Topic: Blockbuster files for bankruptcy

[Chus-Kay]

No one should be surprised by this.

http://www.forbes.com/feeds/ap/2010/09/23/general-specialized-consumer-services-us-blockbuster-bankruptcy_7953228.html?feed=rss_asia

Associated Press
Blockbuster files for bankruptcy protection
Associated Press, 09.23.10, 06:45 AM EDT

NEW YORK -- Troubled video-rental chain Blockbuster Inc. filed for Chapter 11 bankruptcy protection, and said it plans to keep stores and kiosks open as it reorganizes.

In a submission to the U.S. Bankruptcy Court in the Southern District of New York on Thursday, the company said it reached an agreement with bondholders on a recapitalization plan.

Blockbuster  ( BBI -  news  -  people ) plans to reduce debt from nearly $1 billion to about $100 million or less by swapping debt for equity in a reorganized Blockbuster with bondholders that hold about 80.1 percent of the company's senior notes.

It has received commitments for $125 million in "debtor-in-possession" financing from senior noteholders to repay customers, suppliers and employees during the reorganization.

"After a careful and thorough analysis, we determined that the process announced today provides the optimal path for recapitalizing our balance sheet and positioning Blockbuster for the future as we continue to transform our business model to meet the evolving preferences of our customers," said CEO Jim Keyes.

Once a home entertainment powerhouse, Blockbuster has been losing market share and money for years as more Americans rent DVDs from subscription service Netflix Inc.  ( NFLX -  news  -  people ) and popularity surged for streaming video over the Internet.

Blockbuster said its 3,000 stores in the U.S., DVD vending kiosks, by-mail and digital businesses will all continue to operate normally. Operations outside the U.S. and domestic and international franchisees are not part of the Chapter 11 reorganization.

Earlier this year the company said it would close hundreds of stores and said it was struggling with liquidity problems.

The company, which had warned investors it might file for bankruptcy protection, was delisted in early July by the New York Stock Exchange.

i'll have to start watching my local store for sales.

[freud mayweather]

i went into a blockbuster about a month ago because no place had BD's of Mad Men season one. it was a ghost town. they had almost no BD/DVD's for sale outside of shitty used ones, and i was the only person in the store.

[FreebirdSTF]

SHOCKED!

[tr0042]

Not suprised.

We had three real close to us shut down over the last couple of months.  Also had two Hollywood Video close as well.

Hard way to go for the video rental industry

[A Very Smug Bear]

2 things killed the rental industry.

1. DVDs - You can get almost any movie that exists on DVD. Used to be only the biggest releases came out on VHS, some things you just couldn't get unless you got them used from a rental store. If you tried to buy a new VHS of certain movies it coluld cost you upwards of $100.00 because they were rental store copies. Once DVDs hit people said fuck Blockbuster and their ridiculous late fees.

2. Netflix - Obviously.

[SupTool]

Add one more to that Mikey

3. Redbox.  $1 a day rentals vs $5 dollar rentals.  Caused Blockbuster to do their own vending machine business as well, obviously not doing as well.

[Prime]

It's about time, and shame on Blockbuster for not changing their business model to flow with the change in the way people consume their entertainment. If Blockbuster had done a Netflix model, they'd be leading the industry on brand recognition alone.

I'm guessing Rogers video stores here in Canada will be next.

Following that, TV is next. The model has to change.

[Zandrax]

2 things killed the rental industry.

1. DVDs - You can get almost any movie that exists on DVD. Used to be only the biggest releases came out on VHS, some things you just couldn't get unless you got them used from a rental store. If you tried to buy a new VHS of certain movies it coluld cost you upwards of $100.00 because they were rental store copies. Once DVDs hit people said fuck Blockbuster and their ridiculous late fees.

2. Netflix - Obviously.

Add one more to that Mikey

3. Redbox.  $1 a day rentals vs $5 dollar rentals.  Caused Blockbuster to do their own vending machine business as well, obviously not doing as well.

Another thing that was a factor in the other three succeeding is New Releases. The vast majority of business in rentals are of course New Releases. And it costs much less to maintain a Redbox machine than a large building.

[Chus-Kay]

It's about time, and shame on Blockbuster for not changing their business model to flow with the change in the way people consume their entertainment. If Blockbuster had done a Netflix model, they'd be leading the industry on brand recognition alone.

I'm guessing Rogers video stores here in Canada will be next.

Following that, TV is next. The model has to change.

i thought they added a netflix like service.  they claimed it was better because you didn't have to mail the movies back; instead you could drop it at any blockbuster and pick up a new movie (if you didn't want to wait for your next movie to come in the mail).

[Prime]

i thought they added a netflix like service.  they claimed it was better because you didn't have to mail the movies back; instead you could drop it at any blockbuster and pick up a new movie (if you didn't want to wait for your next movie to come in the mail).

I'm talking about streaming though. Physical media will be dead in the near future.

[Chus-Kay]

i thought they added a netflix like service.  they claimed it was better because you didn't have to mail the movies back; instead you could drop it at any blockbuster and pick up a new movie (if you didn't want to wait for your next movie to come in the mail).

I'm talking about streaming though. Physical media will be dead in the near future.

i think a big part of the problem was that by the time they implemented their dvd mail program, netflix had pretty much cornered the market.  i don't know anyone who switched from netflix to bb.

then of course netflix moved on to streaming movies. and redbox came along to take all the in-store business.

so all they had left was video games...and then along comes gamefly.

[POE-Bot Activated!]

2 things killed the rental industry.

1. DVDs - You can get almost any movie that exists on DVD. Used to be only the biggest releases came out on VHS, some things you just couldn't get unless you got them used from a rental store. If you tried to buy a new VHS of certain movies it coluld cost you upwards of $100.00 because they were rental store copies. Once DVDs hit people said fuck Blockbuster and their ridiculous late fees.

2. Netflix - Obviously.

I agree with 1) up to a point. DVDs used to be a LOT higher priced (like Blu-Ray prices at first but close to $30 or $40 for a DVD) until they got to be cheaper to make.

Why rent a DVD from Blockbuster for $8 when you could buy it at $16?

When Blu-Ray is around $10/$15, kiss Blockbuster goodbye.
The only thing I have to thank Blockbuster for is a copy of ICO on PS2 for $15.

[Torgo]

i thought they added a netflix like service.  they claimed it was better because you didn't have to mail the movies back; instead you could drop it at any blockbuster and pick up a new movie (if you didn't want to wait for your next movie to come in the mail).

I'm talking about streaming though. Physical media will be dead in the near future.

I don't think physical media will be dead in the near future.  It may not be as prosperous in the near future, but I see a lot of people not being able to afford or obtain streaming devices and fast internet connections.

[SupTool]

I'm talking about streaming though. Physical media will be dead in the near future.

They do have a streaming movie service, I believe using the CinemaNow system.  The only problem with that, unlike Netflix, it's on a per-movie basis, not a subscription model, so yeah, they're failing at that too.

[Chus-Kay]

2 things killed the rental industry.

1. DVDs - You can get almost any movie that exists on DVD. Used to be only the biggest releases came out on VHS, some things you just couldn't get unless you got them used from a rental store. If you tried to buy a new VHS of certain movies it coluld cost you upwards of $100.00 because they were rental store copies. Once DVDs hit people said fuck Blockbuster and their ridiculous late fees.

2. Netflix - Obviously.

I agree with 1) up to a point. DVDs used to be a LOT higher priced (like Blu-Ray prices at first but close to $30 or $40 for a DVD) until they got to be cheaper to make.

Why rent a DVD from Blockbuster for $8 when you could buy it at $16?

When Blu-Ray is around $10/$15, kiss Blockbuster goodbye.
The only thing I have to thank Blockbuster for is a copy of ICO on PS2 for $15.

$8 for a rental???

[Prime]

I don't think physical media will be dead in the near future.  It may not be as prosperous in the near future, but I see a lot of people not being able to afford or obtain streaming devices and fast internet connections.

Maybe "near" was a bad word to use, but it's coming sooner than later. A large segment of the population now is heavily into MP3 players for music (and even movies), or they're using their phones for that as well. The only reason I buy a CD is to rip it and put it on my iPod. More artists are releasing stuff online.

This is changing now for movies as well on the portable devices, and with the expansion of gaming consoles from just games to full-fledged media centers for movies and music, and new, easier to use, and cheaper network based hard drives with TB's of storage, there isn't much of a reason to keep physical media any more.

Even the TV and movie industries are getting into it. HBO is shooting for a subscription streaming service for iPad and other mobile devices by February. Why not cut out the cable companies and provide the service directly to the user for a bigger cut of the service fee?

I'm see networks moving to this model as well. Why not provide your own subscription service? Subscribe for a few dollars a month to a network for access to most shows. They can charge more for premium shows and live content.  It's gonna happen.

So yeah, maybe near future wasn't the right choice of words, but in 5 years, I see a dent in consumption of physical media, perhaps even the death of the CD. DVD's won't be long after that, maybe 10 years. BluRay is probably the last physical media format we see.

As far as fast internet connections go, that's expanding all the time. Sooner than later, the vast majority of the population will have access to broadband internet.

[Torgo]

I don't think physical media will be dead in the near future.  It may not be as prosperous in the near future, but I see a lot of people not being able to afford or obtain streaming devices and fast internet connections.

Maybe "near" was a bad word to use, but it's coming sooner than later. A large segment of the population now is heavily into MP3 players for music (and even movies), or they're using their phones for that as well. The only reason I buy a CD is to rip it and put it on my iPod. More artists are releasing stuff online.

This is changing now for movies as well on the portable devices, and with the expansion of gaming consoles from just games to full-fledged media centers for movies and music, and new, easier to use, and cheaper network based hard drives with TB's of storage, there isn't much of a reason to keep physical media any more.

Even the TV and movie industries are getting into it. HBO is shooting for a subscription streaming service for iPad and other mobile devices by February. Why not cut out the cable companies and provide the service directly to the user for a bigger cut of the service fee?

I'm see networks moving to this model as well. Why not provide your own subscription service? Subscribe for a few dollars a month to a network for access to most shows. They can charge more for premium shows and live content.  It's gonna happen.

So yeah, maybe near future wasn't the right choice of words, but in 5 years, I see a dent in consumption of physical media, perhaps even the death of the CD. DVD's won't be long after that, maybe 10 years. BluRay is probably the last physical media format we see.

As far as fast internet connections go, that's expanding all the time. Sooner than later, the vast majority of the population will have access to broadband internet.

I think there will be a market for physical movies for a decade + at least, whether they come on discs or a card or whatever.  I don't think everyone is going to be willing or wanting to stream or download a movie.  Personally, I don't feel like I own a movie unless I have the actual disc.  And I don't know if I'd want to put my faith in keeping everything on a computer, because it seems like it'd be too easy to wipe out your entire library.  One virus and there goes your movie collection, potentially. 

Personally I'd love to stream everything to my TV or projector, as long as there are no interruptions and it looks as good as BD (HD content looks really good on Netflix WatchInstantly, but it's still not quite the resolution you can get on BD, from what I can see), which isn't really the case yet.  But it's definitely getting close. 

[Chus-Kay]

when everything is stored on virtual servers (rather than local HDDs) will be about the time dvd's go the way of the betamax.

[Prime]

Cloud computing is getting huge quick. Google's entire model is based on cloud computing. Even their OS is just a way to power a device, and then you use all the apps/files in the cloud. Microsoft is totally revamping Hotmail to do the same thing, and with Skydrive, you get a virtual center to store your files. It's coming, and it's faster than you might think.

As to Torgo's point about viruses, well, that's why you make a backup. Everyone should be doing that regardless.

Good point though on BD quality. Streaming services aren't there yet, but will be eventually, and HD is excellent right now. That's why I didn't say anything about BD going away.

[DocSavage]

I got a copy of Viewtiful Joe for around 4 bucks or so.

Tommy K's Video was my store though, until it closed up shop years ago.

[FreebirdSTF]

All this stuff is certainly coming.  Don't know how quick, but I'm fairly sure that physical media isn't going to go away as quickly as the techies predict.  There's too many folks out there who just aren't going to adopt it that quickly.

[unknownman89]

Blockbuster spent so much time attempting to keep up with the innovations of others that they lost track of their core business.  Many stores suffered when Blockbuster first tried unlimited in-store rental programs, then allowed people to use store product to support the online business.  They also messed up when they eliminated late fees, which served more as an incentive for customers to have a quick turn-around on new release titles, which make the most of their money within the first month or so on the shelf. 

When they reinstated the late fees they just angered customers that had become accustomed to not having them. 

All of this served to deplete product from those people shopping in the store and hasten their departure to other business models, where they chose more established businesses such as Netflix and Redbox.  Viscous circle, right?

[Torgo]

All this stuff is certainly coming.  Don't know how quick, but I'm fairly sure that physical media isn't going to go away as quickly as the techies predict.  There's too many folks out there who just aren't going to adopt it that quickly.

There are people out there that still can't even use a computer.  A lot more than people think.

[Chus-Kay]

All this stuff is certainly coming.  Don't know how quick, but I'm fairly sure that physical media isn't going to go away as quickly as the techies predict.  There's too many folks out there who just aren't going to adopt it that quickly.

There are people out there that still can't even use a computer.  A lot more than people think.

and if they impacted the business at all bb wouldn't have had to declare bankruptcy.

[unknownman89]

All this stuff is certainly coming.  Don't know how quick, but I'm fairly sure that physical media isn't going to go away as quickly as the techies predict.  There's too many folks out there who just aren't going to adopt it that quickly.

There are people out there that still can't even use a computer.  A lot more than people think.

There are people out there that are still frightened by DVDs.  That doesn't mean that companies are still paying money to produce VHS tapes.  Time, and technology, march on.  Even if there are people that don't like it and don't adopt the new tech early.