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Blockbuster's bankruptcy fate shouldn't come as a surprise as the competitive landscape for video rentals has intensified with the likes of Movie on Demand, Netflix Corp., iTunes and video streaming Web sites such as Hulu.com. The players have obviously changed while the old-timer Blockbuster was left flatfooted chasing its smaller competitors in a different game. The Deal's Ben Fidler predicted Blockbuster's bankruptcy possibility four years ago and said: Blockbuster is fighting back, but it faces other challenges as well, including overexpansion and more than $1 billion in debt. The grim reality is that it may only be time before the largest rental chain in the U.S. considers checking itself into bankruptcy protection. Those words seem so prophetic not only for Blockbuster but a good summation of what's ailing many companies these days that are teetering toward the bankruptcy. Overall, Blockbuster might have won the battle for title of "king of the video rental sector" when its former competitor Movie Gallery Inc. blew up in bankruptcy in 2006 because of oversized debt from a deal for Hollywood Entertainment Corp. What Movie Gallery thought would catapult it closer to market leader Blockbuster merely caused its self-destruction. Blockbuster, however, ended the arms race too bloated in debt to compete with upstarts that delivered videos in different formats to a fickle audience that's difficult to please. Blockbuster's future obviously looks dim. It only has $138.7 million in cash and cash equivalents as of June 30, 2008, and it has $1 billion-plus in debt. The recession may curb discretionary spending that ultimately may negatively impact Blockbuster. So, maybe Blockbuster's only salvation may be bankruptcy. Its slate would be wiped clean of debt, but shareholders would be left with the agonizing horror of seeing their investments vanish. - Gerald Magpily See Bloomberg article CategoriesComments
From: Lucas,
ahhh...the sweet smell of technology driving us into another depression. Don't you love it in the morning?
Posted on:
March 5, 2009 8:51 AM
From: Gerald Magpily
 ,
Yes, with technology playing a bigger role in business these days especially in the video rental sector, Blockbuster, especially, will have to seriously consider their need for a physical space. The video rental store will likely go the way of the horse and buggy.
Posted on:
March 5, 2009 10:48 AM
From: Carl,
I worked for Blockbuster corporate for many years 10+ to be exact. They have made very poor choices repeatedly and rested on their laurels while Netflix took control of the market. Compound that with the poor customer service and confusing promotions over the years. People were moving to the Netflix business model for years and BB simply refused to accept the fact that people hated late fees and simply preferred the subscription style service. Add in the option to watch movies on-demand with Netflix and the picture seems clear into the future. And let's not forget the whole "family" video period with Blockbuster where the sanitized their inventory of anything deemed unchristian that left a very bitter censorship aftertaste that never really went away. You can stick a fork in them... they are done.
Posted on:
March 6, 2009 5:49 PM
From: Carl the terd,
This was posted on a site today. Quote: Despite frequent and vehement denials of this event, and insistance that the law firm was hired only to renegotiate Blockbuster's revolving credit convenants, the company is believed to be heading into Chapter 11, yet another victim of the faltering economy.
Posted on:
April 2, 2009 1:04 AM
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Video chain store Blockbuster Inc. (NYSE:BBI) has been grasping for a hit -- any kind of hit over the last couple of years to change its fortunes -- but nothing has obviously worked. The only results for Blockbuster have been red ink and declining market share in the video rental sector -- in other words, the equivalent of a box office bomb. And now it looks like ailing Blockbuster might have accepted defeat as Bloomberg reports Tuesday that the video rental giant has hired Kirkland & Ellis LLP as legal counsel to explore a bankruptcy filing. 
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With office rental increasing, it doesn't make much sense to have a physical office. I believe the future of most businesses will be virtual and leveraging off using a virtual office space.