Blockbuster Facing Bankruptcy After Delisting By NYSE
Blockbuster was once the dominant force in video rentals. How times have changed. The company is now facing bankruptcy straight in the face.When you think about a business filing bankruptcy, the reason usually has to do with some seriously bad business decisions. One needs to only look at General Motors and Chrysler to see such disasters. The case of Blockbuster is a bit different.
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It wasn’t that long ago that we all drove to the local Blockbuster to rent videos and DVDs. The company was simply dominant. Then the web started evolving business niches very quickly. Before anyone new it, a couple people came up with an idea whereby they would have a DVD rental store online. That company is, of course, Netflix.
As the dominant dog on the block, Netflix failed to react to the Netflix concept. It would take years for it to do so…years to late for it to survive. The problem is simple. Netflix has much lower overhead than Netflix since it doesn’t have any retail stores in the brink n’ mortar world. Blockbuster has tried going with the mailing option, but it is too little and far too late.
Blockbuster has been running huge losses year after year. Now the viability of the company moving forward stands on a knife’ edge. The New York Stock Exchange has delisted the stock. This is obviously a bad sign and it is hard to imagine the company every recovering from this fall despite the efforts of management to save it. Simply put, how can it compete with Netflix and other companies offering simple services? It can’t.
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Interestingly, the Netflix business plan is also under pressure for reasons beyond its control. The problem is the snail mail system. The Postal Service is hemorrhaging losses and trying to raise the cost of shipping again. On top of this, it is also talking about ending weekend deliveries to save money. That will hurt Netflix. Whether it can adjust in a better manner than Blockbuster is something we will all have to see.
So, is Blockbuster going to file bankruptcy? All indications are it is just a matter of time.
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