hurting economy and people not paying loans as well as thieving people in charge. Their suffering has very little to do with online. Banks have done very little down sizing in their banks there is some yes but not much and have in fact made up for it with adding the online creating jobs for people to run the site. Banks have handled the situation well and it will take a long time for the general public to accept banking online only.

    Either way you can’t argue with the fact that Non online banking , Newspaper and retail are still alive and rentals are not. Decline or no decline they are still alive and profiting.

  7. I reallize you said that you don’t use it, that’s why I said “but follow your own path.” however, by making your comment you’re demonstrating that is what you think is right and can therefore be inferred that you think others should do the same thing (otherwise, why else would you say it?)

    regarding banks, I didn’t say small town banks, I said “small community banks,” ie. those that have a small asset base and still function by taking deposits and lending it (as opposed to the larger lending / investing / insurance conglomerates). I didn’t say banks were hurting because of the internet, I said those banks have a harder time competing with online-only banks that pay higher rates and don’t have the overhead of brick and mortar retail branches (see the connection to the changing technology discussion?)

    Regarding Best Buy, I don’t know what your definition of “strong” is, but straight out of BBY’s last 10-Q:
    “declines in entertainment software revenue, which includes video gaming hardware and software, CDs and DVDs.”
    “Revenue from our Domestic segment’s online operations increased 21% in fiscal first quarter of 2011″
    “continued decline in the sales of CDs and DVDs”

    Yes, all the things you mention are still alive, but every year each is becoming less and less relevant. Again, do what you wanna do but it’s not going to save jobs and shouldn’t. If medievil society had said that we shouldn’t use the printing press to save the jobs of scribes, where would we be today? It’s commendable to care about someone else’s job, but it’s a futile effort to feel like you’re doing something important, but to each his own.

  8. I want to start with an apology for the small town small community mix up that’s my mistake.

    Decline or no decline brick banks are not going away any time soon. The online increase has not been strong enough and more people still use brick than online in total. To Many people are paranoid and alot of people still trust names that have been around for decades.

    I didn’t say there wasn’t a decline at best buys DVD sales but I said sales are still very strong and the over all decline was very small. In fact just two weeks ago IGN did an article about best buy stores seeing a substantial gain in DVD sales over last year.

    The printing press argument doesn’t really work here. It actually created jobs.

    Of course I don’t expect my not using Netflix to change anything but I do lots of things that won’t actually make difference. My very very small controbutions to charities like Make a Wish or Various cancer research as well as the ASPCA really don’t make a difference doesn’t mean I should just stop. When your debating to contribute to cancer research but only have 20 bucks do you stop and say “Well my 20 bucks isn’t actually going to push them over that cure line… Might as well buy a DVD instead” no … Well I don’t know you so you might but I doubt it. My not using netflix won’t change any thing my donations to make a wish aren’t large enough to matter but i still do it because I feel it’s the right thing at least for me. It’s my morales at some point we all have our lines we won’t cross. For that line means I won’t use things like Netflix the benefits don’t out weigh the the negatives and I really don’t see any real benefits to either anyway.

    To each his own

  9. I’d like to hear how the printing press created jobs (couple people to press 1000 copies vs how many people would it take to scribe 1000 copies in the same time) – but we’re getting way off topic (I concede that’s my fault)

    I guess we’ll agree to disagree. I still say BB restructuring is a good thing and just another sign that tech is changing how we do business and people shouldn’t feel bad about switching to services like Netflix that are cheaper, more convenient, and more efficient

    • i for one hope that the online way to do business never replaces the brick and martyer approach of business no matter how muchnthe online approach does business.i do not do money exchanges with companies online and do not want to have to.

      • I’m the opposite – I’d much rather transmit a payment online through a reputable company, knowing it’s encrypted, than to send a physical check in the mail. 1) you get instantaneous confirmation that the payment is received and 2) no worries that it gets into the wrong hands. If it’s online at least it’s encrypted, if in the mail your info is just hanging around where anyone can get ahold of it.