Big Bust On The Block

Blockbuster’s quarterly report, issued earlier this week, stated a loss of $491M. While most of this loss is a result of it being spun off from Viacom, there are plenty of big problems for Blockbuster. So many, in fact, they warned of seeking bankruptcy protection. Most of the problem stems from the fact that their business model is being supplanted by the internet. They will soon go the way of Wherehouse & Tower Records.

People are getting sick of going to the video store, just to make life easier for Big Entertainment. This leaves them with their Netflix rip-off division. However, while talk of takeover circles around Netflix, which is being courted by Amazon, I just terminated my mailing relationship with Blockbuster because, unlike Netflix, they can’t turn the DVDs around fast enough. Netflix was first on the scene, nimble, modern, so Blockbuster, with all its marketing muscle and name awareness was unable to go forward there.

I was in Fry’s the other day, looking around at a virtual warehouse of digital media that could all be fed directly onto my laptop, or the bigger screen downstairs, so easily. Why should I spend hundreds of dollars on a bunch of little disks to hold information I probably just want to see/hear/use a few times? Bill Gates is up in arms right now because he understands what is happening, all software, all digital media, will soon be online. Our grandkids will find the idea of going to a store for your software, movies and music laughable.

What is a blockbuster? The name came from the press from Jaws, the first movie ever to see people lined up around the block. That was 1975. Well, it’s 30 years later and now maybe people don’t want to wait in line for two hours to puke on the theater floor. Start delivering your product in a way which dignifies your consumer, giving them convenience and choice, and you’ll flourish. BUT, you’ll need to do it like you did it the first time, the way you originally built your company, by challenging the powerful studios that own the rights to all those great films you want to distribute.

Blockbuster was sued by the studios when it first started renting out movies. The studios saw them as an enormous threat (they see every new distribution model as an enormous threat) and sued to shut them down (they try to shut every new distribution model down), but Blockbuster won and flourished. Perhaps it’s time for Blockbuster to start renting films over the internet. The technology is there. Looks like it’s that or bankruptcy.