Blockbuster just recently filed for bankruptcy. According to CNN, Blockbuster’s 1 billion dollar debt forced it to seek chapter 11 protection. Its many years of dominance in the video rental industry have come to an end. There is a possibility that Blockbusters’ arrogance may have led to its failure.
I remember when Blockbuster penetrated the video rental market. The visibility that it had was unbelievable! There was a Blockbuster store strategically placed almost on every corner. It became a leisurely household name. If there was nothing for people to do they would say, “I guess we will make this a Blockbuster night.” Over the years Blockbuster got arrogant in the way it conducted business. It ran its operations as if it would never have any competition. The inability to handle increased capacity also played a vital roll in its downfall. The customer service at Blockbuster became deplorable. They charged customers a $2 fee if they forgot to rewind the videotape that they had rented. It became mandatory that in order for you to get an account with Blockbuster you had to have a major credit card.
There are several factors that also led to Blockbuster’s fall from grace. Around 2006 the number of people who rented movies from Blockbuster decreased tremendously as a result of the ability to download movies from the internet. We saw two new video rental companies come into existence. The first one was Red Box. This company became popular by its self-serve video rental kiosk. This was ideal for customers because they could look through a database and choose the movies that they wanted to rent. Then there was Netflix which, unlike Blockbuster, had no late fees. It even enabled customers to purchase movies right from their gaming systems such as Sony play stations. This could be done right in the comfort of their own homes. Realizing that it was losing the war in the video rental industry Blockbuster tried to further compete with these companies by offer their own online video rental program. By now it was too late for Blockbuster. The once innovative video rental company had now succumbed to the success of its competitors. Its non-willingness to change from its arrogant ways might have launched it into non-existence.