The other day I found an article in the Time magazine informing that Blockbuster has been declared in bankruptcy on last Sept. 23th. The company is going to close about two-third of its outlets. Imagine this company has 3,500 stores, 25,000 workers and 7,500 of them are full-time workers, and more than a half could be unemployed in the following months. Analysts think that bankruptcy could give the company the opportunity to provide movies to its costumers via vending machine, at this moment the company count with 6,630 DVD dispensers, also by mail and Internet. It seems to be that people think that the company still has the possibility to survive. Blockbuster was the retail chain that once dominated the industry and now is in bankruptcy and trying to compete with companies like Netflix, Apple , Amazon, and Walmart. How companies like Blockbuster can just fail like that. Maybe the company did not take serious the complexity and risky of the situation and when It came to react it was too late. The advance in technology is moving at high speed so companies need to be prepared for Blocbuster Bankruptcy/The New York Time
According to Clayton Christensen, a professor who studied technological change and its effect on large companies from Harvard University, “many of the decision that led Blockbuster to bankruptcy might have appeared rational at the time, but when faced with a threat by disruptive competitors like Netflix, the circumstances were different. Decision that in other circumstances would have made sense, instead drove the company into the ground.”
What I found incredible is the Nuevo Dia newspaper just published an article about the huge sucess of Blockbuster in Puerto Rico. At http://www.elnuevodia.com/depeliculaelexitolocaldeblockbuster-781801.html you may read the story about Susana Santamaria who owns 13 stores in the Caribean island out of the 378 store in US. And she is doing more than great!
ReplyDeleteThe trick of her sucess is that she is not buying movies or suplies from the Blockbuster company. she buys from the best option she may find in the island and also included Haagen Dazs, wine and beer as part of her merchandize!
Another part of BlockBusters demise was a significant portion of it's business built around penalties or EVF (Extended Viewing Fees) as they call them in the annual report. Each dollar of EVF fees is an annoyed customer. I couldn't imagine my business depending on customer failures to make up such a large part of my business.
ReplyDeleteThese were not revenues gained with a customer's smile on their face. I believe the business culture which assumed penalty gouged customer wouldn't look for kinder terms is also a consideration that wasn't looked at.
Consider this "In 2000 Blockbuster collected nearly $800 million in late fees, accounting for 16 percent of its revenue. Last year, those late fees had plunged to $134 million, or just 3 percent of the company's revenue." (Anderson, 2010)
The alienating policies like charing fees for non-returns of movie during declared state of emergencies and the constant up-selling drove me away.
Anderson, M, & Liedtke, M. (2010, September 23). Hubris — and late fees — doomed blockbuster. Retrieved from http://www.msnbc.msn.com/id/39332696
I understand the death of modern movie stores. It seems any movie you would ever need can be ordered on damand or via netflix. In fact, often enough you can stream straight off netflix. Why would you leave your home to shop around a store that only rents games or movies. There is no added benefit to going to a movie store. Its not an "experience" like shopping for clothing where you can see and feel the product. You can't watch a preview in blockbuster if your curious about a movie unlike from home. Blockbuster, hollywood video, and countless others thought wrong. The times have changed. Media has affected all. they should have gotten into the business before netflix even began. Yes they may be trying to follow the trend now but is it too late. I think so. Blockbuster has a massive inventory of dvd's and games. If you can get almost anything streamed from the internet why do you need to purchase a 2nd hand hard copy? I feel that they will never unload their inventory and never really be able to recoup those assets to cash.
ReplyDeleteGoing to a video store and renting a movie on a Saturday night is not going to be around much longer. The innovation of online video and the new adaptations of ondemand on our televisions makes it much easier to rent a movie without having to get off the couch. These movies may not always be as new as they are at the nearest blockbuster, but I feel the ease of ordering movies through a cable box will overtake this thought that available movies are not as new as they should be. Cable companies are able to purchase these movies and make them available ondemand by offering the 'renting' price of these movies at a lower price than in the video store. It is no surprise why companies such as Netflix, Apple, and Amazon have seriously increased their revenue due to online video content.
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