Blockbuster hates the Internet - Top Stocks
 
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Blockbuster hates the Internet

Posted Nov 02 2007, 07:11 AM by Kim Peterson
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This is how I picture board meetings at Blockbuster world headquarters. CEO Jim Keyes stands up and slams his hands on the table. "This Internet thing is killing us!" he shouts. "Come on, people, we need ideas!"

Silence. Crickets chirping.

If any company could pack the Internet up in a box and shove it on the garage shelf, it would be Blockbuster. Oh, for the days when it could zap you with late fees if you didn't have the movie back by 4 p.m. Or when it could charge you an arm and a leg for new releases. The company hasn't been able to handle the rise of online distribution or the Web-slash-mail delivery system that Netflix has pioneered.

Netflix had a, ahem, blockbuster third quarter, beating expectations and growing subscribers. But Blockbuster's quarter was miserable. Its loss was worse than what analysts had expected. It closed 500 stores, leaving 7,800 worldwide, and scaled back its advertising budget. Its online subscriber count fell to 3.1 million from 3.6 million (Netflix has 7 million).

Keyes put it this way in the company's conference call:  

"Our pursuit of by-mail subscribers was a bit overzealous. Clearly our spending ... was exceeding our returns."

In other words, we went after Netflix like a pit bull and it backfired. Now, according to the company's press release, "the company will no longer be narrowly focused on its online subscriber count but instead will concentrate on the growth of, and report on, its total membership."

Is Blockbuster getting out of the online rental business? Kinda sounds like it. So maybe the company isn't going to compete with Netflix on mail delivery. It doesn't have to. Even Netflix acknowledges that digital delivery is the future, and that DVDs by mail is an interim step. If Blockbuster had any smarts, it would be looking closely at digital delivery. Someone in that board room's gotta know that.

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Comments

 

They need to work more on allowing games to be ordered online. I would jump on the bandwagon then.

lisa (Posted 11.02.07 3:18 PM)

Jim Keyes needs different people around him--not the 7-11 old gang.

scott berdine (Posted 11.02.07 3:21 PM)

In the days of Netflix cheap rentals, and Wal Mart 1$ Redbox rentals, it's incredible that Blockbuster still charges 4.29 for a 2 day rental of hits. I get the same movie for 1$ at WalMart, if the have it.

They get what they deserve for not pricing accordingly.

DTM (Posted 11.02.07 3:21 PM)

Doesn't it taste sooooo sweet when the neighborhood bully gets his comeuppance?  I predict further erosion of the very base of clients who once made you the king, Blockbuster.  Who knows, you may close altogether.

M.Smith (Posted 11.02.07 3:24 PM)

I started getting my movies from RedBox for $1.00 and I can get the new releases, too!  Goodbye Blockbuster!!!!

Phyllis (Posted 11.02.07 3:26 PM)

The only reason I signed on with Blockbuster online was because we could return movies and exchange at the local store instead of mailing them in. Then they messed everything up and got greedy by limiting the amount of returns to local stores  and charged more if you wanted to have unlimited store returns.

 They also did not help any by backing up a single HDTV format (Blue Ray) over a more popular one so early in the High Def DVD game.

luis (Posted 11.02.07 3:26 PM)

They can have someone online to chat with for any questions and stop saying you can have unlimited movies with certain packages but then turn around and send a questionnaire about how long it takes to get a movie in the mail. Because let's face it folks we know they are just finding out how many videos we get a month and when to send them out so that the average videos sent are around 3-4 month...if your lucky.

lisa (Posted 11.02.07 3:27 PM)

The CEO and Executives of Blockbuster are just like any other old fashion corporate idiots.  They are an excellent examples of dinosaurs who resist changes and technology.

The Internet is the future.  Netflix was successful because it grasp the idea way before any other corporations.  Like the saying goes, you snooze,you lose.

Rogers Video used to be big, now dangling on a thread.  Blockbuster is next.  Tah Tah.

Vancouver (Posted 11.02.07 3:29 PM)

Blockbuster has ticked me off for years but Netflix is a breath of fresh air really looking out for your interests it seems.  Even if Blockbuster were to offer better prices than Netflix in either the snail mail system or the digital system of delivery, I would gladly pay more to Netflix.  They do not have a dark past with me :).  So I am thinking that they will have a bright future.

Ben (Posted 11.02.07 3:33 PM)

We are finding that the internet is the way to go also and that brick does not work as well.  There will always be a need for brick but more and more people are looking to the net for a simple way of doing things.   Blockbuster needs to grasp this and do what they can to stay with the mail order and internet.

We have seen good results with just advertising online for our all natural cleaning residential maid business and it seems to be helping.  

HM@ http://www.thecleanchoice.com

Harry (Posted 11.02.07 3:34 PM)

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