By Bill Zeeble, KERA News
http://stream.publicbroadcasting.net/production/mp3/kera/local-kera-925394.mp3
Dallas, TX – Dallas-based Blockbuster has filed for bankruptcy. The once dominant movie rental giant faces nearly a billion dollars in debt. KERA's Bill Zeeble reports its customers have turned to newer, cheaper competitors.
Through much of this decade, Blockbuster clients increasingly chose alternative movie sources like Netflix, Redbox and other high-tech competitors. Outside a Dallas Blockbuster store, customers Ray Allen and Lisa Bela say the 25 year old-business is aging and out of touch.
Lisa Bela: We stopped using Blockbuster a while ago because Redbox made it so easy. You can just drop off and get your movies any time of the day & it's a dollar a day. and it's just always open. Ray Allen: There's Redbox, I-tunes, and others that are better than Blockbuster. Blockbuster's been going downhill for a while.
Blockbuster tried responding, with Redbox-like Kiosks, a Netflix type mail-order service, and online streaming. But it was slow to catch up with competitors' innovations, while spending a LOT of money trying. That's according to industry analyst Michael Pachter. He's with Wedbush Securities in California.
Michael Pachter, analyst: They chose not to compete with Netflix until it was too late and chose not compete with Redbox at all because they didn't see the threat, nor did I none of us thought that Redbox would be as successful as they are.
Pachter has long predicted Blockbuster would go the way of typewriters and keyboards.
Pachter: I think it disappears. It's sort of like the old typewriter producers. They had valuable names at one time. And yet we all have keyboards and they don't make keyboards for our PC's at the old Royal typewriter and Singer typewriter plants. They don't even use that brand name.
Blockbuster has fought back recently, to stay relevant to customers. This summer, it negotiated deals so it could offer customers the latest releases a month ahead of Netflix, Redbox, & others. But Blockbuster has lacked money to widely advertise that market advantage. It's weighed down with at least $900 million in debt. More store closures are assured, for a company that recently boasted more than 3,500 bricks and mortar stores.
Pachter does not believe Blockbuster will just shut down, saying it will emerge from bankruptcy. But it will shrink. He says for 20 or more million Americans, he says that's too bad. These are the folks, says Pachter, who lack cable or satellite, and don't download movies on computers.
Pachter: Rental is a really inexpensive form of entertainment. A whole family can watch a movie for four or five dollars. For a kiosk, it's a dollar. It's the best entertainment value there is. Unfortunately, if you're stuck with a kiosk, you don't get the selection you got at Blockbuster. So Blockbuster filled a big need of middle-class people to get inexpensive entertainment relatively soon after a theatrical release. We're going to lose that in the next couple years.
Blockbuster may disagree. But the corporation at least admits that after closing hundreds of stores nationwide, it needs to close hundreds more, close to a thousand this year alone.