Blockbuster's Bankruptcy Could Be the Beginning of the End for DVDs | Hacker News Reader

Blockbuster's Bankruptcy Could Be the Beginning of the End for DVDs

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18 pointsduck23 comments

My father, who worked in real estate, predicted the demise of Blockbuster when I was a little kid. In his opinion, they habitually overpaid for property which did not advance their interests. "You have to understand, large chains are real estate investment firms which run a side business in movies, burgers, banking, etc."

The opposite is Walgreens and Starbucks, incidentally.

In St. Louis, I've seen Walgreens shut down one store and open another one literally across the street, at a slightly better location (easier to get into, easier to see coming from both directions on the street).

They have very, very sharp operators who can tell you the difference in expected value of three different ways to cut the egress from a particular road, which is something you have to debate with government traffic planners.

All true, but it's worth adding that they could have still saved their movie business if they had made the timely jump into online movie rental and distribution. This would've been timed well with the rise in the real estate before the bust as they could've unloaded the stores and spaces.

Overpaying for real estate or not, they lost because they failed at keeping up with movie technology trends as well as its competitors. The stores exacerbated the problem, but could've been addressed sooner. Walgreens and Starbucks don't carry products that can be as easily digitized.

Ahh. Now I understand the recent quip by Steve Jobs (that I'm unable to google right now), when asked about his growth strategy for the Apple Stores was that "With the recent market downturn, their are some good deals on commercial Real Estate" - At the time I thought it sounded Odd that he wasn't emphasizing the _sales_ that the stores were doing, and was focusing on the fact that Apple could buy property at discount. Makes sense now. (Particularly if Apple predominantly buys, rather than leases)

"Particularly if Apple predominantly buys, rather than leases"

Or, if the leases are quite long-term.

I hated Blockbuster, their expensive deals and their poor selection... but gosh, I kind of feel sad that they will exist no more. I feel like it's the end of an era. :)

What next? Sony? Microsoft?

I feel so old... :)

It sounds like a non-prediction with all the "could be the beginning".

Some people would also do well to remember that there's a world outside America where Netflix, Hulu, etc. don't exist at all.

I stopped using Blockbuster, because there selection of movies and TV was awful - as were their prices[^1] - but YMMV.

[1]: I could buy a discounted movie for the same price of renting it with bargain bins and sites like Play.com

*"Their" - ungh.

I heard Netflix is named netflix not DVDFlix because the founder of netflix forseen the death of the DVD mail delivery business.

Blockbuster seem to don't think of the future much. Netflix seem to be like two steps ahead of everybody.

Also, DVDFlix is a terrible, terrible name.

This reminds me of the demise of the brick and mortar chain Egghead Software, which was coincidentally adjacent to the Blockbuster in the town where I grew up. I realize it's not exactly the same because it's not like broadband/streaming/Netflix killed Egghead; however, Egghead and its contemporaries were the only way, at one point, to really see (and salivate over) the latest and greatest software titles. How many standalone software stores do you see these days?

Definitely, the days of the blue-chip brick and mortar movie rental operations are over. Blockbuster has attempted to enter the RedBox kiosk market.. but IMHO, it's too little, too late. Even that market has a very limited life expectancy.

I just saw a line of 7-8 in front of a redbox at the grocery store by my house, and _right next to it_ the blockbuster bluebox was sitting idle. The people have spoken.

The fact that redbox was not a blockbuster development is final proof of why blockbuster should die.

You rent betamax tapes, the market changes, you adapt.

Now you rent vhs tapes, the market changes, you adapt.

Now you rent dvds, the market changes, you don't adapt.

You fail...

You're right of course, but that last jump is quite a bit larger than the others.

Is anybody actually surprised about this? If you are go read that 'old' classic 'being digital' by Nicholas Negroponte.

This was exactly on schedule, really.

Anything that can be digitized is at risk, and will eventually go the way of the Dodo. Including books, even though the sentimental and practical aspects there are very strong.

The following graph (and future version), provides some predictions on the likely commercial success of Blockbuster (and RedBox, to some degree) over time:

http://tctechcrunch.files.wordpress.com/2010/08/pewbroadband...

So, how long until BestBuy goes down in a similar way? Unlike clothing, few of their products require a consumer's hands-on examination before purchase. Why would someone bother walking into one of their stores when Amazon has the item for mess? There's considerable evidence that BestBuy understands this and is hedging with a services model (GeekSquad and some acquisition I can't recall). But, a services model doesn't require their current realestate portfolio.

Best Buy caters to getting people in the store to touch products, once people are the staff tries to encourage "getting it now." Sure, they could wait a week and get that digital camera for $100 less, but most people want to touch the thing they are buying and get it instantly (in America, at least).

I think the author chose a poor title for the article. The continuing shrinkage of Blockbuster is just a continuing reinforcement of the fact that DVD sales and rentals will decrease as digital downloads and streaming continue their growth. If anything this is confirmation that the end is a lot closer than the begining.

From the article:

"DVDs are going away. This already happened with music. One day that vast majority of us will no longer buy physical copies of movies and keep them on a shelf. Netflix realizes this - which is exactly why they want to get out of the expensive rent-by-mail business and completely focus their efforts online with streaming content."

I perceive NetFlix's DVD-by-mail strategy as an ingenious hack to get market penetration into a market which required eventual movement by large entities -- (1) the telcoms to provide sufficient bandwidth to consumers and (2) the studios to allow their content to be streamed. It was obvious that #1 and #2 would have to happen eventually, but only a fool would have built a business whose success was contingent on the timing of these changes. Brilliant.

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