Posted by Shane
Today is the first time I have predicted the demise of a company while I was still working for the company in 2007-2008. However, I have two different views on the situation. Lets get to the background first.
For 6 months, I worked at Blockbsuter as an Assistant Store Manager in Falls Church, VA. That store currently has been closed and my former co-workers where given a choice to work at any store they wanted. I left the company not because it wasn’t a great model and a great place to work, I left because of the horrible working conditions that I was subjected to.
During those months I worked there, the model that we operated on at the store was the same model the Blockbuster stores have been running since I once worked at Blockbuster during the Summer once. Rent, Bring Back, and so on.
During the always agonizing orientation session this company provides to teach all new employees is that Blockbuster reigns key when it comes to entertainment selection and prices. That is true. Blockbuster is primary a rent-return store. At the time, no other company can match the two major qualities of Blockbuster:
- Selection put together.
In comes Netflix, Netflix Online, iTunes, Amazon, and others. Now Blockbuster has a problem. Now you have to add these two items to the list:
These items are now have to factor in when going to Blockbuster model to get to the store. Netflix, the online renter, for example has only items 1, 2, and 4. No need for gas if you have your mailed since you already have to get to your mail.
- What about Blockbuster Online? Not that big of a selection.
- Can’t you trade your movies at the store? Yes. Only a certain amount though per each month.
The Netflix Online model (also with a year up on Blockbuster Online) introduced partnerships with company’s like Samsung and Microsoft to allow customers to stream HD movies right to their TV or Computers without needing to head to the mail or having the overhead of locations. Just distribution centers and high speed data networks which are already in place.
Where Blockbuster lacked was technology and building concepts. At one point during my last few months, the districts Assistant Store Managers were giving a preview of the new concept stores called Rock The Block. Depending on the store’s location the store would either get a family center, gaming room, a cafe, or mix selection of 12 different concepts. The concept store in Dallas had all the trimmings. Another pitfall is technology. Blockbuster still today is using MS-DOS for their main renting system in the store. That system has a lot of overhead as you have to keep costly and old equipment functioning in order for it to work. Only when I started working for the company full time did we have a modern computer that was able to punch in and out.
Pressure? Yes to Blockbuster. Now Netflix has seen a decline also, but I am sure they don’t have as much debt as Blockbuster reported $250 million loan that is due May 11th. I predicted that this would happen, however, I didn’t think it would be this soon.
One thing I do feel sorry for is my former co-workers who now will have to work harder in order to maintains Blockbuster’s stability. In today’s economy, news like this usually kills the company outright, like it did Circuit City.