Blockbuster failed to read its times

Posted: 30/08/2010 in ARIN6903 Exploring Digital Cultures, Uncategorized

Movie rental giant Blockbuster is about to file for bankruptcy due to poor financial performance. The crumbling of this former giant of the entertainment industry signals not only the end of an era, but serves also as a warning to those companies that still rely on physical formats and base their business plan on their production and distribution. For years, Blockbuster was the biggest, meanest video rental store in the world. Even though it was not a monopoly, as there were smaller rental houses, it held the biggest slice of the market share. However, with the introduction of digital distribution schemes, both legal and illegal, for movies and television shows, Blockbuster suddenly found itself helpless among a pack of wolves (Netflix, Amazon, TiVo et al). Its sin was offering the rental of a product (DVDs and Blu-rays) which was becoming outdated itself. Blockbuster did not diversify and did not respond to an increasingly digitized market.

The company had what its new, fresh competitors only dreamed of: the support of the studios. Instead for pushing for development in digital distribution methods, it kept spending huge amounts of money in maintaining its numerous stores (rent, electricity, salaries): the customers, however, were wandering peer-to-peer networks and recording their favourite shows and movies with TiVo, or downloading material from iTunes.

A Hollywood institution is about to perish. Will it be a warning sign?

For ARIN6903, Exploring Digital Cultures, The University of Sydney (Master in Digital Communication and Culture).


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