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The Blockbuster video chain slogan “Make it a Blockbuster night” hasn’t been relevant in a long time. But it was apt last night. Bidders battled through the evening to capture the distressed asset before Dish Network closed a deal worth $320 million at around 3 AM East Coast time. That bested rival offers that included one from Carl Icahn. The deal has to pass bankruptcy muster, but the bid includes $228 million in cash, which at least gives studios a chance to recoup some of the money owed for past merchandise shipments. Can Dish figure out a way to capitalize on a once mighty brand? I can remember standing in long lines on a Friday to rent a movie, and enduring exorbitant late charges because Blockbuster had more copies than rental store on the hot movie you wanted to see. But with the $1 Redbox option available in kiosks at every supermarket, and Netflix’s painless streaming program and mail rental system, can anyone remember the last time they even stepped foot in a Blockbuster store? Blockbuster’s brick and mortar strategy was exposed as a dinosaur strategy when those other services began to rise, and the behemoth moved too slowly to adapt to the times and protect its turf. Here is the official statement from Dish:
ENGLEWOOD, Colo., April 6, 2011 /PRNewswire/ — DISH Network Corporation (NASDAQ: DISH) announced that it was selected as the winning bidder in the bankruptcy court auction for substantially all of the assets of Blockbuster, Inc. DISH Network’s winning bid was valued at approximately $320 million. After certain adjustments are made at closing of the transaction, including adjustments for available cash and inventory, DISH Network expects to pay approximately $228 million in cash to acquire Blockbuster at the closing which is expected to occur in the second quarter of 2011.
“With its more than 1,700 store locations, a highly recognizable brand and multiple methods of delivery, Blockbuster will complement our existing video offerings while presenting cross-marketing and service extension opportunities for DISH Network,” said Tom Cullen, executive vice president of Sales, Marketing and Programming for DISH Network. “While Blockbuster’s business faces significant challenges, we look forward to working with its employees to re-establish Blockbuster’s brand as a leader in video entertainment.”
Completion of the transaction is contingent upon satisfaction of certain conditions, including bankruptcy court approval.
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I can’t remember the last time I set foot in a Blockbuster Store or any video rental store. Has to be at least ten years. With cable TV offering streaming on demand of contant, Netflix or the other options out there, who needs to make the annoying trip to the video store? I know I can always rent the film I wanna see from the comfort of my home. Blockbuster just wasn’t changing fast enough to keep up with everyone else innovating around them.
Dave M is a dork
Dave M is right.
Mike Flemming cannot be more wrong. I pay $20/month for Blockbuster mail service, which is identical to Netflix in every way except two: Netflix allows me to watch non-new release grainy picture movies via my PS3 and Blockbuster allows me to exchange my movies at the store for new releases 28 days before Netflix gets them. Redbox is nice if you don’t keep the movies for longer than one day. I like the convenience that Netflix and BB offer of not charging late fees. I enjoy going to the dinosaur brick and mortar stores to exchange my mail movies fore store movies. At the end of the day, BB can get into the kiosk business and the instant streaming business, neither Redbox nor Netflix will offer rental stores any time soon. With Dish behind them I believe that Blockbuster’s brick and mortar model will compliment tehse other services. The truth is, I used a kiosk once, and it cost me $5 to rent one movie. For $20 I watch about 10 movies month with Blockbuster. I switched from Netflix because watching old grainy movies on demand wasn’t that special for me, and I’d prefer to go down the street and grab a new release in Blu-Ray on demand.
More and more brick and mortar stores will be shutting down – and not just those renting/selling DVDs. Of course, that will mean communities will lose the tax base of those stores, and local jobs will disappear as well. Good thing McDonald’s is hiring 50K more workers. Pretty soon stores that sell/make food will be the only stores left. Welcome to the future!
The biggest problems with Blockbuster were A. their customer service stunk, and B. their constant changes to their policies regarding late fees, restocking fees, etc. This, plus they still never seemed to have enough of the movies and games we wanted, even before we upgraded to Blu-ray.
Good riddance. Dish does customer service better than anyone, I hope they can figure out a good plan for what still has strong brand recognition.
Matt, You must not have been to my Blockbuster, our customer service awesome, our customers love us and would vouch for us any day. Before you make an overall assumption about customer service try going to several locations.
I visit Blockbuster at least once a week, but it is to exchange or return a movie from the online service. I love the Blockbuster Online service – 5 in store exchanges each month. I am happy with them.
I can’t believe they still have 1700 stores open. All of them near me went out of business a couple of years ago except one, and the store just closed about 2 months ago. I feel like Dish Network only bought a name at this point….
Two advantages Blockbuster actually has today over Netflix: 1) Movies are immediately available for rental when they are released on DVD, in store or by mail. On Netflix, you have to wait around 28 days for most new releases past when they were actually released. This started in the past year and sucks.
2) if you desire another movie that day and forgot to mail back the last shipping, you can return the movie to a Blockbuster store and get a new one in its place up to 5 times a month…. so no wait time between having to mail the movie and wait for the new one to be delivered by mail. And no extra cost for DVD from store (which you can keep with no due date).
Years ago, when I was thinking of going to a mail DVD service, I compared the Blockbuster mail DVD service to Netflix. BB was a bit more expensive, but had the advantage that you could return your DVD to a store, for immediate return credit… meaning the advantage over Netflix was you could get your next DVD faster. But guess what? BB did not see it this way… they limited the store return to one per month! So here you had the one thing they had as an advantage… a string of retail stores… and they had a policy negate that! I wrote to them and told them they were missing the boat… that if they wanted to compete with Netflix they should allow unlimited returns to their stores, and that since they were already invested in the stores, it was a win/win for them. They wrote back to the effect that they did not want too many rentals per month, for the monthly fee. I knew then that they were doomed… I’m no businessman by a long shot… but it was obvious this was a poor judgment. I went to Netflix, love it, and watched the local BB get smaller, and now, die.
i did the same thing a few years ago. I don’t have a local Blockbuster but I was annoyed that I had to wait so long for new releases. Unfortunately, the average wait time for DVDs to arrive by mail was 3-5 days with Blockbuster; whereas, Netflix was 1-2 days. Moreover, Blockbuster never had enough new releases available so the wait time for DVDs to become available made the 30-day delay on Netflix a moot point.
High price to pay for a dead business. Explain the wisdom in that one…”cross-marketing and service extension business” of what? With 320 burning in their pockets, Dish could fund an entire division of new content and brand it with the lastest digital media marketing. Best deal Carl Icahn didn’t make.
For many years I’ve been able to successfully navigate renting from both Netflix, Blockbuster, and indie video stores like Cinefile with ease.
I love netflix, but what if ya want that hot Andrei Tarkovsky film on a friday night? BB won’t have it. So, we head on down to the local indi guy. Bam get my high class fix.
Only purpose BB served was to satisfy by burning need for a new release and the negotiated a window for those new releases that caused Netflix 28 wait period from the studios. Yes, I bought Black Swan blu ray cause I couldn’t rent it. That’s what they want, but it won’t last for long.
Going to a Blockbuster store is like going back in time. To 1995.
The stores look the same. Nothing has changed.
Good thing the rest of the world has stayed exactly the same. It’s a wonder that Blockbuster filed C11. It’s a terrific business model, coupled with a great customer experience!
Yeesh. It’s like Borders buying AOL.
Depth of title* is one thing, but width is something else, and Blockbuster seldom stepped up. At least with Netflix, if you want an obscure documentary, a foreign language film, or a TV show more than six months old, you can put it in your queue and it will eventually get to you, unlike popping into Blockbuster and hoping that the one copy they have of it will be available.
If Dish is willing to spend $320 million for a brand that is so reviled (viz this board), I have a closet full of old VHSs and DVDs they are welcome to buy for $100 apiece.
I just hope the filmmakers get paid their rental royalties, minute as they may be.
* Hint: never go into any video store that has a Stallone section.
Hard copies should have died over 10 yrs ago, technology was in place; the public is so resistant to any new ideas it’s difficult to gauge in advance.
Along with the famous Blockbuster name comes the memory of $5 DVD rentals and outragous Late Fees.
I used to be with Netflix and changed to BB for two reasons. One, I was sick of waiting a month to get new releases (this is BEFORE the 28 window was put into effect) and two, Netflix (still) charges more to rent blu-rays. BB doesn’t. I found BB to be overall cheaper and they still have an impressive inventory of titles online. From what I hear, nothing has changed with Netflix, because too many folks out there are willing to put up with it and membership is legion now so of course, they’ll never change. But even the BB online service is starting to drop the ball in some ways. Overall, the studios would rather we just buy instead of rent. But who the hell wants to spend $15+ on a title they’ve never even seen and aren’t sure they’ll like?! So you buy it, hate it, and then sell it used on Amazon for half what you originaly paid. That’s stupid and the average Joe will never stop renting. Streaming rentals through my Samsung blu-ray player is not a bad option… once they’re able to lower the high $6-$7 price point for each rental (in HD). It will be interesting to see how things play out. If Dish is smart and they want to reinvent BB, they will hopefully offer customers what Netflix can’t, like a more robsut inventory of blu-ray rentals, a fair window gaurentee for new release availablity, of course streaming too, and perhaps even cheaper (at least comptetive) fees compared to Netflix (and not charging more for blu-ray rentals!).
If there’s a way to make Blockbuster work, Charlie Ergen can make it work. I’ve been a Dish Network customer from the very beginning still have the receiver I bought myself at Costco years ago, when you actually bought the system and put it up yourself with a little compass they gave you.
Went to Blockbuster just yesterday…Exchanged two mailed DVD’s for two in-store DVD’s – Actually, got away from my computer and walked to the store and mingled while I looked at the product…Works for me!
Blockbuster used to censor their movies. BOO!
I don’t know, I use Dish – and I wish they had funneled that $320 million back into lowering our monthly fees for service. I can’t imagine how much additional cash they will use in trying to make Blockbuster viable in some way. I just don’t see this acquisition as doing anything to enhance the Dish name or service reputation.
I always find it amusing when people talk about Blockbuster not taking the challenge of Redbox and Netflix seriously. How, exactly, with thousands of bricks-and-mortar stores to support was Blockbuster supposed to “adapt?” They rode the declining business model as long as they could, outlasting all the other national players in the process. Dish will eventually close all the retail stores, liquidate the inventory, and strip mine Blockbuster’s IP for all it’s worth. Will it be worth $320M? The jury’s definitely out on that.
Sadly it is an old technology that had to go. I feel for all of the Leases, and jobs that are being lost, let’s not forget that people. But in reality this was bound to happen and the writing has been on the wall for Blockbuster since the late 90s.
Blockbuster needs to have a vhs section. There are THOUSANDS of movies that have never been/may never be released on dvd. This would pump up their revenue.
Also, more Blockbuster Exclusives. What that mean is that certain title is ONLY available at Blockbuster and can’t be found at a Redbox or on Netflix. But I love the idea of brick-and-mortar stores. These lazy teens nowadays need to get out and not rely so heavily on computers for everything.
cant even buy vcr’s anymore
does anyone give a crap that dish network charges $7.00 to RENT a movie? I know I do. I will only rent ppv boxing or ufc, and thats only because you cant watch it live anywhere else. $7.00 to watch a movie? Give me a break!!!!!!!!!!
@dan That is outrageous… I had no idea, and can’t imagine they think $7 will make it in this day and age. For renting movies that Netflix does not stream, you can use Amazon. That is, if you have a Roku set top box, or an Xbox, and so on. I think they only charge .99 cents per title.
I have quite a few Blockbuster gift cards that my local store will not take as payment saying they are protected under the bankruptcy laws, (who protects me with all these gift cards from my grandchildren who weren’t aware of a looming bankruptcy last December), has the takeover been resolved and how long do I have to wait till I can cash these gift cards in for the movies I want to watch, needless to say I’m not going to rent from Dish when Blockbuster is under them. I live in the West Chester, PA area and would like some resolution to this.