Blockbuster Going Under, Trying Anything

Published by Jeff Leins on: May 28th, 2009

Blockbuster Inc. is branching out to try to save their business from bankruptcy.  The 24-year-old movie rental company was listed as one of the “15 Companies That Might Not Survive 2009″ in US News in February.  In April, the company warned it may not have sufficient funds to finance the “ongoing obligations” of its business.  Their stock price fell to 71 cents today and shares have sunk almost 90% in two years as competition mounts and credit lines disappear.

To counter the growing debt, Blockbuster announced two new initiatives this week in an attempt to stay afloat.

The first idea is to try their hand at online video game rentals, a market currently dominated by GameFly.  Once again Blockbuster is late to the party, making announcements now seven years after that service started offering game rentals online.  Blockbuster controls a large portion of overall game rentals, but launching an online pilot program right now seems more frantic than anything else.  It will start in Cleveland this June with plans to roll out nationwide if it’s successful.  Oh, and if the company doesn’t go under.

The other bright idea Blockbuster announced is selling merchandise in their stores.  According to the Hollywood Reporter, CEO Jim Keyes touted the plan at their shareholder meeting today in Dallas.  It basically consists of lining shelves with replicas of movie items, like Men in Black or Top Gun sunglasses.  Why would anyone want a cheap pair of sunglasses from Blockbuster?  They’re exactly like a pair of Ray-bans or blue blockers.  There’s nothing particularly special about them other than Will Smith or Tom Cruise wore something similar years ago.

“We’re in big trouble, people.  We need a million dollar idea.  What’ve you got?”
“Well, we could sell knock-off memorabilia to our dwindling customers?”
“Brilliant!  Get me a pair of those Top Gun sunglasses.  Boy, do I love the 80s.  That’s when Blockbuster was still relevant.”

The online video service still faces stiff competition from their main rival, Netflix, an online company that continues to thrive even in the recession and still controls 80%+ of the online movie rental market.  On the other side is Redbox, a subsidiary of Coinstar, which offers $1 DVD rentals for 24-hours and has more locations than Blockbuster’s costly brick and mortar stores.  As these profitable services expand and creep more into Blockbuster’s territority, it looks like we may be seeing the end of the movie rental giant.  It means possible unemployment for their estimated 60,000 employees, but as a former one myself I couldn’t be happier to see Blockbuster go.