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Blockbuster made it official today, filing its long expected Chapter 11 bankruptcy, with a line of creditors that includes its product suppliers like Fox, Sony, Universal, Warner Bros and Disney. It seems unfathomable that given Blockbuster’s supremacy at one time–think of all the mom and pop video stores that went out of business when Blockbuster set up shop nearby–the corporation could not have been more forward thinking. It could have owned the VOD and rental by mail space dominated by Netflix, and it got its head handed to it by Coinstar’s Redbox, which offered the same DVDs in supermarket kiosks for 25% of the rental prices charged by Blockbuster. Its forays into those areas came too late because they were locked into the brick and mortar game plan. While Carl Icahn is reportedly buying up Blockbuster debt and somebody might take a shot at resurrecting Blockbuster and its $1 billion in assets, it might well be too late to establish itself in VOD and as a buyer of pay TV rights for films, as Netflix is now doing at a fraction of the costs incurred by Blockbuster to maintain its 3000 stores. It’s a cautionary tale about standing pat when the sand is shifting under your feet, and Blockbuster’s woes are similar to those being felt by brick and mortar bookstores like Borders and Barnes & Noble. They’re also hard pressed to compete with web rivals like Amazon, serving up both paper books and e-titles without having to pay rent, the light bill and staff the cash registers.
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If you want to talk about another monolithic company that kept its head in the sand, take a look at Eastman Kodak. They sat on their hands and watched as the digital era swept passed them.
General Motors..
Hi,
Actually, did you know that Kodak developed and commercially released (one of) the first, and it was relatively high-tech, Digital Cameras (old Polaroid also did).
Kodak also spent lots, and subsequently developed OLED display technology with many patents.
The problem was the disconnect between nacsent before-its-time technology R&D, and quarter-to-quarter daily management and the resources needed for commercialisation/market-ownership.
Kodak were not General Motors which spitefully killed the EV1 and acted against the co.’s fiduciary duty to shareholders.
Kind regards,
Shakir Razak
While agree with the General Motors comments the same can not be said about Kodak. Kodak developed the first digital camera in the ’70s and every digital camera to this day uses technology licensed from Kodak because of their foward thinking development of the camera all the way back then.
I think the time is right for some NetFlix competition. I hope Blockbuster comes back.
Only a fool would subscribe to Netflix if they have a Blockbuster nearby. The combo of in the mail movies and and in-th-store movies is hard to beat. I’m rooting for a comeback.
Blockbuster also made filmmakers re-edit their films to be considered for store shelves.
Ding Dong The Witch is dead.
Good point.
Fat, corny, and dumb, they reflected and amplified an unsavory, insipid side of American culture. By taking the low road to broad domination, they’ve been sunk.
(An urgent lesson, by the way, both for American foreign policy and our too-big-to-fail-but-plenty-big-to-plunder private and shadowy Federal Reserve banking system.)
It isn’t just that Blockbuster was technologically challenged. It was their downright hostile policies toward customers that tainted them early on: charging a rewind fee, strange math on what constituted a late fee, refusing to carry films depending on their rating or if they offended particular religions, pulling titles the moment they dropped in popularity, and so forth. I once bought the whole VHS set of “Eyes on the Prize” at their “for sale” table and when I paid the clerk I asked, “Why are you dumping this great series?” The clerk — who was African-American — said, “Oh, they only got it for Black History Month and now that it’s over they don’t need it any more.”
The question now is Who pays the filmmakers who had a piece — no matter how minuscule — of the rental fees that part of the duebill to the distributors?
You’re spot on. You can’t expect to survive as a business by screwing customers at every step of the game.
You’re next Direct TV!
Santayana, I loved your question. Who pays the filmmakers their piece of the backend once distro profit is accounted from gross revenue? Unfortunately, that’s a rhetorical question that’s been asked for decades, before even Blockbuster came along, and one we’ll be asking for many more years to come, and in many other distribution models. “Read your contract,” “hahahahah,” or “what profit?” are common answers given by attorneys when this question is posed with a straight face. Ultimately, Blockbuster’s bankruptcy might give studios another line item to play with in their ledgers, but that’s about it. Filmmakers will make what they’ve always made: whatever upfront fees they negotiated into their deal.
So true. I always tell filmmakers to get as much upfront money as possible and be prepared to get screwed out of any backend money.
Why do so many talent people and their agents keep asking for back end deals then? Can’t ‘talent’ just skip this bitching and moaning and all the wasted dollars on lawyers and auditors and P&R departments and just work for a good paycheck?
I know I’d be more than happy to take a $20mm payday for 10 weeks of work and call it a done deal!
I think everyone except the snoozing former leadership at Blockbuster saw this coming. The business landscape changes rapidly thanks to technology. You either keep up or get left in the dust. That’s across the board.
Fuck Blockbuster. Years ago part of their STATED BUSINESS OBJECTIVES was to incur maximum late fees. It accounted for a massive percentage of their profits, though the exact number escapes me. Maybe 25%? More? They could come out with shipped rentals and streaming for FREE and I still wouldn’t leave Netflix. So long, and good riddance.
Ah, bookstores!
Bookstores Now Selling To The Rats
They are soooo there already!
Yes, yes lets DO think of all the Mom and Pop video stores that were put out of business by Blockbuster. And then, let’s offer a toast to karmic revenge.
Payback is a bitch, ain’t it?
Here-here!
Back in ’01, I returned a movie late. Had to pay double the rental fee. Haven’t been back to one since. 10 yrs later, they’re dead. Can’t say I’ll miss them.
Bye bye to a corporation run by the most arrogant, creepy bastards ever.
All of their customer policies were bait-and-switch scams, designed to
hoodwink and swindle their renters. (Anyone remember how their “no late fee” scam landed them in hot water with almost every state attorney general? Anyone remember how they didn’t like the terms on “American
Beauty”…so they stocked exactly one copy per store, hiding it behind the counter?)
I can’t think of this happening to a more deserving collection of
douchebags than the BB hierarchy. Adios, schucks.
I used to work in a Blockbuster in a heavily African American neighborhood. But someone in a corporate office in Dallas made all our purchasing decisions. I was the one who had to explain to customers why we got 2 copies of the latest Eddie Murphy movie, and 20 copies of the new Willie Nelson Farm Aid concert.
All their stores had that sameness. Which is to say, LAME-NESS. No ability to stock a store any differently. So if you lived in, say Studio City or Hollywood, or Santa Monica, your Blockbuster would have 70 copies of the new Pauly Shore comedy, but nothing at all by Buñuel.
The one good thing about a monolithic company like BB going bankrupt are the inevitable “Going out of Business” sales where a Bunch of DVDs can be sold for $1/Lb. Guess I know where I’ll be doing some Xmas Shopping this Year.
Blockbuster had to see this coming.. they dont put their money back into the stores.. the stores look dated.. I only truly seriously go if I HAVE TO..I like Redbox better
I think the problem here is a company with fat margins being desperate to cling to them.
If Blockbuster was willing to match Netflix on price, they could have killed them by exploiting the impulse rental market that mail-order cannot accomodate. But they never were willing to do this, because they hated how subscription rental made their most profitable customers (high-volume renters) less profitable.
Always hard to get the market leader to accept that a new competitor might force them to lower their margins if they want to remain the market leader.
This will be great! Should be a fire sale of DVDs! I’m hoping for 5 for $20!
Their Wal-Mart like approach to content control (re-edits or outright exclusion) was enough to put them in the good riddance pile for me years ago. If Fox groin shot comedies ever had a perfect retail partner this was it.
This past year I taught a film class at Berkeley and arranged for the students to have free Blockbuster Online memberships for the movies they had to watch outside of class. More than half of them kept their Netflix accounts, and a few used Amazon downloads instead.
That spoke volumes to me — broke college students would rather PAY to use your competitor’s service than use yours for free, because you aren’t giving this generation what it wants. They could not fathom not being able to just download the movies they needed to see, and were annoyed that they had to wait for DVDs to arrive in the mail. (Of course, back when I took this class, we had to go to the library, get the VHS tapes from the reserve desk and sit at a viewing station).
Keep that in mind when you emerge from bankruptcy, Blockbuster. If you do.
In L.A., I supported the 20/20 chain, and occasionally Rocket Video, ‘cus those stores actually branched out into foreign and arthouse films more often than BB. Really, though, DVD in general’s what killed that chain. You didn’t have to pay $100 or wait a year, to own a movie, like you did with VHS, and so rental in general became obsolete. Yeah, Netflix managed to bring the idea back, but that has more to do with the fact that the studios have been dumping crap into theaters specifically meant to take advantage of the DVD bubble, and thus devalued the product. People still buy this stuff, rather than rent it, just not at the same rate as before Shrek 2.
“hit the road jack, dontcha come back no more, no more, no more…”
Overhead kills. Always has and always will.