Blockbuster: Another Nail in the Coffin

Can you hear that, Blockbuster (NYSE: BBI)? It’s the sound of obsolescence.

With the news that LG Electronics (LGERF.PK) will be producing high-definition televisions that will stream movies from Netflix (Nasdaq: NFLX), you can add another nail in the coffin for Blockbuster.

At first, Netflix’s threat to Blockbuster seemed laughable. But now, with more consumers cutting back and looking for instant entertainment, low monthly costs and the ease of Netflix are really starting to squeeze Blockbuster.

And that’s not to say that Blockbuster hasn’t given its rivals a hand. There was the misguided and disastrous attempt to merge with financial-albatross Circuit City (CCTYQ.PK), the botched roll-out of the “no more late fees - just other fees” program and the complete failure to see how a vindictive fee and collection system could alienate its customers.

But the competition isn’t just coming from Netflix. Redbox’s easy-to-use, dollar-a-day rental system is also stealing revenue. Most Redbox vending machines are located outside of parent company McDonald’s (NYSE: MCD) and inside grocery stores. Often in the same shopping centers as Blockbuster.

In the same way Eastman Kodak (NYSE: EK) missed the advent of digital, Blockbuster missed the transformative power of the Internet and subscription rentals. It’s playing catch-up. And only time will tell if BBI can recover.

Disclosure: None

Comments

[enrique:]

you need to do some real research, blockbuster also has a streaming product,,,check out their website....then, if you have any sense...re-track this waste of time....

Jan 07 08:14 AM

[bookman:]

Blockbuster's site is slow and difficult to navigate. They have redone it at least three times since I joined which was at the very beginning and it has never gotten quicker or easier to use. The store exchange was great at first but now in order to slow down the amount of rentals given per month the next is not shipped till it gets to the distribution center. It seems like a subtle change but for a three movie at a time subscriber I know get 6 less movies a month. Very Long Wait means we will never have and the stores are more about games and sales than rentals. The flooor space to older releases was once agian reduced. Now they stack instead of full display. Wasn'tr that their inital draw over the mom and pop's of the early days. Sadly they are done.


On Jan 07 08:14 AM User 131738 wrote:

> you need to do some real research, blockbuster also has a streaming
> product,,,check out their website....then, if you have any sense...re-track
> this waste of time....

Jan 07 09:08 AM

[svosavvy:]

bbi hasn't been legitimate competition for nflx for some time now. nflx has graduated to a new set of competitors, ones that are more on par for this well run company. The competition is now vudu hulu aapl and other internet media companies. This should scare cable into changing their model before they become an infrastructure play. long nflx, short nflx puts

Jan 07 10:12 AM

[Konsta:]

an opinion is like an asshole in that everyone has one, hopefully now people see that even "legitimate" pundits' opinions are not worth the price of a toilet paper roll, let alone those of wannabe hacks peddling bullsh-t penny stocks. Blockbuster is probably really undervalued, that's my opinion, based on looking at their balance sheet and revenue and income statements along with the valuation. But hey, you never really know do you. And don't listen to anyone that says they do, they are either liars or fools

Jan 08 10:27 PM

[Salesman:]

Blockbuster is one of the worst managed company I ever seen. Ten months ago I submitted a proposal to them that will save them millions of dollars a year. They keep making excuses and dragging their feet. I finally have given up. They are in business to make friends and not money. At this point I dont care if they make it or not.

Jan 14 10:09 PM