Blockbuster – no surprise – is filing for Chapter 11. The stores are going to stay open while it tries to renegotiate debt and cut costs.
It’s in this mess because it can’t compete as a distributor of DVDs. Mashable does a nice job of summarizing the problem:
It’s the same thing that’s been happening to the newspaper and publishing industries; new and more efficient business models have emerged that have made their models increasingly obsolete. Netflix’s rental-by-mail model and Redbox’s $1 DVD kiosks have clearly won, but so have the online video distribution models that Netflix, Hulu, YouTube (YouTube) and others have pioneered.
So if you’re in any kind of distribution business, you’re one innovation away from obsolescence. That is unless innovation is built into your process.
What’s a brick and mortar distributer of DVDs to do in the modern age? Instead of distributing discs, it can provide entertainment.
It sort of figured that when it started renting games.
So what else can it do? Start brainstorming how it can entertain people. Despite the successful online business models, the real space still rules. People will travel to be entertained and share experiences. Look at Blockbuster now, it’s not any more fun to be in the middle of those shelves as it is to scroll through web pages in Netfilx.
I can brainstorm all day on this but I don’t have any coin in this game. It’s easy for me to make suggestions. I don’t have to pay for it or do the work to make it happen. Especially since anything I come up with will involve taking shelves out of the stores.
Anything they do now to think differently will be expensive. Not exactly the best strategy for a company in Chapter 11. But they’re not going to come out of it unless they do something painful.
Good luck guys.