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