Blockbuster Bankruptcy?

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The bad news just keeps on coming for beleaguered movie rental giant Blockbuster, but is anyone really surprised? Yesterday, the LA Times reported that Blockbuster chief executive Jim Keyes was in LA to discuss plans for a possible “pre-planned” bankruptcy in September. Apparently, he met with executives at several studios including Paramount Pictures, Sony Pictures, Walt Disney Studios, and 20th Century Fox. The support of these studios is necessary for Blockbuster, which will need to rely on them for new releases during the bankruptcy and subsequent restructuring.

Blockbuster hopes to spend only six months in restructuring, but the process will undoubtedly be painful. The company is $920 million in debt and needs to restructure leases on at least five hundred of their three thousand five hundred US stores. The firm also plans on refocusing on non-retail spaces; apparently they’ve started to manufacture Blockbuster brand kiosks (much like Redbox) that will rent DVDs for a dollar.

In order to be successful, Blockbuster needs to do several things. Firstly, they need to pay closer attention to the profitability of each of their stores. Last year, Blockbuster shuttered around a thousand of their brick and mortar operations when they discovered that the stores weren’t making any money; frankly, the fact that executives didn’t realize this ahead of time makes them look careless. Secondly, Blockbuster needs to adopt a better price plan – something cheaper and consistent. Does anyone really know what late movie charges are? Thirdly, Blockbuster needs to improve the customer experience. Mom and pop rental operations seem to be doing okay – this might have something to do with the fact that their staff is friendly, knowledgeable about movies, and more willing to carry hard to find items (like RoboGeisha) than Blockbuster.

Of course, that much change is a fairly tall order, and it seems doubtful that Blockbuster can cope. The last time I was in one of their stores, the seventeen-year-old cashier spent ten minutes on his cell phone before telling me that he hadn’t heard of American Beauty.

Good riddance, Blockbuster.

– Dave Robson

  1. Jovita Cruz Quan says

    The losses in terms of jobs will be terrible. Though Blockbuster boasts a lackluster track record it is still unfortunate that many like that bum who did not know about American Beauty will be out of a job further hurting the economy.

  2. Derek says

    Another example of how smaller businesses can adapt faster and more efficiently than Big Box Behemoths. Something about actually being on the ground and interacting with your customers and employes gives the Independent store more flexibility to try new things without having to consult the head office on the Death Star (or where BlockBusters headquarters are). It also gives them the resiliency to not tinker with what works and not fall for hairbrained schemes, such as the No Late Fee Policy or experimenting with selling frozen Pizza’s as one chain did.

    The Small Business model is no good for large scale operations, but the Large Multinational Corp is definately not always the right fit for smaller retail outlets, where connection to the community is a sizeable advantage.

  3. Ricky D says

    i feel bad for the people losing their jobs but I hate this franchise.

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