Blockbuster (NYSE: BBI) – Another Nail In The Coffin

Can you hear that, Blockbuster (NYSE: BBI)? It’s the sound of obsolescence.

With the news that LG Electronics will be producing high-definition televisions that will stream movies from Netflix (Nasdaq: NFLX), you can add another nail in the coffin for Blockbuster.

At first, Netflix’s threat to Blockbuster seemed laughable. But now, with more consumers cutting back and looking for instant entertainment, low monthly costs and the ease of Netflix are really starting to squeeze Blockbuster.

And that’s not to say that Blockbuster hasn’t given its rivals a hand. There was the misguided and disastrous attempt to merge with financial-albatross Circuit City (OTC: CCTYQ), the botched roll-out of the “no more late fees – just other fees” program and the complete failure to see how a vindictive fee and collection system could alienate its customers.

But the competition isn’t just coming from Netflix. Redbox’s easy-to-use, dollar-a-day rental system is also stealing revenue. Most Redbox vending machines are located outside of parent company McDonald’s (NYSE: MCD) and inside grocery stores. Often in the same shopping centers as Blockbuster.

In the same way Eastman Kodak (NYSE: EK) missed the advent of digital, Blockbuster missed the transformative power of the Internet and subscription rentals. It’s playing catch-up. And only time will tell if BBI can recover.

Companies mentioned in this article: BBI, NFLX, CCTYQ, MCD and EK.

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