Trading of Blockbuster stock was halted today after the share price plunged more than 77 percent, all the way down to the miniscule $0.22 a share. Why the bloodbath? Bloomberg says the movie rental company has hired a firm to explore Chapter 11 bankruptcy filing, according to Tech Trader Daily.
It’s not like we didn’t see [...]
Trading of Blockbuster stock was halted today after the share price plunged more than 77 percent, all the way down to the miniscule $0.22 a share. Why the bloodbath? Bloomberg says the movie rental company has hired a firm to explore Chapter 11 bankruptcy filing, according to Tech Trader Daily.
It’s not like we didn’t see this one coming (and predicted it). Blockbuster has really been dying a slow death for a long time thanks to its very slow reactions to the changing market. At a time when Netflix, a movie rental-by-mail service, is extremely popular, Blockbuster still has over 7,500 brick and mortar stores — stores that are expensive to maintain. Blockbuster did get into the DVD-by-mail business, but too late to make a dent.
And now things are shifting to streaming rentals and purchases over the Internet. Netflix is once again a leader in this pack, while Blockbuster didn’t think it was an important business to get into — until it realized it was extremely important to get into, and reversed course quickly, but with an inferior set top box product for the living room.
Instead, Blockbuster decided it needed to focus on its stores and making things like kiosks — yes, kiosks — where customers could load up digital movie players with movies. But if you going to digitize the films, why not just send them over the Internet directly to customers? Why make them come into stores to get them?
Even more hilarious was Blockbuster’s attempt to buy Circuit City last year. No one seemed to understand that deal, and Blockbuster eventually pulled out. It was a good thing too, because that company filed for bankruptcy last year, and now is completely out of business. Perhaps that would have just quickened things for Blockbuster.
If it does get its Chapter 11 protection, Blockbuster needs to do something drastic to save itself. Something like cut a deal with Nintendo to get its online service on every Wii already sold. Otherwise, there will be no due date on this return.
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