Blockbuster, the DVD rental chain went into administration in January 2013 as demand shrank under pressures from online video streaming services like NetFlix and Amazon’s LoveFilm and the increased entertainment options provided by the many channels available on satellite TV.
It was announced just before the quarterly rents were due for payment in late March 2013, 264 stores have been bought from the administrator, Deloitte by Gordon Brothers Europe.
Is There A Future For Blockbuster?
Little has been said about the future strategy for Blockbuster.
The Five Competitive Forces still don’t look very favourable although better than they did before the administration.
Buyer Power – while dealing with individual consumers rather than big buyers, customers are both price sensitive and service sensitive with the higher convenience of video streaming services coming on line.
Competitive Rivalry – the administration of HMV will have helped by reducing supply for shoppers who want to browse through DVDs. Supermarkets will continue to be a problem for the latest releases and most popular of the back catalogue classics.
New Entrants & Substitutes – like for like new entrants are unlikely but there may be further competition in the video streaming services market. Cinemas also rise and fall in demand as certain blockbusters need to be seen when everyone else is talking about them and the “big screen” experience can be much better.
Suppliers – this could be the force that has the most give in it. Landlords have been forced to change some of their practices as the commercial properties are increasingly empty. It’s better to earn something than nothing and too many empty stores will create a snow-balling effect of decline. DVD suppliers and film intellectual property holders may also want to keep a variety of different types of suppliers active.
What Can Blockbuster Do To Make Their Stores More Attractive?
The stores that have been acquired will have been cherry-picked based on profitability. Some areas don’t have good enough Internet service to allow the online video streaming competitors to be effective.
I haven’t been to a Blockbuster store for years although I don’t subscribe to any of the video streaming services.
I don’t subscribe to Sky or any of the other enhanced TV services although I do have access to the Freeview channels. I rarely go to the cinema because there aren’t many films that capture my imagination.
Perhaps I’m easily pleased with the repeats on the TV channels and the box-sets of programmes that I saw and enjoyed from yesteryear or I wanted to see and missed.
I struggle to see what would get me back into a Blockbuster store other than time to waste before I met someone and bad weather to stop me waiting in the fresh air.
What Do You Think? How Can Blockbuster Be Turned Around?
What would you do to make Blockbuster have a more attractive customer value proposition?
Can anything be done to make it more competitive?