Internet Killed Blockbuster. Who’s Next?
Dallas – The bomb blew up just a few days ago when a Los Angeles Times article reported that Blockbuster Inc., the video rental giant, is ready to file for bankruptcy.
Overwhelmed by debt and losses amounting to over $1 billion since 2008, the video rental chain is yet another of the world’s most famous names to join the long list of once successful companies that have not been able to adapt their business to the radical changes in the market introduced by the Internet. Another high-profile victim.
In a recent note (August 13), Blockbuster reported total revenues for the second quarter of 2010 were $788 million, with a loss of $194 million compared to total revenues for the same period one year ago. Net loss for the second quarter of 2010 was $69 million with a negative increase of $32 million compared to net loss in the second quarter of 2009.
As with the entire music industry, that in the early 2000, with the rapid spread of the Internet, has witnessed the failure of its revenue mainly because of music piracy and as, more recently, the bookstore chain Barnes & Nobles, which is paying for a significant delay in entering the business of electronic books (which record is firmly in the hands of Amazon), Blockbuster pays his choice of sticking to an old distribution model for its core business, a model that’s no longer adequate in the age of the Internet and unable to compete with Netflix or iTunes.
If it is true that over the next five years entertainment, music, books, videos, video games, will be distributed mainly via remote connections – it’s already happening right now, you know – I believe we have to realistically expect that the classic physical media will suffer a further drastic reduction and that this change will cause another earthquake which will spare only those who will react in a timely fashion.
To cope with the losses, Blockbuster plans to shut down 500 to 800 of the 3,425 on the United States territory. The bankruptcy will be filed probably by the end of September.
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The next is Tv and the next are radio stations.
I don’t think its only the Internet’s fault, Video On Demand and Pay Per View services are also a cause.
I don’t agree that TV will be next, since we are seeing large companies investing on new TV services (Apple TV and Google TV). Instead of TV disappearing, it will be revived and modernized to work side by side with the Internet.
Radio is a different story, more and more radio stations are broadcasting in the web, but that doesn’t mean the traditional radio service will die. Take the example of Vinyl, did CD or DVD killed it like they did with the Tape?
“…the entire music industry, that in the early 2000, with the rapid spread of the Internet, has witnessed the failure of its revenue mainly because of music piracy…”
That is debatable. The industry likes to chalk it up to “piracy,” but evidence seems to show otherwise. There were studies that suggested that “pirates” purchased significantly more music than others. I think what’s going on it music sales are just lower than they used to be. People are putting their money toward other things, entertainment or otherwise. Similarly, movie revenue is on the rise (due to rising ticket prices) while attendance is down.
For the past 3 or 4 years I have only been to blockbuster to get ice cream or crisps on a sunday afternoon. They are very grim places nowadays. They could have changed their model, become gaming hang outs, micro-cinemas, movie merchandise outlets who knows, the opportunities are endless. But no, they just stick to a model that no longer works and keep whining. They probably deserve to get out of the way and give space to people that actually want to be successful instead of making excuses.
I always preferred to spend my money in small video rentals because you can take a dvd at 2.50€ instead of 4.50 – 5€ requested from blockbuster…this is business..
Piracy is most definitely a top 3 reason music sales are down.
Another Top 3 reason is a proliferation of online services that stream music similar to the online “radio station” model, similar to radio stations, but completely different in that we now have multiple online music servers. And, you can listen for free for hours, all day, all night.
I haven’t stopped to think what the third reason is, many candidates, but, those two I have listed have absolutely slowed music sales.
I have an iTunes account but it has become so “messy” that I stopped buying music via iTunes. Which Apple might want to take note of…their model needs revamping and it has a LOT of competiton.
But, do you see what has happened in just a few years? Online music streaming–like Grooveshark, etc, etc…have made us all “pirates” in a sense?
As per bbc, in 2006 the piracy industry was estimated at 20% of total entertainment industry of america and now it has managed to grow over 50% of industry. the root cause of problem lies in entertainment industry itself, if they provide their poducts for little profit only for 1-1.5 years then the interest of buyer will definetly draw on original.
next is Barnes & Noble and Borders!