Bye Bye Blockbuster, Not So Fast Netflix

Sep. 24, 2010 3:53 AM ET, , , , 15 Comments

by David Urani

The final credits began rolling on Blockbuster (BBI) on Thursday when it filed for Chapter 11, effectively ending its legacy. It's kind of saddening really; I can remember walking through those stores thumbing through VHS tapes when I was younger and who would have thought that Blockbuster, which seemingly had a monopoly on the movie rental business, would ever become obsolete. Well, that is in fact the case and the business that seemingly toppled Blockbuster singlehandedly is Netflix (NFLX). So now Netflix is free and clear to rule the movie rental monarchy once held by Blockbuster, right? I beg to differ.

A New Hope

Blockbuster never seemed to have trouble making the switch from VHS to DVD, but where Netflix really got its foot in the door was through its mail-in system. While you had to go to Blockbuster stores and pick up movies, Netflix allowed you the luxury of renting multiple movies at once through the mail, with the option of sending them back an unlimited amount of times per month for a new batch; and at a very decent price. $8.99 a month for unlimited movies is a sweet deal. Nevertheless, Blockbuster was able to hang in for a while; if you are the kind of person that rents just one or two movies a month going to the store isn't such a big deal, especially since you could get the movie without having to wait for the mail. Ever since 2005, Blockbuster sales have been declining.

Back to the Future

What really flipped the rental game on its head was the onset of internet streaming and Netflix was more than prepared for it. As long as you have a high speed internet connection, which most of us do now, all of a sudden you have the ability

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