Downfall of Dallas-based Empire Blockbuster

Downfall of Dallas-based Empire: Blockbuster. Blockbuster, which first established itself 25 years ago in Dallas, is on the verge of having to file Chapter 11 bankruptcy. As of December 31 2009, Blockbuster has accumulated a debt of approximately $964 million and has overall losses of over $1 billion since 2007.

So why is Blockbuster on such a decline? Enter Netflix. Netflix is the online movie provider that, along with Redbox, has almost single-handedly crushed the once dominant movie rental provider Blockbuster. Netflix was officially established in 1997, although sales began booming in the early part of the next decade. Netflix reported its 2 billionth movie rental in April of 2009, a billion more than 2 years prior. Netflix's low, flat-rate prices and no late fees have made it the standard of movie renting. Now one would think that the immediacy of being able to pick up a movie from a Blockbuster would be more advantageous than having to wait for one to arrive in the mail, right? Well, Netflix began an instant download service on its rentals where its customers can upload the movie right to his/her computer or television. All in all, Netflix's prices and services have surpassed those provided by the once superior Blockbuster.

Blockbuster has attributed its decline to its competitors, like Netflix, but also the kiosk newcomer Redbox. Redbox, a subsidiary with the ingenious minds of Coinstar, has revolutionized movie rentals. Starting in 2003, Redbox is well over 100 million rentals and its stock is still rising. You may have first seen Redbox at your local Walmart, but as of recently Redbox has surpassed Blockbuster for number of locations, granted the 572 Blockbusters which closed in the U.S. in 2009 does not help.

Blockbuster, accordingly, is making one last push to become a profitable corporation once again. In July of 2009 Blockbuster opened "Blockbuster Express," a kiosk rental service that cuts out having to deal with understaffed Blockbuster stores. Blockbuster now has 2,225 kiosks in the U.S. and more will be appearing in North Texas in the next few months to try to turn around the corporation's dismal financial status. If things don't turn around immediately, it will in fact be...the downfall of Dallas-based empire Blockbuster.