Netflix Killed the Video Store

[marmar]

from 24/7WallStreet:




Bye, Bye Blockbuster; It Was Fun While It Lasted
Posted: September 22, 2010 at 6:41 pm



Blockbuster Inc. is going bust.

The struggling movie rental outfit is set to file for Chapter 11 bankruptcy tomorrow and receive $125 million in debtor-in-possession financing to forestall the inevitable liquidation, according to Bloomberg News. Nimbler competitors such as NetFlix Inc. (NASDAQ:NFLX) have eaten Blockbuster’s lunch for years and will continue to do so.

For reasons best understood by him, billionaire Carl Icahn took a shine to the retailer and got on the board in 2005 after a successful proxy fight. Chief Executive John Antioco left the Dallas-based company in 2006 after Icahn complained about the size of his bonus. Many investors wondered if Icahn would do more than saber rattle and hope for a big profit. Ichan has stuck with the company, which has stopped paying interest on its $900 million in debt. But even the super-hyper investor has his limits.

“He resigned as director in January and in March sold most of his 16.9 percent common share stake,” according to Bloomberg, adding the billionaire “who bought about one-third of Blockbuster’s bonds, will join with a group of creditors in swapping their debt for all of the video-rental company’s stock.”

Why? To sell the company for scrap.

Blockbuster is done. It failed to adapt to changing market conditions. All that’s left are arguments about the funeral arrangements.


-– Jonathan Berr



http://247wallst.com/2010/09/22/bye-bye-blockbuster-it-was-fun-while-it-lasted/#ixzz10MDd1K5q

[JonLP24]

1. Hollywood Video also went down too

I think they have a few stores open. I gotta hurry up and replace my Xbox 360 at GameCrazy which is part of Hollywood Video.

[bikebloke]

55. Hollywood Video drove me to Netflix

They started stocking mostly straight-to-DVD crap on the premise that anyone in the mood for a flick wouldn't walk out empty handed.

Plus at my local store, the clerks would let returned DVD's pile up for days (in huge stacks) without checking them in. Then you'd get hit for late fees.

[uncommon]

2. Unfortunately for the old style video stores, Netflix is just vastly superior for consumers.

Convenience and the availability of online content, along with the very low cost, is just not going to be beat.

[mainer]

3. Just like Amazon is killing Barnes and Noble

People seem to prefer shopping from their computer screens.

[stray cat]

4. Evolution

[eallen]

13. Yes, but in economics, it is called capitalism.

But yes, it's an evolutionary algorithm. And why things change so fast.

:hippie:

[Fla Dem]

54. We can celebrate the death of Blockbuster et al, but also look at the lost jobs.

I was just as angry at the big box movie rental stores gobbling up all the mom & pop video stores in the 1990's. But a lot of those stores provided employment for many high school, college and non-college people. With the stores closing, there will be fewer parttime positions available for young people just starting out, or for the Moms that could only work parttime. Along with video stores, record stores are also closing as more and more people download tunes. It's just not the physical store that goes away, but also all the ancillary jobs that go into supporting video and record stores. Just think of the print shops not printing album, cd or dvd covers, or the manufacturing companies that made the jewel cases for cd's or the covers for dvd's, distribution warehouse jobs, corporate support jobs. These aren't high paying jobs, but they are the jobs of the middle class and they are disappearing as new technology eliminates the need for actual person to person services.

I'm not against technology, I get my videos through the mail, I'm just saying that as much as we are gleeful over Blockbuster's demise, there will be a lot more people suffering economically.

[lunatica]

5. This was inevitable

I'm sure the early 20th Century saw the demise of perfectly good companies which simply couldn't compete with new ways of doing business. Blockbuster could have seen the writing on the wall and gone digital too. They'd at least be able to compete with the new technology.

Why they didn't capitalize and do the same thing Netflix does is puzzling.

I wonder the same thing about the oil companies. Why don't they capitalize on the obvious peak oil facts and go heavily into alternate sources of energy? They can do it, but they'd rather pay politicians off and stay put. I guarantee that if the oil companies wanted it we'd already be using alternate energy for cars, and they'd be raking in the money and in complete control. Not very visionary in my opinion.

edited for spelling

[Bluenorthwest]

23. Netflix process is not easily duplicated without their software

There are reasons others can not just 'do what they do'. Proprietary systems. In fact, Blockbuster did try to do that, and was made to cease by Netflix in court.

[MattBaggins]

39. Actually they may have been more an example of patent abuse.

there was nothing magical and mythical about the software. They went after BB for implementing a different method of the mail rental system which should be fine. Businesses patenting basic ideas and methods rather than specific hows is utter crap.

[terrya]

6. I have mixed feelings about it.

A couple of video stores in my area have gone out of business....I'm sure Netflix is a big reason why. So, I lose the convenience of walking to those stores and renting a movie.

However...I am extremely pleased with Netflix. I'm on their 2 movies at a time plan. Which I can keep "as long as I want" (although I haven't tested what "as long as I want" really means...

You can watch movies on Netflix instantly via online. They have a great catalog of movies. And their customer service is first rate. Nice, helpful people you can get on the phone quickly. I've received damaged dvds in the mail...I let Netflix know, and they not only sent me a replacement, but they also immediately sent me the next film in my Netflix queue.

[ejpoeta]

24. as long as you want means as long as you are paying for the membership.

they are really good with getting movies to us fast which was not always the case. we had them a few years ago and it took forever to get movies. so i went with blockbuster because i like being able to go in and pick out a movie when i feel like watching it. but after awhile you run out of movies to rent. i decided to give netflix another try and the movies came faster. i think they have a distribution center closer then they did last time maybe. plus since they made it so we could watch movies through the wii the kids have been watching all kinds of movies and tv shows.

[Occulus]

62. The ability of Netflix to get them to us fast (I'm a subscriber now too)

is also a testament to the speed and efficiency of the US Postal Service (my own employer).

Remember this the next time anyone bags on the Postal Service. The fact that we get these DVDs through the mail so quickly puts the lie to the claims of "postal inefficiency" and "lazy, overpaid" postal workers.

[ejpoeta]

64. i marvel that i can put the dvd envelope in my mailbox and

it's logged as recieved the next day. i can send a letter and it will be clear across the country in 2 days.... for what is it, 47 cents. it is amazing. people just want to believe everyone else has it easy for some reason while we don't.

[NNN0LHI]

7. All the smaller family owned video stores in this area are still open and thriving

They just rent and sell adult movies now.

I don't think Netflix or Redbox does those ... yet?

Don

[marmar]

10. I remember talking to the owner of a small local video store.....

...... He said the adult section was the sole reason he was still in business.

[NNN0LHI]

14. They just completely switched over around here. Don't even mess with regular movies any more

Parking lots are full every time I drive by one.

Got a goldmine.

Don

[MattBaggins]

40. Which is in itself rather unusual given it's easier to get porn on the net

then it is to get the netflix stuff.

[Oceansaway]

8. $4.11 p/g gas helped web sales too....nt

[Blue_Tires]

9. high-speed torrent downloads and satellite TV are what did them in...

[ecstatic]

11. Their online/in-store hybrid plan wasn't bad at all

I canceled a while back because it was taking me longer and longer to get around to watching the movies... but they always shipped the movies super fast, and I had the ability to go into the store to get videos right away if I needed to. Oh well...

[marmar]

12. They didn't seem to do a good enough job of promoting that....

nt

[Bradical79]

21. Actually, they botched it pretty bad

At least from a business standpoint. The amount they made per rental ended up being way too low due to people renting thousands of dvds a month (probably pirates). So their solution was to try and drive away as many of the high volume customers as they could by raising prices and limiting the amount of dvds you could trade in at the store. Eventually it ended up being pretty much just like Netflix but more expensive. I'm sure Netflix's quick adaptation to on demand video didn't help either. That's part of the reason I've stuck with Netflix, I can watch a lot of different shows instantly through my Xbox 360.

[RobinA]

44. I Have This Plan

and have always loved it. I get movies so fast I don't know how they do it. Maybe Netflix will be just as good, I went with Blockbuster because it was a way better deal and was never disappointed.

[charlie]

15. Blockbuster killed a million mom and pops in its day

Wouldn't stock NC-17 titles, was far less likely to carry oddball indy films, and favored abominable pan-and-scan over letterboxing.

They were the Walmart of the video rental industry. Buh-bye.

[kenny blankenship]

38. I can't imagine being weepy at the demise of this shitty retailer. They were horrible.

A few local independent video stores survive in areas of Atlanta with lots of college students and neighborhoods of highly educated young professionals, but everywhere else in town it's Blockbuster AND NO SELECTION. No "classics", no foreign, no independent cinema. Just the dreck you could've easily seen in theaters in the last 24 months, if for some reason you had wanted to watch crappy movies. The fact that Blockbuster is now dying is reason to feel a little bit hopeful about the tastes of the American consumer.

[Hepburn]

16. Yep...

...my friend and I were talking about this the other day. In the shopping center by his house, there had been a Blockbuster there for at least 10 years. One day recently, it disappeared and a Chase Bank is going into its space.

However, when we went to a Blockbuster by my house a few months ago, for three movies, we could have gone to a regular movie theater. Not cheap, crowded and a bunch of wild children running around.

[ejpoeta]

17. i think if they would have adapted, they would have survived.

my sister has blockbuster and likes it because she can go into the store and exchange movies there. i liked it when i could do that too but i didn't get into town enough to make it worth it in the end. i have netflix now. and i can watch all the movies i want through my wii or my computer. then there is redbox in our walmart and i saw one in our grocery store yesterday. $1 a day. if they would have been thinking ahead they could have beat these competitors to the punch. there are kiosks going up all over now, but they are just using the blockbuster name and have no actual affiliation with blockbuster. my husband works on those machines. he said they are owned and operated by his company, ncr.

it's a shame to see blockbuster go under, but that's what happens when companies aren't looking for ways to improve themselves before they need improving.

[bpj62]

18. Evolution

In the words of the Buggles "Video killed the radio star'. As a prior poster said if you don't adjust you are done. Blockbuster domminated the home video/DVD market for almost 20 years. They drove small video stores out of business, but in the long run they failed to adjust to a rapidly changing market. RIP you will not be missed. I havent stepped inside a Blockbluster for almost 10 years.

[Bluenorthwest]

25. Great song, but the lyric is poetic not actual

Video changed the radio star. Television did not kill radio, it altered radio. Television also did not kill the movies. It altered them.
I suggest that if the radio star was dead, we'd not have radio stars. Rush isn't dead, he just smells like that. We'd not have sat radio, 24/7 streaminng net radio. I listen to radio from every city I have ever lived or stayed in. So it is not dead. It is just no longer all alone.
All of this to say that this business too will alter, the shops will not vanish, they will mutate. Blockbuster as a company has lost its way, but the retail end of video will have new forms that are not internet based as well as those that are internet based.

[xchrom]

19. i know it's Change -- but i hate models --

blockbuster, amazon, etc -- that kill off good mom and pop businesses.

there is just something so sad about that.

[marmar]

22. Very true......

And perhaps a change in the economy back toward localization will kill them off.

[xchrom]

27. I have become a 'locavore' consumer with as much stuff as

I can. Not just food -- but clothing boutiques, local made bath soaps,
Whatever I can.

But it takes a tremendous amount of energy from community and city
To keep it going.

Fortunately I live in Durham, NC - and. The
Movement right now is strong.

[Liberal Gramma]

32. Local is also a political statement

Most of the big box businesses are Republican to the core. They support Repugs politically with the dollars we spend there. If you buy local wherever you can, you may be supporting a mix of Dems and Repugs, but at least it's a mix. As an added bonus, you often get a superior product.

[xchrom]

35. and i add directly to my community -- these are people often with children,

who live work own homes etc -- right here.

i can't know all their politics -- but i want my life and theirs to be richer in all kinds of ways --
because it makes everything better right here at home.

[Binka]

42. We Miss You Here In Our Community

I know I am in freaky Santa Rosa but I am an OAKTOWN girl at heart. Place of my birth and baby Pey born just a mere 3 miles away in Berk Town. I swear you must come to wine country and party soon. The connects I have are fab (fuckin family), even if they are Pubs, they have the SHIT when it comes to the vino.

We can laugh at them when they pour us a glass of $120 bottle Etude Cab. We fucking hate their guts but we can drink their good shit and crack behind their backs. I do it all the time.:loveya:

[xchrom]

43. gasp!!! ETUDE?! girl you are singing my song!

well i have to get back there because i have family still back there -- and when i do -- i'll make a bee line for santa rosa.
i love, love, love it up there.

and we will party.

[Binka]

48. My BIL Has Breakfast With The Etude Dude Every Tuesday

The shit is sweet! I would love to take you to one of their pool bashes. They are still flummoxed as how to handle my gay son Ian, Ian is just still Ian, why would his being gay change things? Stupid fucks. What really cracks me up is my BIL has a grandson and he is the spitting image of Ian. I knew Ian was gay when he was 2. Hank is just like him.

My sister prattles on about Hank being "all boy". Code speak for please do not be gay. Fuck that, I had a sleep over with Hank and his sister and all Hank wanted to do was wear my clothes!

These idiots have a LOT of growing up to do.

[xchrom]

50. lol! atta boy hank -- oh my god that is SO funny.

well they'll really get a bang outa me!

you can tease them about it after and tell me the dish.

[cbdo2007]

20. Good - Blockbuster has a management problem

Really, we can ask over and over again, "why didn't they adapt sooner to the netflix model?" but still the management there doesn't understand that the video store doesn't exist anymore. They are only closing 2/3 of their actual store locations or something - close them all?!?! Nobody wants to go into a video store anymore.

The only way Blockbuster will ever come back is by getting rid of their current owners and management and bringing in some new, foward thinking people to run the place.

[backscatter712]

26. Distributing movies on physical media has become obsolete.

Netflix will still do it with their mailings of DVDs, but they know perfectly well that the real future lies in downloading and streaming movies over the Internet.

In that world, there's no place left for brick & mortar video stores. There will still be a market for movies & music on physical media, mostly for people who want to build collections, but that market's been snapped up by Netflix, Amazon, Best Buy. Blockbuster failed to adapt.

[snooper2]

30. Thanks, now I don't have to write that post :)

things change and business models have to change with them...

In two decades everyone will have videophones and full presence with voice services.

[MattBaggins]

41. That world is still a ways off.

People want to use those 50 inch 1080p/i 3D TVs they spent thousands on. Streaming of HD movies on the present backbone isn't fully feasible. Netflix will also have to deal with the various internet providers who see the money potential and will look to provide these services themselves. Couple that With the push to do away with net neutrality; and Netflix will go the way of BB unless they could convince the government to declare such moves by the major providers to be anti-trust violations.

[RobinA]

46. Do Many People

watch movies on their computers? Maybe I'm missing something, but when I watch anything on my laptop I get a headache after about 15 minutes. My desktop is in the den where I don't really want to watch a movie sitting at a desk. What am I missing?

[backscatter712]

58. A lot of people have media center PCs.

Now you can hook your PC directly to a big HDTV or projector if you want. Just have a PC serve as the nerve center of your living-room entertainment center. It can stream Netflix movies, or serve as a DVR, or play DVDs and Blu-Ray discs directly.

Alternatively, Netflix now has apps for the Wii, Xbox 360 and PS3 that let you watch streaming movies.

[Tatiana]

28. Too slow to adapt.

They were still trying to charge late fees long after Netflix offered a policy that let you keep DVDs as long as you wanted without incurring extra charges.

[otohara]

29. Blockbuster Killed Sound Warehouse

first....there's one good record store left where I live

[Cal Carpenter]

31. Well, Blockbuster killed the local video store first

And like most big corporate chains, it was an asshole of a business, an asshole of an employer...fuck 'em.

It's a shame sometimes but the times they are a-changin'...

[boston bean]

33. I think video on demand killed them.

[DainBramaged]

34. Way back in the 80's, when video was in it's infancy, and single speed VCRs were $995

the Mom and Pop video store sprung up like weeds, giving people a wonderful new business to start even as it became cut-throat by the 90's. And when the big chains like Blockfucker and Hollywood Thieves came along and put the Mom and Pops out of business because they were wide and deep in inventory, and offered rentals for cheap, it looked once more like the big box store would again crush the American dream.


For all of the Mom and Pop video stores around the country who lost that dream because of Blockfucker, I say let them go down like the scum they are. Three cheers for Netflix, the next best thing until we perfect video on demand. (If VOD was perfect, Netflix would be unnecessary).

I only feel sorry for the kids who will lose their jobs, some who ARE movie buffs and found Blockfucker a great way to feed their Jones.

[Hosnon]

36. I was hard on Blockbuster until I found out that they did try to build a Netflix-style

department way back when.

I think the problem they had was that the technology just wasn't up to speed yet, i.e., they tried too early.

But, yes, the business model is obsolete.

[madmom]

37. Ah but that's ok because ..

walmart is the bad one.
So before I get flamed IMO there is no difference between losing small local video stores and small local mom & pop grocery/convenient stores. Many will say..."but walmart treated their employees like dirt" I will say this was true in the past, but I worked for them and was treated and paid very well and would work for them again, while I do remember working for mom & pop stores when I was younger and hated it. As for their foreign cheap crap?...what kind of car are you driving? It seems to be they are only bad guys if WE don't like to do business with them, but we we do, somehow they are all right no matter what. Now flame away if you must.:eyes:

[taught_me_patience]

45. Actually, it was Redbox that drove the stake in their heart

Netflix only wounded them.

[geek tragedy]

47. Netflix, Wal-Mart, and Redbox.

Netflix provides better value and service, plus streaming.

Wal-Mart offers better prices and more locations for DVD sales.

Redbox provides more locations for impulse rentals for new releases.

BBI doesn't have a niche.

[scheming daemons]

49. And "On Demand" will kill netflix.

[cbdo2007]

51. Netflix already has "On Demand" for way cheaper than anybody else.

For $8.99 month I can stream as many movies/tv shows to my tv each month. Currently it's true that they don't have new releases available for On Demand but that will change in the coming years.

If Cable/Satellite don't lower their prices - Netflix will probably kill them too.

[eShirl]

61. not really. We have both Netflix and Amazon On-Demand (via Roku set-top box)

and we find ourselves only using Amazon for watching trailers and the occasional free TV show. A few times we found a movie we wanted to see, checked and Netflix already had it online.

[cbdo2007]

52. NFLX stock price up 200% so far this year!!

Damn, that's a hot stock. I think it's probably overbought right now, but after it corrects in the near future it should be a great buy again.

[Starbucks Anarchist]

53. Netflix has a huge selection that Blockbuster doesn't.

Plus the streaming option.

[Canuckistanian]

56. The Canadian Blockbuster is still up and running

I heard that a company spokesman said the Canadian stores weren't affected. Are they next to go?

We don't have Netflix in Canada - but it's coming, I hear.

[Spike89]

57. Inevitable really

Blockbuster really never had a chance to adapt to Netflix (or the real killer, streaming). The problem wasn't really management or that it didn't react to the threats. Blockbuster became a monster by being everywhere, building stores, leasing long term spaces, and stocking thousands of stores. Anything less and they would have been passed by Hollywood and even the more agressive regional chains. However, all that infrastructure became the millstone that drug them down.

There was no way to compete with Netflix. Netflix did not have to support all those expensive brick-and-mortar retail locations, they did not need to stock thousands of stores with hundreds of copies of the latest movies, and they didn't have to pay thousands and thousands of clerks. Blockbuster did try and do what Netflix did, but it couldn't do it profitably.

[Warren DeMontague]

59. I'm not going to weep for Blockbuster. I spent years working for a chain of indie video stores

and believe me, people who were paying attention knew this was going to happen 10 years ago.

[eShirl]

60. $9 per month flat-fee unlimited streaming movies, best channel on Roku.

I should say so.

[fishwax]

63. fortunately we've got a few great local and regional rental places here

We have a local store with a selection that is much better than Blockbuster (and rivals Netflix, actually), and I only pay $1 for 3-day rentals (including new releases). It's so cheap and convenient that we dropped Netflix. There's also a regional chain here that has a comparable selection and better prices than Blockbuster. They're apparently doing well and opening new stores.

And unlike Netflix and Redbox, you can get all the new releases on the day they actually come out. (The "Blockbuster Exclusives" aren't really exclusive--Netflix and Redbox just agreed to wait 28-days on New Releases from some studios in order to protect their distribution arrangements.)

When we move away from here, we'll probably get Netflix again, though, since most locations don't have such a great local option.