Slippery Slope Downhill for Blockbuster
James | Feb 28, 2010 | Comments View Comments
2009 and 2010 have been rough years for many business, one in particularly is the video-store rental giant, Blockbuster (BBI). Blockbuster once dominated the
video rental world yet now they are being build out by its main competitors Netflix (NFLX) and Redbox. With prospects continuing to weaken for Blockbuster I doubt there is little the company can salvage or do to save face.
Lets listen to the bad news first. US stores sales fell 16% and revenue dipped 18% in the fourth quarter. The company is in great amount of debt and continues to lose money. Their reaction, closing down the 500 weakest stores, which is supposedly supposed to reduce expense by roughly $200 million a year. Adding to this they have cut huge amounts of staff and slashed advertising costs. The company now is trying to move in a direction of digital downloads and vending kiosks though I think it’s too late. Netflix and Redbox beat them to the bunch and already own the market share. That’s why I believe it will be near impossible for Blockbuster to ever become profitable again. Maybe the best call is a merger with these new market-leaders until then it will be a slippery slope down for Blockbuster.
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Filed Under: Featured • Technology | Retail
I must concur, but how does the recent news of the post office closing down on Saturday and the raising of mail delivery affect Netflix?
I think Netflix will find a way around this problem whether they use a private company aka FedEx to deliver all DVDs.
They could, but this would drastically raise expenses by utilizing a company such as Fedex and squeeze profit margins. Delivery does not get any cheaper than the post office.
True but who knows how much longer the post office will be able to run at these cheap rates? This will be a big issue NetFlix will eventually have to address.
Just curious but do you know how the prototype stores are doing in Dallas?
Doesn’t look good for the Video Rental giant.
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