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Blockbuster Declaring Bankruptcy in September
The Los Angeles Times broke the story yesterday that Blockbuster management is telling its movie studio partners that the heavily leveraged company is going to file for bankruptcy reorganization in mid-September.
The move is oddly (and probably coincidentally) timed to be within days of a highly anticipated Apple press event to refresh the iPod line of product and -- maybe -- to introduce a new version of the Apple TV set-top device. The Apple TV box (which may be renamed the "iTV") appears destined to offer even more options for renting, buying and downloading streaming movies and television episodes.
In its most recent earnings report, Netflix reported that they'd seen 42% year-over-year subscriber growth, reporting over 15 million subscribers. Net income for the quarter was $43.5 million on revenues of $519.8 million. Blockbuster's most recently posted earnings (Q1 2010) showed revenues approaching $1 billion, but an operating loss of over $29 million.
Blockbuster -- itself largely responsible for the demise of the local "video store" -- has seen its luster fade next to Netflix, which is partnering with many different companies to make its streaming video service available via set-top boxes, TV sets and Blu-ray players. Many of those same devices also offer access to Amazon.com rentals for more recent releases, putting Netflix and Amazon into direct competition with Apple and its installed based of iTunes Store compatible devices (iPods, iPhones, iPad, Macs, PCs and Apple TV devices).
COMMENTS
Given the advent of Netflix, Redbox, YouTube and now this iTV, it really doesn't surprise me that Blockbuster is filing bankruptcy.
posted by golden eagle on 08/28/10 at 08:43 AM
I was amused recently when I pulled up to a gas station and saw a Blockbuster DVD vending machine being installed in response to a Redbox across the street.
Blockbuster failed to keep pace with innovative competitors like Redbox and Netflix until it was too late. Now that Netflix has added Blu-ray and internet streaming (which is good because DVDs are too easily damaged) and Amazon.com along with them, its pretty much over for brick-and-mortar video rental stores.
posted by Jeff Lucas on 08/30/10 at 08:09 AM
I'd bet they probably thought it would be a passing fad. With technology these days, never go to sleep on any new innovation. Who knows, maybe CDs and DVDs may go away, too, in the future.
posted by golden eagle on 08/30/10 at 11:07 AM
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