This will be the first of a series of posts that I am publishing that explores the current market of Movie Rentals and how some of the changes to the market affect how and where we get our movies.
After hearing the news that Blockbuster would be filing Chapter 11 Bankruptcy, I was put in touch with with Barry Guest, Vice President and General Manager of Blockbuster Canada, and he had some great news to share about Blockbuster. Well, great news for his side of the business anyways.
It appears that amidst the official filing of Voluntary Chapter 11 (protection against bankruptcy for the reorganization and revitalization of the company) that Blockbuster Canada is not named among their assets, and would remain functioning as the separate entitiy that it is.
TMB: We heard yesterday that Blockbuster was filing for Chapter 11, and it appears that here in Canada, you are not.
BG: Yes, that was filed and confirmed this morning that the US had filed Voluntary Chapter 11 and that the legal filing excludes Blockbuster Canada. We are a different company, we have our own assets and cashflow to maintain our business and to deliver our business objectives and strategies.
TMB: Was the current situation something that Blockbuster US could have avoided?
BG: I cannot comment on the US and how they run their business. I can comment that the Canadian is quite different. “By Mail” services haven’t taken hold here the way they did in the US. We have had a very solid growth plan over the past years and have over 440 stores coast to coast. [We] still maintain a positive market share and are growing that market share in the industry.
TMB: Netflix is now offering direct streaming content to Canada? How does this affect Blockbuster Canada?
BG: Netflix announced yesterday, and I think that competition is a good thing. They have not launched “By Mail” subscription and that’s what their business was founded on in the US. They also are offering older content, and older content on new devices will be interesting to see how that performs. There is some unclarity on facebook and twitter about volume you stream and service [provider] you have will maybe bring additional costs to you as a consumer.
From Blockbuster Canada’s perspective it would make sense for us to evolve into different channels of distribution. That’s not an announcement.
The recaptolization of our US parent will only help us get to broader strategies here in the future.
TMB: So, not an announcement but more of a “something you may be looking at”?
BG: Absoultely. And not because of the filing, and not because of Netflix. We have been looking at that for some time now.
TMB: Because it would make logical sense to keep up with the evolution of the industry and do what makes sense for the business as a whole?
BG: We will be formulating our own plan, and watching the marketplace closely and digital content from everything that has been reported to us. Still the Canadian consumer gets most of its rental via hard goods through our stores across the country.
What do you think about Blockbuster reorganizing? Can they find a plan that works that serves the consumer?
I was a member of Blockbuster.com and Netflix.com and preferred the latter. Blockbuster was more expensive and never seemed to be able to send the movies I liked out although being able to return the videos to the store in exchange for another video was awesome. Unfortunately, as soon as they started closing their stores Netflix made their plans to split streaming and dvds, almost doubling the cost of their service if you wanted both features.
Even when Netflix raised their prices Blockbuster.com still didn’t make any kind of push to steal back their customers. They deserve what they are getting.
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It’s only a matter of time… I used to work for the now defunct Movie Gallery in their Canadian division. It started the same way. First the U.S. division filed for Chapter 11, and this would have no effect on the separate Canadian entity. Some time past with restructuring and closures and finally the announcement that the U.S. portion would file for bankruptcy. Movie Gallery Canada would then try and run on its own but its debt in the U.S was too great. Five months later the Canadian store would be closed. What’s the moral of the story? Brick and mortar DVD rental chains are a dying breed. The digital medium is too prevalent. Even the Netflix DVD by mail’s days are numbered. Now the Mom & Pop video store with the massive back catalog of films will always have a small place for them in the market, but the chains have no chance.
I think we have to be honest with ourselves here… isn’t this a good thing? Blockbuster was freaking highway robbery and before Netflix and Red Box started driving it out of business, it drove all the local video rental stores out of business. I have zero sympathy now, given Blockbuster’s past — and its historically outrageous prices and gimmicks (early returns you’d inevitably miss on the second day, anyone?).
I am a store manager for Blockbuster Video in Kansas. I can assure you that the bankruptcy is a good thing. I know that it sounds ironic to say such a thing but this is actually helping the company out. This will free the near billion dollar debt by using equities with senior shareholders and etc. We had a conference call on Thursday morning and listened to Roger Dunlap say himself that we are still open for business and that we aren’t going anywhere. Basically, the Chapter 11 will be used in a way to start from scratch. It will be used to shift our focuses and fix the mistakes we had made. Yes, Netflix had an affect on BBV, but a lot of people don’t realize how well Blockbuster’s Total Access plan is compared to Netflix. I won’t get into details because it will sound like a sales pitch, but it is a pretty good program. More customers have been coming in since the announcement claiming that they don’t want to see the store close. The other thing that’s good for the company is that the movie studios prefer Blockbuster over Redbox and Netflix. Both of the competitive companies de-value the product the moment in comes out because of the prices of their plans. This is why Warner Bros. made the 28 day window titles with Blockbuster and that Sony will have a similar 28 day window with Blockbuster starting in October. I have worked for the company for six years and have seen many changes within the company. I have no doubt in my mind that this company will be fine once the smoke has cleared. Thank you.
I agree that there is a benefit to this restructuring.
However your claim that a studio “likes” one over the other is nonsense. The distributor will go with whoever gives them a better deal. Its always about money. The only thing they “like” is your money. Blockbuster PAYS for the rights to rental before some of their competitors, and the imposed “28 day window” is a part of that exclusivity they PAY for and this additional overhead affects the price of the rentals.
This advantage is a business arrangement, not an issue of a studio’s distributor feelings.
I’m surprised that Blockbuster’s decision to file for Chapter 11 only applies to it’s American branch and not the company as a whole. Back in the ’90s-’00s, business was a-booming for Blockbuster, but with mail-in services such as NetFlix and Redbox, it was clear that Blockbuster was doomed from that start unless it changed with the times. It should’ve hopped on the bandwagon a lot sooner.
Perhaps the US branch could reorganize as to where it’s entirely an online-based market that mails in both movies and video games, keep them for as long as they want with no late fee (hey, it works for NetFlix) and let people purchase used movies/games?
The Canadian Blockbuster remains profitable. Why should it be punished for its US parent company’s failures?
Nothing wrong with Blockbuster Canada, they shouldn’t go down with the ship. On the same token, Blockbuster US could still dig themselves out of this hole. If there wasn’t a chance, they would be liquidating, not rebuilding.
Correct me if I’m wrong but netflix and such services aren’t that big in Canada just yet?
I remember reading just this week that the PS3 just got netflix instant streaming up there?
If so than the climate in Canada could change pretty quick for blockbuster and they could find themselves in the same fight they are having in the US right now!
And Blockbuster Canada has the opportunity to learn from their parent company’s mistakes.
Mr Guest did tell me that Blockbuster is working on strategies already and they welcome the competition.
I just thought the chapter 11 would apply to the whole company, though, not just a particular area of it.
Blockbuster Canada is a separate company.
Obviously they work closely with their parent company from which they spawned, but they are independent of them financially and run their own show.
There fucked.
Baseless ramdom guess or would you like to elaborate on that?
“official filing of Voluntary Chapter 11 (protection against bankruptcy for the reorganization and revitalization of the company) ”
That and the fact there blockbuster.
Imo its only the beginning of their downward spiral into nothingness….
Ok, so you don’t want to elaborate. You just want todisqualify your statement to blind opinion. That’s fine too.
Voluntary means they willingly did this. They were not forced to do it. Chapter 11 means protection from bankruptcy, not bankrupt. And “because they are blockbuster” is just mud slinging.
I thought you had a reason but it seems you don’t.
“Voluntary means they willingly did this. They were not forced to do it. ”
And your also not “technically” being forced to wear a oxygen tank when diving yet without out it your probably gonna drown so in a way, yeah, you are being forced but not by any legal wording or such, just by a little thing called common sense/self-preservation.
Same with blockbuster, maybe in a legal wording it was technically voluntary but did they really have many other options? Where the heck would they be without it? drowning…… although imo there still gonna drown this will just slow things down a bit and give them some what of a fighting chance.