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Blockbuster bust

July 5th, 2010 at 06:47 am

Text is Grim news indeed and Link is http://online.wsj.com/article/SB10001424052748703571704575340900845194966.html
Grim news indeed if you have anything to do with Blockbuster beyond being a customer.

First, they went through bankruptcy restructuring, clinging on to less than $40 million in capital, which may sound like a lot, but not when you're facing nearly a billion dollars in debt. To make matters worse, now there is news that they will be delisted from the NYSE.

You can read more details in the link if you want, but what I wanted to share about this story is that even the mighty can be brought to its knees if it is unable to tame the debt dragon.

One could also argue that it's about business agility, which I can agree with, but if Blockbuster didn't have so much debt, it would still have time to evolve and grow.

Oh yeah, that and maybe karma. Late fees used to be Blockbuster's bread and butter, and as such, they didn't bend on the policy. I hated that though, and cheered Netflix when they will allow you to keep yours for as long as you want without late fees. Anyway, the late fee inflexibility may have been the double edged sword that gave Netflix a chance to break into the market.

But mostly, it's a cautionary tale about what debt can do to you if you are not careful.

4 Responses to “Blockbuster bust”

  1. Aleta Says:

    I also thought that if they had opened a kiosk inside of their stores for one night rentals like Redbox, that that could have given the customer the choice between 1 day rentals or longer It would have brought in more customers trying to get a $1. movie for one night until the kiosk was empty and then they would probably rent another movie instead.

  2. homebody Says:

    Wow I guess I'd better use that gift card before the local store boards over the windows!

  3. monkeymama Says:

    I think BB has done a good job catering to the likes of my video phile husband, but most people just want what's cheap (thus, success of netflix and redbox). Usually, when I tell people we use BB, they just tell me, "BB sucks." They've pissed off too many people along the way.

    Debt and greed, I suppose.

  4. dmontngrey Says:

    No BB near us for a few years now. Redbox is our only option. We don't usually rent movies - so we added to their demise. Hollywood Video was our preference, but they disappeared first. Oh well.

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