Blockbuster

[Cinephrenic]

Late fees...last minute ass fuck.

[Matt]

Blockbuster Losing Customers at ‘Unprecedented’ Rate, Analyst Says

[starmanof51]

Blockbuster Losing Customers at ‘Unprecedented’ Rate, Analyst Says

The analyst in question, Michael Pachter, has struck this armchair observer as being spectacularly wrong the last few years, given that he's only got a handful of companies to worry about. Google yields all kinds of bullishness on Blockbuster on his part, and a fair amount of sneering at Netflix. He still sounds like he can't bear to wholly write off Blockbuster - just wait'll Blockbuster gets their own kiosks and streaming out, Netflix! Then we - er - they will show you!

He was sure a few years ago that Blockbuster's online rental would pound down Netflix. And Wedbush Morgan still pays him.

[mfunk9786]

Blockbuster adds video games to mail offerings

Frankly, this sounds like a great deal at $8.99 per month for the base subscription. Cheaper than GameFly, and as long as the selection is as good or better (a lot of games are Long Wait on GameFly) I might just sign up. If you have a Blockbuster near your home, you can put Blockbuster Online envelopes in the drop box and they go into the system as returned as soon as the employees scan them. So the instant gratification factor is better than Netflix - if only the selection were nearly as good.

But with video games, the amount of obscure titles, etc that they could potentially not stock are non-existant compared to films.

Unfortunately, the site is already down, partially (I assume) thanks to the giant free trial being advertised on Drudge Report.

[Jeff]

Chapter 11

[dx23]

Blockbuster Files for Bankruptcy Protection

By : Erik Gruenwedel | Posted: 23 Sep 2010
egruenwedel@questex.com

As expected, Blockbuster Inc. Sept. 23 filed a pre-packaged bankruptcy filing in U.S. Bankruptcy Court in New York, and initiated a $125 million debtor-in-possession financing loan provided by senior bondholders to maintain operations.

Under the recapitalization plan, Dallas-based Blockbuster reduced more $1 billion in debt to about $100 million, according to the filing. Blockbuster's largest studio creditor includes 20th Century Fox Home Entertainment with $21.6 million in claims.

Under the terms of the proposed plan, Blockbuster's 11 3/4 percent senior secured notes will be exchanged for equity in the reorganized company. The only debt expected to remain upon emergence from Chapter 11 will be the amounts drawn under the $125 million DIP financing, which will convert to an exit loan facility of up to $50 million.

Holders of Blockbuster’s outstanding subordinated debt, preferred stock or common stock, will get nothing.

“After a careful and thorough analysis, we determined that the process announced today provides the optimal path for recapitalizing our balance sheet and positioning Blockbuster for the future as we continue to transform our business model to meet the evolving preferences of our customers,” said CEO Jim Keyes in a statement.

Keyes said Blockbuster’s 3,000 domestic stores would remain open during bankruptcy while it evaluates its store base, including reportedly shuttering hundreds of company-owned locations.

Blockbuster is expected to focus on a multiplatform distribution strategy that includes Blockbuster Express kiosks, Blockbuster On Demand, Blockbuster Mobile and a smaller retail footprint.

Duluth, Ga.-based NCR Corp., which has rolled out 7,000 Express kiosks under a license agreement with Blockbuster, reaffirmed support for the company and continued involvement with Blockbuster Express.

“Our relationship with Blockbuster continues and we welcome their 'business as usual' approach in creating demand for convenient access to entertainment,” said Justin Hotard, VP, GM NCR Entertainment.

Niko Celentano, who headed a Blockbuster shareholder group, said the filing was "a sad day" for shareholders. He faulted Keyes and the Blockbuster board for allowing the rental icon's fortunes to decline.

"Jim Keyes is the main reason Blockbuster is in this position today, due to his denial of being in a business model that did not work anymore," Celentano wrote in an email. "If Keyes would have seen the changes that were evolving in this industry in the past few years, Blockbuster would not have been in the courts today filing Chapter 11 protection."

Specifically, Celentano questioned Keyes relationship with corporate raider Carl Icahn, a former board member and investor, who reemerged earlier this month reportedly acquiring a third of Blockbuster's senior debt. Icahn is said to have been a key driver in pushing through the DIP financing, and is expected to play a role in the restructured company.

"Icahn, who hand picked Keyes for this job, has basically been handed this company from his good friend," Celentano wrote in his email. The investor, who said he sold all his Blockbuster shares Sept. 22, said he looks foward to a day in court when "those involved" will be "held accountable" for their actions.

Longtime Blockbuster analsyt Michael Pachter, with Wedbush Morgan Securities in Los Angeles, questions whether the rental icon can overcome such a large brick-and-mortar footprint. Pachter said offering a large retail selection and service requires space and staffing, and puts Blockbuster at a cost disadvantage to chief competitors such as Redbox and Netflix.

“So long as they participate in brick-and-mortar rental, they will have higher overhead costs than Netflix and Redbox, and will be forced to charge more,” Pachter said. “It’s too late for Blockbuster to revive its online offering, and would take way too much capital for them to compete effectively with Redbox, so I think we’ll just see Blockbuster continue to slowly waste away.”

[Tom Hagen]

Blockbuster is Hyman Roth; they've been dying of the same heart attack for the last twenty years.

[Max von Mayerling]

Well, at least they eventually put Roth down.

[Cinephrenic]

I remember working there as a assistant manager in the nineties while a student. It sure sucked.

[Matt]

Though I'm no fan of Blockbuster now, back in 1997, one of their stores was the only place in Columbus, OH (a town that had three extremely good, well-stocked independent video stores) where I could find Driller Killer and Daughters of Darkness. Of course, they probably had those because they drove some mom & pop store out of business and bought their inventory.

[dx23]

I would love someone to do a case study on the rise and fall of Blockbuster. Clearly, arrogance, failure to understand their market, greed and not updating their business to new technologies on time killed their company, but also the same old story of putting business people with no passion or knowledge of what they are selling in top spots help their huge decline.

[Cinephrenic]

Bad management from the top levels. They made 75% of their profit from late fees back then. They use to penalize managers and put quotas on the amount of credit to be given, if any.

[Tom Hagen]

I would love someone to do a case study on the rise and fall of Blockbuster.

Rise: capitalize on a burgeoning home video market and use the power of a corporate behemoth to run local competitors out of business. Fall: failure to adapt new technology and distribution methods, accompanied with a failure to recognize the imminent danger of Netflix before it was too late to use its capital advantages to acquire or defeat them. It's a pretty quick study.

[Matt]

Blockbuster to close all 300 remaining U.S. stores

Seems appropriate that I had to resurrect a thread that's been dead for three years just to post that.

[swo17]

And their by-mail service will shut down next month.

[movielocke]

What's amazing is that it was redbox that killed them more than netflix. It wasn't until redbox happened that my family stopped going to rental stores, and I imagine that was true of just about everyone. I feel like streaming and netflix/mail service are blamed for it's decline, but I think those serve the same demographic and resulted in a survivable hit. There's a lot of people who won't do streaming because it's too much work. But redbox? Redbox is incredibly easy, convenient and at saturation, why bother going into the video store anymore, cannibalized a completely different market from the streaming/mail cohort, and completely decimated blockbuster as a result.

[Perkins Cobb]

I hope I can be forgiven, just on this one occasion, for creating a post for no reason other than to add a smilie:

[Matt]

What's amazing is that it was redbox that killed them more than netflix.

When was the last time you went to a Redbox? Due to getting locked out by the studios (who mandated weeks-long embargoes on rentals or refused to wholesale to Redbox at all), the selection has become extremely poor over the past couple of years. I mean, I watched Pacific Rim via iTunes 3 weeks ago and Redbox won't even have it available until next Tuesday. And that's one of the few major movies that's going to be available. If that's out of stock, you might have to settle for Narx, Moscow Chill, or the Rico Rodriguez vehicle, Babysitters Beware.

Redbox certainly contributed to the decline of Blockbuster, but I wouldn't say it was a greater factor than Netflix (both streaming and DVD-by-mail).

[Gregory]

I'm surprised they still had 300 stores open. I haven't seen one in a couple years, probably because they're almost all scattered around in various suburbs. This will mean not only more people out of work but even more vacant Blockbuster eyesores sitting around for years among all the big-box blight across America the beautiful.

[swo17]

Blockbuster's by-mail program has been a helpful gap filler for a small percentage of movies that either can't be rented physically anywhere else or that have ridiculous waits on Netflix, so I will miss it slightly.

[FrauBlucher]

I am nowhere as sad as I was when Tower Records & Video shuttered their doors. That's when I realized times have changed.

[RagingNoodles]

In my home town area, Blockbuster Stores "will remain open indefinitely".

[Minkin]

Blockbuster to close all 300 remaining U.S. stores

Thank God. This was perhaps one of the worst companies out there (yes, I feel like complaining about corporate giants today). After they killed the local mom & pop stores (back when I was in Oregon) - which charged less for a movie rental than Blockbuster did, Blockbuster then proceeded to ruin everyone's lives with their monopoly.

Everytime I rented something and returned it (even a few days early), I would be charged a late fee. It got to the point where I would have to take a picture of me returning the thing to try and prove to them otherwise. It didn't matter if I returned it in the drop box, or in store, or handed it to an employee and waited for them to remove the item - I got a fee. I always argued and got the fee removed, but not after a drawn out hassle. Then once I tried to rent something, it was out of stock, thus I asked for their "you get it free if its not in stock" deal - to which the coupons were in a 4-hour locked safe. Thankfully I discovered Netflix the year that became available, but otherwise I would have been stuck with Blockbuster.

All the local California Blockbusters went out in the last two years, but I never knew anyone who ever used them, and the one by the Trader Joes (with its high traffic) always sat empty of customers. Blockbuster has nobody to blame but their own horrible decisions, atrocious customer service, and constant class-action lawsuits. Certainly, Netflix helped and made the idea of $6 rentals seem insane, but Blockbuster did its best to ruin every customer's experience.
So, just like Perkins:

[LavaLamp]

I thought Blockbuster had gone out of business years ago, since all of the local ones had closed. So, this is news to me. Good %^&*$#@ riddance. I don't miss them at all:

I used to rent a lot of DVDs from Blockbuster, since they were one of the only stores around for years. The one I went to rented a lot of DVDs that were scratched, and would thus freeze/stop at certain places. When I would return the DVD & complain about this, they would look skeptical. I would offer to have them play the DVD & show them where the scratch/scratches were, and they would always say that the DVD players in the store were only to be used for advertising/playing the new movies. You would think they would want to know if a DVD was scratched so they could take it out of circulation, but they didn't care. I'm sure they just put these scratched DVDs back into circulation. This was obviously store policy, and horrible customer service.

Their late fees were a rip-off, and were just a way to scam the consumer out of more $.

The selection was always skewed towards 100 DVDs of a new film, and very few older releases. Their foreign/independent/obscure releases were almost nonexistent.

And, it's ironic that these days you can buy new DVDs (and in some cases even new Blu-rays) for the cost of what a Blockbuster rental used to cost back in the day....

Side-note: I did like Hollywood Video. There was only one around me, and they typically had a better DVD selection of older films & good deals. Plus, their DVDs were almost always in better shape than Blockbuster's. Sadly, they couldn't compete with Blockbuster & closed their stores years ago.

[warren oates]

Not only did Blockbuster cheat and lie to get its late fees, but the incompetence of its late-fee accounting and accountability extended all the way from the in-store clerks (who routinely failed to scan titles back into inventory and/or file them in a timely manner or correct location) to the highest echelons of the corporation which at one point literally had its own collection agency (or pretended to?). From which I got a letter. For a few dollars worth of late fees. That I nevertheless did not, in fact, owe in the first place. I would dance with glee on their grave if they hadn't put all those great local video stores out of business in the process of becoming the useless behemoth that they were. They didn't have a great idea like Netflix or a venerable customer service culture like Amazon. They were the first to get biggest in their market and that's all.