Trust Me: Blockbuster Video is Dead.

Written by anthonyrosania

Friday, 23 July 2010

image for Trust Me: Blockbuster Video is Dead.
"O Danny boy, the pipes, the pipes are calling. From glen to glen, and down the mountain side..."

If, on March 20, 2002, you had the fortunate forethought to dump, say, 150 shares of common stock in Blockbuster, Inc. (NYSE: BBI), you would have netted a cool $4,357. Not a King's ransom, but a nice chunk of change.

The value of those same 150 shares yesterday? Twenty-four crisp one-dollar bills.


That means the stock went from it's 10-year high of $30.25 to close yesterday at 16 cents.

For twenty years, Blockbuster Video made money hand-over-fist as the Grand Poobahs of the video rental business. But, like certain other companies who hang on to unprofitable business models like historical artifacts --we're looking at you, H&R Block-- the company's Lead Counsel is carrying a draft copy of Blockbuster's Chapter 11 bankruptcy filing in his or her briefcase.

Blockbuster's meteoric rise and subsequent fall followed the same stupid trajectory as Bethlehem Steel, Conrail, and any number of failed businesses.

In one sentence...

Company finds business niche (the new home video market); Company develops retail format and pricing model that resonates with consumers; Company makes a sh-tload of cash with relatively little debt; Company leverages that cash to flood the market with store fronts (at one point, Blockbuster was opening one store every seventeen hours); Company buys up regional competitors to maintain near-monopoly (Ritz Video, A-Z Video, etc.); Company is challenged by a new business model that erodes their business (Netflix); Company arrogantly believes its market share is enough to resist the challenge; Company learns that consumer loyalty is incredibly fickle; Company attempts to mirror competitors new business model, leveraging its size to overcome the challenge (Blockbuster Online); Company fails miserably (also Blockbuster Online); Company recedes, closing unprofitable stores, and eliminating middle managers; Company hemorrhages cash, prays to God for help, help is denied, stock price goes <splat>!

Interestingly, while Blockbuster was cursing Netflix for their innovation, and lamenting the fact that they missed the opportunity to rebuild their business with new ideas, a second innovation burst into the marketplace, further eroding Blockbuster's business.

The truth is, despite Blockbuster Video having its lunch money stolen by Netflix, the fact that they are a brick-and-mortar business always allowed them one advantage. To wit: The ability to overcome the 'Netflix Effect'.

Here's the scenario: The girl you've been trying to bed for 7 months finally agrees to come over to your apartment to "watch a video or something." You can open your laptop, log onto Netflix, and put "You've Got Mail" into your queue, but you're not going to have DVD in-hand for at least a day or two.

If the only movies you have on DVD is Seasons 1 and 2 of Taxicab Confessions and the scenes you've downloaded from Youporn, and you threw out your Blockbuster Video membership card when they charged you $23.00 because you forgot you had The Matrix: Reloaded in your glove compartment, you're screwed.

Or are you?

Started in 2003 by --no shocker here-- McDonalds, Redbox Automated Retailers invented a way to securely vend new-release DVDs via self-service, interactive kiosks.

Coinstar eventually bought 47% of the company, and almost immediately, those 8 foot red boxes were chained and locked in the lobby of every f--king grocery store and 7-11 in the universe.

Has this second innovation been profitable? Just four years after its inception, Red Box had more locations than Blockbuster! Their 22,000th US location opened in 2009.

Blockbuster has 9,000 locations. Worldwide.

This is huge: While Blockbuster was mopping up their tears with near-worthless stock certificates, a no-name upstart stole 39% of the DVD rental market. (Rent by mail services like Netflix own 36% of the market. Blockbuster's share of the market is estimated to be at 15%, down from a high of --wait for it--, 79%.)

So, where else did Blockbuster f--k up? Or, what could they have done differently?

How about innovate?

Or, in the alternative, steal innovative ideas and leverage the Blockbuster brand to retain their market share.

How the hell does Blockbuster become aware of the existence of Netflix, and do absolutely nothing about it? The advantages the incumbent has over an up-start company are two-fold: brand recognition and market share.

Had Blockbuster not been so blinded by their dominance in the industry, they would have done the right thing for their customers, employees, and shareholders: Launched Blockbuster-Flix, used their huge mailing list to announce the service, undercut the competitor --either in price, or level of service--, and tossed Netflix's impoverished corpse adrift next to Turbografx 16, HD DVD, Daewoo and Betamax on the S.S. You're F--ing Bankrupt.

And even after screwing that opportunity up, Blockbuster was left at the dock with their corporate d--ks in their hand, cursing their bad luck once the Red Box ship had sailed!

Why hasn't every person, whose investment portfolio --or their retirement income-- relied in whole or in part on Blockbuster's continued solvency, not written a letter that begins, "Dear F-kheads; Why the hell isn't there a single Blockbuster branded DVD rental box set up to compete with Red Box?"

It won't happen, because everybody knows that Blockbuster is dead. Cable and satellite video on demand, DVDs via mail, dispensing machines, Bittorrent sites and Blockbuster's arrogance were all co-conspirators in the death. And since there will never be a murder trial in this case, Blockbuster's employees and shareholders will never get to make a victim impact statement.

A shame, because they had the most to lose.

The story above is a satire or parody. It is entirely fictitious.

Do you dream of being a comedy news writer? Click here to be a writer!

Spoof news topics

Mailing List

Get Spoof News in your email inbox!

Go to top
readers are online right now!
Globey, The Spoof's mascot

We use cookies to give you the best experience, this includes cookies from third party websites and advertisers.

Continue ? Find out more