Department of the Obvious (Blockbuster, Netflix)

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This week in Department of the Obvious, we find Blockbuster filing for bankruptcy. The only possible surprise is that it took this long. As chapter 11 was the inevitable outcome after failing to modernize their operation quickly enough and, in my experience, providing years of poor customer service. Fortunately, for them, they intend to emerge from bankruptcy proceedings having shed a ton of debt and still in business. As I tweeted yesterday, “The smart moves for Blockbuster are to shutter stores & double down on kiosks.” They’ve got a well-known, if sullied, brand and should work additional licensing deals to preserve their legacy and the business. Whatever that business turns out to be.

And on the other end of the spectrum… Netlflix, who has done a rather masterful job navigating these uncharted waters, confirmed the obvious: “We are looking at adding a streaming-only option for the USA over the coming months.” No surprise there — Netflix has repeatedly stated they expect digital video streaming usage to continue increasing, as shipments of physical DVDs ultimately decrease. The only challenge they’ll have is pricing such a service. Right now, the $9/mo single disc rental package includes unlimited online playback. And I can’t imagine they could take a digital-only package much lower. For comparison, the new discless Canadian subscription runs $8/month CAD. Unfortunately, at these price points, I fear we’ll continue to miss out on premium new releases.

8 thoughts on “Department of the Obvious (Blockbuster, Netflix)”

  1. The image above is duplicated on many sites across the web, but I couldn’t seem to track down the source. If anyone has any idea, please let me know so I can properly attribute and link.

  3. I find it interesting that so many people have such negative feelings about Blockbuster.

    I remember the days of Mom and Pop video stores. The ones I used were nothing special.

    I do think the fear of accumulating fees for overdue movies is very real, but before Netflix, all video stores created this problem.

    Ever since Blockbuster stores started their various subscription-type models (first, in the stores, then by mail, then by mail+store exchanges) I’ve been very pleased with their offerings. I’ve been a subscriber of their BlockBuster Online service since 2005. Especially with the addition of in-store exchanges, I really enjoy the service.

    At the two BB stores closest to my house, the selection is pretty good (of course, the more obscure titles I get via mail), including Bluray. The staff is pleasant and helpful, and the stores seem pretty busy with customers renting movies.

    I’m sure streamed movies will get there, but for me, for now, I appreciate the quality of movie video and sound available on disk. I’d say 70% of what I get is on Bluray these days.

  5. Dave,

    You’re right about the stores, but I don’t know if you realize that NCR owns the Blockbuster kiosks and is only licensing the name. I can’t see this being a huge moneymaker for Blockbuster, but it’s great for branding and covering locations where stores are not profitable.

    Blockbuster already offers movies through devices (TVs, 2wire box, etc.), but they’re competing against the well-funded and DVD seller Amazon, and if they go after streaming they’re fighting Netflix & Hulu, and the others expected to enter the space.

    Blockbuster was selling PS3s and other gaming systems in stores, so maybe a reincarnation as “BestBuy light” stores in profitable locations? Best Buy could use a competitor, and maybe Blockbuster has a shot in this space?

    It’ll be interesting to see what Blockbuster management does when they emerge from bankruptcy as a leaner, more agile company.

    – Mike / HackingNetflix

  6. Yah, I’m aware. The 2wire box was discontinued long ago and is no longer listed on their site. I actually still have the one I purchased (it was horrible) – I wonder what would happen if I power it up?

    I don’t know how well those PS3 or TiVos were selling in-store given how far they had to drop the prices on the TiVos to unload them.

  7. It is time for Amazon to just buy Blockbuster and turn those storefronts into retail space. Use the Blockbuster name to rebrand their VOD service and expand it as well as continuing with the rentals by mail. Then using all the sales data from the Amazon website, stock the stores with the items that sell best right there in that zip code. Have kiosks in store to allow people to order from Amazon whatever they do not have in the store. Allow people to have items shipped to the store, allow people selling on amazon to ship from the stores. These could be the idealistic embodiment of a virtual store in the physical world. Give ebay a run for their money in easy of use of selling your stuff. Oh don’t forget about loading up your Kindle with books while you are on the Amazon wifi connection. The stores are already in place, someone already did the leg work of finding the good locations and setting up the leases. Lets see them get used!

    Too easy huh?

  8. Good riddance. Seriously, such crappy execution and so little vision. More companies that are led so poorly should go down like this.

    I don’t know how many stores will be shuttered, but I can’t imagine it will help Blockbuster’s stuttering online or mail order services to have the company go bankrupt and shutter most of its stores.

    And unfortunately Netflix execution has been near perfect. Sorry to say but this backruptcy won’t be changing anything.

  9. One thing people overlook about Blockbuster was the breadth and depth of their database, broken out by location and users’ viewing preference. No 2 stores carried the same inventory because of this, the savings from which probably kept BB in business far longer than it deserved.

    In re-organizing around its online (Internet/ OTT) service, BB is likely to exploit this in competing against Netflix (maybe by teaming up with Google TV).

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