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Could Blockbuster Be Going Away In 2011?

by Sean P. Aune | July 15, 2010July 15, 2010 8:00 am PDT

Rumors are circulating that the Blockbuster home video rental chains may be no more by the end of 2011. If this sounds familiar, it’s because it is, and rumors of the company going under circulate almost every week, but this time we do have to say it’s looking a bit more definite.  With Movie Gallery already gone, is it so far fetched to believe that Blockbuster won’t suffer the same fate?

rentalstoresThe rumors of Blockbuster being on the verge of collapse have popped up from analysts every year as of late, but with chapter 11 bankruptcy being discussed again, a $65 million dollar loss in the last quarter and its stock plunging as low as $.24 a share, it seems like its only passing the time at this point.

Blockbuster still has 6,000 stores, so it’s difficult to picture it just disappearing one day, but the same could have been said of the 2,400 Movie Gallery stores.  Just because a company has thousands of stores doesn’t mean its invulnerable when it comes to financial woes.

I include the much smaller Hastings chain in the image to the right because with under 200 stores, it may be an example of what video stores need to be to survive.  I have a lot of personal complaints about Hastings as they price absolutely everything at the maximum suggested retail price, but it still does a brisk business in rentals.  The stores are also offering a mix of products from books, music, toys and so on in addition to movie and video game rentals.  Blockbuster and Movie Gallery both hitched their wagons to dying formats and expected those to carry them forever.

Then, beyond the formats, you had companies like Netflix and Redbox which don’t have to deal with nearly the overhead the retailers did and could do the same, if not more, with less employees and next to nothing in rent compared to these other companies.  Sure Redbox may only be doing DVDs for now, but they aren’t paying employees, they are paying next to no rent and they got better pricing due to those 28 day rental delays.  Netflix is going for the jugular when it comes to streaming video, do you even want to contemplate how much less that costs?

Brick and mortar video rental stores that do nothing beyond rentals are doomed.  The death of Blockbuster is just a matter of time at this point, and the longer they draw it out, the more painful it will become.

What say you?  Are you ready to see Blockbuster stores go away?


Sean P. Aune

Sean P. Aune has been a professional technology blogger since July 2007, but his love of tech dates back to at least 1976 when his parents bought...

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