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Blockbuster in the Dead Pool?

Posted by susabelle at 6:25 PM on March 24, 2010

It looks like Blockbuster is fatally wounded, and may not be around much longer. The company has been suffering severe financial losses for years now, and this is probably an inevitable end to the company. It is sad in a way, but in another, there were some huge mistakes made that cost them any chance of a future.

Why are companies like Red Box and Netflix making money hand over fist? Because when the market changed, they changed too. Red Box $1 rentals, available on virtually every corner, are a win-win. For a buck, I get a new-run movie for the night. I can pick it up from any Red Box, and return it to any Red Box the next day. If I don’t return it, they charge my card, and charge it for every day that I have it and don’t return it. I can even get free rentals by buying a large drink at McDonald’s (hello, Diet Coke!) and am likely to get one for free and rent one to boot. Two for one! I can even reserve a particular title via a handy iPhone app so that when I go to my favorite Red Box, my movie is there.

And for $15 or so a month, I can have a Netflix subscription and rent as many movies as I can conceivably watch. I can even watch some of those movies right on my computer (about 25% or more of Netflix movies can be played “on demand,” including some new releases). So if I have two movies at home that the family is watching, and I happen to be in another city, I can watch whatever I want on demand on my laptop in a hotel room a thousand miles away. All for the same low cost I’m already paying in membership. If movies are turned around quickly here at Casa Susabelle, we can have six movies a week run through our queue. That’s 24 movies a month. That’s less than a dollar a movie, not counting the on-demand function. And I can rent new or old movies, television series, you name it. I have yet not to find a movie I wanted to see through Netflix massive online store.

Blockbuster toyed with a subscription program, but it was cumbersome and slow. They toyed with lowering their prices, but that didn’t help either. The fact was they were too late into the game; they didn’t change when they should have. They ran all the smaller video stores out of business, but then didn’t see the model changing right in front of them. Now it is too late. They will not overtake Netflix, or Red Box.

I don’t think there is anything they can do to save themselves now.

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