Print 71 comment(s) - last by callmeroy.. on Apr 30 at 10:41 AM

Blockbuster may have been busted by Netflix

For many years Blockbuster video enjoyed great success in the movie rental business. Blockbuster is one of the largest movie rental chains in the country, but the company has found that its continued existence is far from guaranteed.

Blockbuster has announced that there is "substantial doubt" about its ability to continue as a going concern. A going concern is a qualification that refers to an auditor's assessment of a company's ability to continue operations reports MSNBC.

Blockbuster is struggling with profitability and viability in the face of the rising popularity of mail-order rental services like Netflix the company stated in a SEC disclosure. Blockbuster had previously disclosed that an auditor was likely to raise doubts about its long-term viability.

Blockbuster stated last week that its revolving and term loan agreement had been amended giving the company a $250 million revolving loan for financing maturing on September 30, 2010. The company thinks it will be able to close the financing around May 11, but states that the closing of the loan is not assured at this point.

Blockbuster says that even if the loan is funded it, "may not have sufficient liquidity to finance the ongoing obligations of our business, which raises substantial doubt about our ability to continue as a going concern."

Blockbuster shares fell 3 cents to 85 cents in trading after hours after closing at 88 cents reports MSNBC. In July of 2008 Blockbuster was considering the purchase of now defunct Circuit City.  

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Not so simple
By redeem4god on 4/7/2009 2:40:44 PM , Rating: 2
While it sounds simple in theory to just move from a brick-n-mortar business to an online only business its not especially when Netflix already has a dedicated following. It never works coming late the game which blockbuster is.

There are two big issues blockbuster has had over the years. One is that their business model resembles that of Nintendos (and even they realize the need to diversify). A family oriented rental shop that rarely, if at all, purchases director’s unrated cuts/versions, mature rated animations, 17+ movies etc, etc.

To add to their demise is the unwillingness to purchase more letterbox/widescreen version and having the ignorant notion that the majority of the population prefers Pan & Crap (Scan) over such.

Only the ignorant wouldn’t realize that as more movies become 16:9/10 enhanced those vast majorities will play in widescreen, like the theater, consuming the whole screen without black bars. Yet if you have Pan & Scan DVD's you will get the black bars on the sides...suckers!

These two factors in my opinion lead or are leading to their downfall and it's about damn time. You run a business badly or without foresight & knowledge of the technology that your median plays on you deserve to fail.

RE: Not so simple
By thequoth on 4/7/2009 5:38:54 PM , Rating: 2
You make a good point... Something you may not have considered is that your store(s) may be in a franchise area and the store owner is making the inventory decisions.

Corporate stores in low income areas are usually stocked with more "Standard" than widescreen due to studies that show the lower class demographic will usually choose the one over the other.

RE: Not so simple
By Boze on 4/7/2009 6:59:05 PM , Rating: 1
You mean put simply...

Most poor people could not, and still cannot, afford widescreen televisions. What's also interesting, is that they don't realize they're actually being ripped off. If you rent a "standard" video, you're missing out on, I believe its up to 33% of the picture (maybe some movie gurus can help me out on this, I really don't remember the picture loss going from 2.35:1 to 1.33:1). Or really, they simply lack the common sense to understand that if someone chops off a sixth of your picture on either side, you're technically watching "less" movie. I was a kid when I figured this out, and was buying widescreen DVDs with my allowance, and later on, part-time after school job money.

Maybe there's a reason that the lower class demographic stays lower class... I guess that old adage about common sense not being too common is all too true.

RE: Not so simple
By bobobeastie on 4/7/2009 8:31:53 PM , Rating: 2
Maybe what you are talking about is a franchise/ corporate issue. I'm pretty sure my local blockbuster is corporate owned and I don't think I have ever even seen a pan and scan abomination on their shelves. Worst case scenario is that it's a late 90's non anamorphic DVD release, like the Rock, that they didn't bother replacing when an updated anamorphic version was released.

I'm not sure about NC17 (I can rent those from their online service), but they have plenty of new releases with the unrated gimmick. They just don't have directors cuts outside of blu ray because they don't want to replace their theatrical cuts.

"I'd be pissed too, but you didn't have to go all Minority Report on his ass!" -- Jon Stewart on police raiding Gizmodo editor Jason Chen's home
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