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Blockbuster’s a Dud

November 7th, 2013 - 8:22 am

I have not set foot inside a Blockbuster during this century — and apparently the same was true for just a lot of former customers:

Blockbuster, the video rental chain that’s been pummeled by the rise of digital and on-demand entertainment, said it will close its 300 remaining U.S. stores by early January.

The Blockbuster By Mail service will end in mid-December.

Blockbuster’s current owner, DISH Network Corp., said there will be about 50 U.S. stores operated by franchises not affected by the announcement. But DISH said it is also closing all its U.S. distrubution centers.

Talk about bad management. Blockbuster was late to the party on three new forms of video distribution: Mail, internet, and kiosk. They got trounced once by Red Box and twice by Netflix. They were slow to change, apparently figuring that people really liked standing around on cheap carpet under bad lights where the whole world could watch them trying to decide between Mack Chestwell Blows Everything Up Real Good or Bikini Girls III: Revenge of the Sling.

Netflix came along with a nifty web front-end for a mail delivery-and-return rental service. By the time Blockbuster had a decent copy of that, Netflix was busy moving into digital streaming. Where’s that Blockbuster app for your Apple TV? Um… they’ll get back to you on that.

While Blockbuster was spiffying up their stores, the smart folks at Red Box figured out that vending machines could do 80% of what Blockbuster’s stores do, for a fraction of the cost and at an even smaller fraction of the real estate footprint. Easier to move around to hotter retail spaces, too.

Thanks to Red Box and Netflix, watching what you want when you want is far easier than it ever was when Blockbuster was still king.

Now that’s capitalism’s creative destruction at work — and it didn’t require any government mandates whatsoever.

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All Comments   (13)
All Comments   (13)
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I got frustrated with Netflix for a bit - their snail-mail turnaround started to lag, so I gave Blockbuster's by-mail offering a try. Consistently crap turnaround. I went from two or three deliveries a week from Netflix, to about one (or less) per week with BB. When I cancelled, they even had a "Not Fast Enough Turnaround" box to check as the reason for quitting. Last time I was in a physical BB store was to return a mailed DVD.
50 weeks ago
50 weeks ago Link To Comment
Fair warning: I've never rented at Blockbuster. Always went to the local West Coast Video (is that a local chain?), and when that closed the local Family Video. Neither had the issues Gretz mentions.

I"m also very leery of handing out my credit card number to a company and pre-authorizing them to make withdrawals.
50 weeks ago
50 weeks ago Link To Comment
So open an account with a bank that lets you create card numbers with spending limits for online use. It is the 21st century, after all.
50 weeks ago
50 weeks ago Link To Comment
I am one of the few that misses retail DVD stores I guess. For new movies, streaming is fine, but to find old, stranger movies you might never have watched, nothing beat a store.

I have noticed a trend that after a movie has been out for a short time, you can no longer rent, you can only 'buy' a digital downstream. That sucks, too.
50 weeks ago
50 weeks ago Link To Comment
I can buy a movie from iTunes or elsewhere for around $10-20 and be watching it inside of five minutes, never having left my Comfy Chair, while pounding back my sixth margarita.

Or, I could get in the car, blow $10 on gas, waste an hour of my life, and pay $5 to rent something on the off chance the box store has something I want to see, and then hope the disc isn't scratched to hell. And then repeat all that to return it.

And that is exactly why Blockbuster is done.
50 weeks ago
50 weeks ago Link To Comment
Given that iTunes was locked into 120kbps for music for a long time, color me skeptical their video is much better.

...And if you have to spend $10 on gas on a trip down to the local video store and back, you need a new car. ;)

Not to mention the local Family Video has a disc-polishing machine on-premises to fix scratches. They also offer a ton of $1 movies, rent two get one free, and sell used DVDs. Not to mention (as Austin points out) older movies which might be difficult to find on iTunes or Amazon which tend to focus on the latest hits.

The sale of used DVDs is one reason I really like local stores. They buy a lot of popular titles to cover demand on new release, then sell most of them after the euphoria wears off. So I get a practically new DVD (not a lower-resolution download) for not much money.
50 weeks ago
50 weeks ago Link To Comment
No doubt you would be skeptical with a bias. They use VBR H.264, which while compressed, is visually indistinguishable in virtually all cases from Blu-Ray. It is well above the "I care" quality threshold, and I spent a not insignificant amount of time in the entertainment world playing with broadcast HD formats. In short: Try it, you'll like it.

As to my car, it's chucking out around 800 horsepower and is barely a year old, so I don't think I need a new one.

As to older films, I've purchased most of Hitchcock's greats, Eastwood, Bogart, you name it. All in HD. In minutes. Apple has something like 50,000 films available-- odds are good you'll find what you're looking for.
50 weeks ago
50 weeks ago Link To Comment
The former Blockbuster near where I lived until last year (and where we rented a few movies before discovering Netflix -- heck, before we even had a DVD player) will, it's just been anounced, become a Verizon store.
50 weeks ago
50 weeks ago Link To Comment
In other news, Blockbuster still has 300 retail stores.

Wow.
50 weeks ago
50 weeks ago Link To Comment
Did you hear? RIM just announced a new Blockbuster app for Blackberry OS 10! Yippee!
50 weeks ago
50 weeks ago Link To Comment

Can't really fault Blockbuster for not adopting Netflix's business model, or Redbox's. Would that really have been a good use of their capital? More philosophically, is that really what we want from private firms--copy-catting the latest hot business model?

I think not. The question is whether Blockbuster executed their own business model as best it could be done, so that it would have a fair shake in the marketplace of ideas.

I'd say no, they did not. There's not necessarily anything wrong with a bricks 'n mortar front end, so long as you've got good locations. And Blockbuster had good locations, mostly--at least in my area, I noticed a high percentage of Blockbusters had a McDonald's nearby, and that means it's a great location for impulse purchases.

As Gretz notes below, it was Blockbuster's predatory pricing structure that gave Netflix an opening. Blockbuster behaved as though they had a lock on content delivery, well after they no longer did. I would think that with a more customer-oriented focus they could have lured people into those video wonderlands on an impulse and then upsell, upsell, upsell.

Maybe I'm wrong, but Redbox is proof enough that people will rent movies on impulse. I have trouble believing Blockbuster couldn't have made something out of that behavior.
50 weeks ago
50 weeks ago Link To Comment
The red box model is amazing.

The ability to hit the web, find the movie you want, usually in a machine right outside the closest 7-eleven or grocery store is amazing.

Another thing that clobbered them is the network enabled TV. My new TV can go get movies itself. Why would I even get off the couch to go to redbox?

Every blockbuster I've been in seemed like such a soul sucking place.

BTW you forgot amazon and iTunes. I get content from them as well.
50 weeks ago
50 weeks ago Link To Comment
Netflix also didn't gouge you to keep a title an extra day. Blockbuster was slow to stock DVD's when the DVD's first came to market, and was notorious for having year old titles still flagged as 'new release' with a premium rental price. Netflix also didn't bill you $60 if the clerk lost your tape or screwed up handling the returns box.

It was hard to beat Netflix's 3 or 5 at a time for a consistent monthly rental rate, or the ability to have a popular title sent out 'next available', without you having to return to the store (or webpage).

Any issues with the availability of a title for streaming have to do with the publisher's petty demands (or some arcane marketing release scheme), not Netflix.
50 weeks ago
50 weeks ago Link To Comment
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