Netflix and Redbox continue to eat away at Blockbuster
It appears that Blockbuster is about to report a loss of $193 million for 2009, and things don’t look to be improving any time soon.
The former king of the movie rental industry has found itself quickly losing ground to the likes of online rental company Netflix and DVD kiosk merchant Redbox. According to CNET, Blockbuster is set to announce a loss of $193 million for 2009 and intentions to close 20 percent of its retail stores through out 2010. In April 2002, Blockbuster stock was trading for $28.60, on Feb. 9 the stock closed at 37 cents a share.
In stark contract, Netflix stock is currently trading at $61 and in its last quarterly report it showed a profit of $30.9 million, an increase of 36 percent over the same quarter last year.
Blockbuster is apparently looking into expanding its online streaming video presence, something that Netflix has a large head start over the company. The Blockbuster kiosks are also looking at being expanded to try to give more direct competition to Redbox. Although the kiosk vendor is having its share or problems as of late, there is no question that the business concept has really captured the imagination of consumers as the new method of renting their films on the weekends. If Blockbuster has any hopes of catching up in this particular market remains to be seen, but Redbox has such a jump start, it could be quite a long road for them.
Movie Gallery, the former biggest competitor to Blockbuster, filed for chapter 11 bankruptcy protection last week, its second time since 2007. At this point, saving the mainstream brick and mortar video store may be impossible. Your smaller mom & pop stores that specialize in the unusual will probably survive, but your traditional store with a hundred copies each of the newest releases are probably not long for the world at this point.
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