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Blockbuster chain mulls bankruptcy
Make it a Netflix night. Or make it a Redbox night. Or make it an On Demand night.
But “make it a Blockbuster night”?
Dallas-based Blockbuster wishes it could press the rewind button and return to the days a decade ago when it was the giant in the video-rental business and widely seen as the corporate mega-chain forcing mom-and-pop stores out of business.
Blockbuster announced this week that it is suffering severe cash-flow shortages and is considering filing for bankruptcy. The company stock value tumbled to just 28 cents a share at the close of Thursday’s trading, two days after a Tuesday night regulatory filing that said the video giant was suffering “significant liquidity constraints” that, along with its debt load, “raise substantial doubt about our ability to continue as a going concern.”
And Blockbuster is not alone. Movie Gallery Inc., the nation’s second-largest movie-rental chain and owner of Movie Gallery, Hollywood Video and Game Crazy stores, filed for bankruptcy protection in February and has since closed 48 percent of its domestic stores. Almost all stores in the Washington area were closed in the process - the company Web site lists only two stores remaining inside the Washington Beltway.
Blame the new shape of the home-movie market. Film and video writers say the concept of a chain of video-rental stores has become an obsolete business model because of how technology has transformed the home-movie experience and will continue doing so.
“I think it’s all going to be handled online,” said critic Noel Murray, a contributing writer for the Onion AV Club.
Although he noted the success of DVD rental kiosks such as Redbox, Mr. Murray thinks the days of obtaining a physical disc when renting movies will end soon, replaced by movies streamed or downloaded directly to computers or television. He cited boxes such as the Tivo Premiere, a not-yet-released DVR system with a Netflix connection that gives access to movies with the touch of a remote as opposed to a drive to the video store.
Mr. Murray said he could not see any way for brick-and-mortar video stores to stay in business in the future, with the only exception being very small, independent shops carrying lesser-known, hard-to-find films. He said he expects outright purchases of discs to continue as a viable business.
“You’re going to be getting them through your computer, or you’re going to be buying,” he said.
Film critic Matt Prigge, a contributing writer for the Philadelphia Weekly, agreed that instant access to movies has become so attractive that rental stores are on their way out.
“That seems to be the path that we’re heading,” he said, though he added that he enjoys the experience of going to a rental store, particularly mom-and-pop shops, because they offer a personal touch and can offer hard-to-find titles.
“But it is so cheap to have a Netflix subscription, and you can get so much with it,” he said. “It seems that Netflix had the right idea, and Blockbuster was slow to capitalize on this.”
Nevertheless, a Blockbuster spokesman insists the company will remain, though not with the same model that barreled the company to dominance in the 1990s.
Randy Pruitt said his company closed 500 stores in 2009 and is planning to close between 230 and 275 more stores in 2010. The company owned about 3,500 stores in the U.S. in January, with franchise shops.
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By Andrew P. Napolitano
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