[Eug]

Bankruptcy warning sinks Blockbuster - The Globe and Mail

So far the stock is down over 1/3rd, to $0.27.

Competition from DVD-by-mail company Netflix Inc. and DVD vending machines operated by Coinstar Inc. have eroded the Dallas company's revenue even as it staggers under a heavy debt load.

Blockbuster said in a regulatory filing late Tuesday that it was suffering “significant liquidity constraints,” and could have to file for bankruptcy protection if it was unable to convince creditors to restructure a big chunk of its debt or its business continued to deteriorate.

The company has had to close about 1,300 stores and wants to shut down hundreds more.

I'm a little surprised, but then again, it has seemed to me Blockbuster has always been slow to adopt new technology. For example, they were late the DVD party, and the Blockbuster near my old apt. closed as the entire neighbourhood started going to the local ex-LD shop which became a hardcore DVD rental place.

Blockbuster could have been in a great position to capitalize on the download and mail-order market because of their extensive existing card-carrying customer base, but missed it too.

[Big Mac]

I thought that happened long ago, actually. . .

[sek929]

I've seen a few 'redbox' style Blockbuster units but it's to little to late for that company.

Like Big Mac I could have sworn they were already out of business, which doesn't bode well for them.

[imitchellg5]

You're right in saying that Blockbuster have been very slow to adopt new technology. I suspect things like Netflix and public libraries have killed them. Here in Colorado, I can go to the library and pick up pretty much any recent film that I want for a 3 day free rental. It put the Hollywood Movie next door out of business within months after they started carrying new DVDs.

[Eug]

Originally Posted by sek929 

I've seen a few 'redbox' style Blockbuster units but it's to little to late for that company.

Are those just vending machines?

[sek929]

Yeah, I'm not sure if they adopted the same price as RedBox ($1 a day) but they pretty much mirrored everything else after the other company. I've only seen one or two around.

My problem with Blockbuster was always the selection. I'd go in looking for the original Hellraiser, and they have Hellraiser 3 and Hellraiser 4. They'd be out of Children of Men (with only three copies) but would have a whole wall of Big Momma's House.

BB charged me for an overdue movie, the price of the movie (like 30 bucks or something) so I brought the movie in so I could pay the late fee and get the buying whole movie fee waived. They said they could take the movie back but would still have to charge me the full amount. I took the movie back into my hands and left the store never to return. That was the last movie shop I've ever set foot in.

[starman]

My local BB took FOREVER to adopt DVDs. "Nobody wants them" they'd say. In the meantime, my local Palmer was renting them like crazy.

However, they did rent LDs back in the day.

Either way, I have NO sympathy for BB going under. Their policy of editing videos just made me stop going there.

[Laminar]

I'm not surprised. The Hollywood Video and another movie place here are both going out of business, as is the Hollywood video in Ames. Between Redbox and Netflix, you'd be hard pressed to find a good reason to go into an actual movie rental store.

[Oisín]

Even here (where things like Netflix and Hulu are not really players on the field), Blockbusters are closing down around town.

Like Laminar, I don’t think they’re the only ones—PlayTime Video, 2tal, and all the other movie places here seem to be going that way.

[Shaddim]

We lost our Blockbuster last year and Hollywood Video followed soon after. Since we buy all our movies it doesn't effect me, but it is rough seeing more people lose their jobs.

[reader50]

This news comes from an SEC filing. Since the SEC requires companies to identify any plausible business threats & wost-case consequences, I wouldn't read too much into it. Yet.

[Demonhood]

Originally Posted by Eug 

...the entire neighbourhood started going to the local ex-LD shop which became a hardcore DVD rental place.

quite a fun neighborhood you've got.

[analogue SPRINKLES]

Originally Posted by Eug 

I'm a little surprised

How often do you go to BB? How about anyone you know?

Me, never. Friends, almost never.

I'm surprised they lasted this long.

[driven]

I stopped going after a few extremely high late fees. (One of which I actually returned on time in their night drop box ... good luck proving it.)

[Eriamjh]

Blockbuster could have been Netflix. Smart companies see the writing on the wall and buy up the competition to maintain control. BB was too blind to see the future.

[Eug]

Originally Posted by Demonhood 

quite a fun neighborhood you've got.

Hehe. Now that I read it again I see that I wrote that a little incorrectly. Not "hardcore" as in XXX, but in that they went after DVD with a vengeance. They probably had the biggest selection of DVDs in the city. (This was in 1999ish.)

Originally Posted by analogue SPRINKLES 

How often do you go to BB? How about anyone you know?

My GF goes twice a month.

Originally Posted by reader50 

This news comes from an SEC filing. Since the SEC requires companies to identify any plausible business threats & wost-case consequences, I wouldn't read too much into it. Yet.

Yet. Anyways, the investors would big to differ...

[Eriamjh]

Here's why we don't go to BB anymore.

BB: 1 DVD rental, $4.23
Netflix: $9 for 8 movies in one month.

Why couldn't BB match that offer? They wouldn't even have to pay the postage (I'd drive them).

[Montezuma58]

Netflix blows Blockbuster Online out of the water. With Netflix I put a movie I'm trough with in the mail. Two days later I get the next movie in my queue. Blockbuster Online it was a 5 day turn around.

[Big Mac]

Originally Posted by Eriamjh 

Here's why we don't go to BB anymore.

BB: 1 DVD rental, $4.23
Netflix: $9 for 8 movies in one month.

Why couldn't BB match that offer? They wouldn't even have to pay the postage (I'd drive them).

As Montezuma points out there is Blockbuster Online, but it sucks compared to Netflix.

[Wiskedjak]

Well, at least they didn't try to blame P2P with an aim toward getting the government to legislate their survival.

[Eug]

[SpaceMonkey]

Originally Posted by driven

I stopped going after a few extremely high late fees. (One of which I actually returned on time in their night drop box ... good luck proving it.)

Reminds me of one of my favorite exchanges in Dr. Katz: Professional Therapist. So glad we don't have to mess with video stores anymore.

-----

Store Clerk: Those late fees, you know, are the lifeblood of Vic's Videos. I mean, they're our bread and butter.

Ben: Well, I just don't understand why you charge a full night's rental...'cause, shouldn't you use a discount rate?

SC: The idea of the late fee is that it's a punishment. It's a fine. It's a severe fine, for a severe crime.

B: But is it, is it that severe?

SC: In the context of a video store? Yes it is. Is it like murder or anything like that? No, not at all.

B: Yeah, 'cause I'm usually not late.

SC: It's ten bucks.

B: Are you serious?

SC: I'm serious, ten dollars.

B: But that's as much as I paid for the videos to begin with.

SC: I'm not going to go over this--

B: So you charge full rental rates--

SC: --full rental rates. It's a 100% fine for a late rental.

B: That's a little, uh, punitive, isn't it?

SC: A little punitive? It's 100% punitive.

[Eug]

Some interesting points in these articles:

Blockbuster shares flop on Chapter 11 warning

Blockbuster's chief financial officer, Tom Casey, told the Financial Post the bankruptcy warning was precautionary language, adding that the company issued a similar warning in a filing last year, but avoided bankruptcy protection.

"We have no plans to file," he said.

Analysts, however, said that Chapter 11 bankruptcy protection might be Blockbuster's best option because the company's onerous debt load is making it difficult for management to run the company.

"Filing would address the company's debt problem and also lease termination costs for stores already closed and stores yet to be closed," said Mary Ross Gilbert, an analyst with Imperial Capital. "They have a viable strategy, but it comes down to whether management can execute it. Clearly, with their debt load, they're being constrained."

---

Blockbuster bankruptcy looms - The Globe and Mail

Blockbuster has a market value today of just $78-million (U.S.). The shares fell 11 cents to 29 cents on the New York Stock Exchange. Five years ago they traded around $10.

In one indication of how marginalized Blockbuster has become, shares of Netflix inched up less than 1 per cent Wednesday on the news of a possible bankruptcy filing by its rival.

California-based Netflix has been growing by nearly 20 per cent annually over the last few years and posted profit of $679.7-million last year on sales of $1.67-billion. In contrast, Blockbuster sales fell 20 per cent last year to $4.1-billion. Losses increased to $558.2-million, up from $374.1-million. The company closed hundreds of its 6,500 stores last year as it moved to boost its online and kiosk-based sales. But at the end of 2009, Blockbusters' liabilities exceeded assets by $314-million.

---

Some "value investors" might be looking to Blockbuster now because it's become so "cheap". However, I've noticed that a lot of these type of stocks these days end up being worthless. The prime example is Nortel.

[driven]

That's funny. Again, got me once. Here is your money. I don't return for more however.

[The Final Dakar]

Originally Posted by Eriamjh 

Here's why we don't go to BB anymore.

BB: 1 DVD rental, $4.23
Netflix: $9 for 8 movies in one month.

Why couldn't BB match that offer?

Too much overhead. It takes several brick & mortar stores staffed by several people to cover one area the way one central Netflix shipping warehouse does.

[Laminar]

Originally Posted by The Final Dakar 

Too much overhead. It takes several brick & mortar stores staffed by several people to cover one area the way one central Netflix shipping warehouse does.

And for the price of that one store with long lines and annoying people, you could put a Redbox in every gas station and McDonalds in the area.

[Eug]

What volume of movies can be carried in those redbox vending machines?

When I was on vacation in Hawaii, the local grocery store had a DVD vending machine, but it only had a limited selection of the more recent movies, and basically no older movies. Very unappealing.

OTOH, there is a small shop in Toronto which is built around some complex very large vending machine which has tons and tons of movies from all genres and all periods (including 50 years ago). But, it's an actual shop, as this machine wouldn't fit in a gas station or anything like that. It's ginormous compared to the one I saw in the grocery store.

[The Final Dakar]

Anyway, funny this thread should be posted, as just two days before there was a story on how both the Blockbuster and Movie Gallery in my town were closing (or closed). As soon as Netflix became available for XBOX is jumped on and never looked back. Disregarding the price, the convenience (Between Instant Streaming or delivery to your door) is incomparable.

[Eug]

Zip.ca in Canada is like Netflix, but I have never wanted to become a member, partially because I don't like subscription based models in this context. But then again, maybe I just don't know what I'm missing. Maybe if I can get a free 3-month trial or something I'll sign up.

As for the few HD downloads I've seen on the Xbox, the quality is OK, but Blu-ray looks much, much better, at least on my projection screen.

[The Final Dakar]

I've used it mostly to catch-up on every TV show I never bothered watching the past 10 years.

HD is not an issue for me (or those TV shows from the past 10 years).

[Laminar]

Originally Posted by Eug 

What volume of movies can be carried in those redbox vending machines?

Any new release is available, and RedBox's website lists over 300 movies available, some old ones in the Redbox Replay category, like Ghost, Anchorman, Zoolander, Forrest Gump, etc.. I got Groundhog Day a couple of months back.

[Oneota]

Originally Posted by starman 

Either way, I have NO sympathy for BB going under. Their policy of editing videos just made me stop going there.

Editing videos? As in, they removed scenes from the movies they rented? WTF?

[Laminar]

Originally Posted by Oneota 

Editing videos? As in, they removed scenes from the movies they rented? WTF?

Google seems to think that's a myth.

[ort888]

The story as I heard it was that Blockbuster was a very conservatively religious company and would use their influence to tell hollywood what kind of movies they should be making, because if they didn't, they would not rent them in their stores and it would be financially devastating... but yeah, I think that's a bunch of crap that some hippy with an agenda made up.

[The Final Dakar]

No one cares what Blockbuster thinks. Sub Wal•Mart in and it becomes slightly believable.

[imitchellg5]

Originally Posted by ort888 

The story as I heard it was that Blockbuster was a very conservatively religious company and would use their influence to tell hollywood what kind of movies they should be making, because if they didn't, they would not rent them in their stores and it would be financially devastating... but yeah, I think that's a bunch of crap that some hippy with an agenda made up.

That seems a little ridiculous considering if they were "very" conservative I doubt that they'd carry an eighth of the stuff that they do carry.

[dcmacdaddy]

Originally Posted by Big Mac 

I thought that happened long ago, actually. . .

Me too. I thought they already were out of business. Oh well. Adapt or die.

[SpaceMonkey]

Besides, sex sells, so it wouldn't really be in their interests.

[driven]

Originally Posted by SpaceMonkey 

Besides, sex sells, so it wouldn't really be in their interests.

LOL. Yeah, if Blockbuster had a porn section they would be fine.

[downinflames68]

That sucks. I remember renting a lot of videogames from them, then finding out the games sucked, and then not buying them. Saved me a lot of $.

[Laminar]

Originally Posted by downinflames68 

That sucks. I remember renting a lot of videogames from them, then finding out the games sucked, and then not buying them. Saved me a lot of $.

Video Game Rentals: Rent/Buy Wii,PS3,PS2,Xbox,360,PSP,DS,GC,GBA Games – GameFly.com

[SpaceMonkey]

Originally Posted by driven 

LOL. Yeah, if Blockbuster had a porn section they would be fine.

They might as well try it at this point!

[imitchellg5]

Originally Posted by downinflames68 

That sucks. I remember renting a lot of videogames from them, then finding out the games sucked, and then not buying them. Saved me a lot of $.

I used to do that as well, but they got so expensive ($13 for a PSP game), that I ended up just buying the game and then trading it in at Gamestop if I didn't like it.

[analogue SPRINKLES]

Originally Posted by Eug 

My GF goes twice a month.

Ok so that makes sense since she is also uses a flip phone and im guessing scared of her computer, plus the thought of watching a movie herself using your Xbox gives her a heart attack.

This is the kind of old school customer that has kept them around this long. Most tech savvy people and the younger crowd use netflix or one of the million other cheaper/easier ways to watch movies.

Heck, my 69 year old mom has an iPhone as her only line and even bought apps. If she can make such a huge leap into modern times this is exactly why BB is ****ed.

[imitchellg5]

You unsuccessfully correlated a lot of very unrelated things.

[analogue SPRINKLES]

Originally Posted by imitchellg5 

You unsuccessfully correlated a lot of very unrelated things.

I don't think so. THe point is BB Is OLD SCHOOL. People who still go there often are OLD SCHOOL.

In todays times if you are a HUGE company that still thinks it is in the early 90's there's gonna be a big problem.

It's called modernization and BB never heard of it.

[Eug]

I don't like Blockbuster. I like Queen Video (but don't go there anymore since I don't live downtown).

Both are brick-and-mortar video stores. I prefer brick-and-mortar over mail order (time) and downloads (quality), but Blockbuster is not the type of brick-and-mortar I like.

P.S. I use an iPhone, an Xbox 360, multiple brand new Macs, and sometimes even stream multimedia over self-installed GigE from my iMac to that 360.

Like imitchellg5 says, most of what you've put in your post is unrelated.

[analogue SPRINKLES]

Originally Posted by Eug 

Like imitchellg5 says, most of what you've put in your post is unrelated.

So you are both saying that BB customers are not old school like I explained?

What kind of customers do they have then? Or in this case it seems which do they have but not enough of?

[Eug]

Probably some of the same customers that go to a physical Apple Store to buy an iPod.

But they're all old school, because all the youngsters buy their iPods online.

[downinflames68]

Originally Posted by Eug 

Probably some of the same customers that go to a physical Apple Store to buy an iPod.

But they're all old school, because all the youngsters buy their iPods online.

I buy all my apple stuff at the store if it isn't custom built. Then I can get it NOW, and I don't have to worry about thieving bastards at my door, or driving 15 miles to a UPS dropoff.