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August 31, 2021

Is there any hope for Blockbuster?

How do you tell something great it’s time to say goodbye?

Who, in 1994, would’ve ordered Lassie put down? Who, in 1991, would’ve suggested Magic Johnson retire? Who, in 2008, would’ve urged The Wire  not to come back for a sixth season?

And who, in 2010, is going to tell Blockbuster the ride’s been fun? Because Blockbuster, it’s probably time to say goodbye.

Yes, Blockbuster has fallen on hard times. The home video giant, the  place to be for all your movie and (most of your) video game needs in the ‘80s and ‘90s, appears to have joined newspapers as just the latest victim of the Internet and modern consumer culture, unable to keep up with the times.

With more and more viewers turning to alternative ways to catch their home theatre action, Blockbuster’s business has slumped with almost remarkable consistency, reporting losses of nearly $1 billion since 2007.

And, after missing a $42 million payment to bondholders earlier this year (an extension was granted), the Wall Street Journal reports that the rental chain may just be headed towards a Chapter 11 filing in 2010: bankruptcy for Blockbuster.

Should Blockbuster actually seek bankruptcy, which will restructure the chain’s debt and free it from some 500 underperforming franchise leases, this might all but sweep the dying franchise under the rug once and for all – if not from a business operating stance than one from a consumer’s perspective.

With a delisted stock price that hovered around eight cents per share Monday, to say Blockbuster has become an afterthought would be putting it lightly. Louie Anderson is an afterthought. Blockbuster is hardly even on the map.

For all its cash flow pitfalls – of which there are many; the Dallas-based corporation lost $69.3 million for its second quarter to leave it $136.4 million in the hole so far this year – the sins of Blockbuster have always been tied to relevance.

In an age when Netflix, iTunes and video streaming sites have seized the movie/TV rental market, Blockbuster’s strategy has remained largely unchanged (even its Blockbuster On Demand was painfully late to the party) and, in turn, largely unprofitable.

Indeed, the cards seem to be stacked against Blockbuster and any return to prominence appears unlikely. News this week that Google and YouTube may soon team up for pay-per-view rentals (“Buy-bye Blockbuster!” opines MSNBC) surely doesn’t help, and neither does word that Boise, Idaho – a prominent U.S. city with more than 200,000 people – will close the last of its Blockbuster franchises on Wednesday.

Who, then, can save Blockbuster? Maybe nobody. Blockbuster was surely great it in its time, but maybe, as Russ Britt of the Wall Street Journal writes, it’ll fade away as the “poster child of a video age gone by.”

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...