This week, the ball is in the students’ court. We were not assigned a specific topic, so I am at liberty to present to you anything I please. I’m going to give you a piece I wrote in the beginning of the semester about Blockbuster’s bankruptcy. Most of my sources are not first-hand, but maybe you will find some of the information new.
This past September, the Blockbuster video-chain company filed for chapter 11 bankruptcy in hopes to alleviate any additional debt. To further the business’s financial crisis, a recent lawsuit was filed by Lyme Regis Partners LLC.
According to Bloomberg.com’s Joel Rosenblatt, Carl Icahn “used inside information to convert their equity interests into a controlling amount of debt.” The article continues to explain how the lawsuit failed to address any damage Lyme Regis experienced from Icahn’s investments.
Prior to this incident, Lyme Regis attempted to expose the investments of Icahn. Fortunately for the latter, the attempt was singed.
Apart from this current lawsuit, Blockbuster is trying to salvage what is left of the company. David Lieberman of usatoday.com writes about “[Blockbuster’s] plans to reduce debt from nearly $1 billion to about $100 million or less by swapping debt for equity in a ‘reorganized Blockbuster’ with bondholders that hold about 80% of the company’s senior notes.”
Daniel, the store manager of a Blockbuster located in Florida, made note of the effects this bankruptcy has on local stores.
“Three stores in [this area] alone have been closed down. It wasn’t necessarily because [the stores] were unprofitable, but they needed more cash off hand. We are busier [since the stores have been combined].”
But can Blockbuster hold on, especially with these competing, more convenient services of Redbox, Netflix and On Demand?
Thomas, another current employee of South Florida’s Blockbuster, makes a valid point.
“Blockbuster gets video games 28 days before any other company.”
Sure this is beneficial for all the video game gurus but what about the independent film lovers? This is where Redbox, Netflix and On Demand come into play.
“[Netflix’s] instant queue is really cool. I don’t want to wait. Can’t beat it, its $8.99,” Thomas stated.
Thomas also thought On Demand would eventually be the main service utilized in every home. The only reason for their current lack of appeal is the pricing of the movies. With On Demand, an average movie costs from $4.99 to $5.99. Redbox and Netflix seem to blow On Demand out of the water with the lower cost efficiencies.
Unfortunately for Redbox and On Demand, the selection range is somewhat limited. This shortcoming brings Netflix to the forefront of the race.
Travis, a University of Central Florida student, sided with Netflix’s services.
“[Netflix] absolutely [has] a better selection.”
Another student from Rutgers University, Victoria, approved of Netflix as well. When asked to choose between Blockbuster and Netflix and to choose the service with the better selection she simply stated, “Netflix and Netflix!
Surprisingly, one student admitted to never using the services of Blockbuster or Netflix.
“Seriously I’ve never used either,” Danielle stated.
She sided with On Demand all the way. Regardless of the service, the movie rental industry will always be one of competitive nature. If Blockbuster can forget through the beatings of financial depravity and the rival services, the company may just survive.
*Last names have been removed to protect the identities of the people mentioned.
PS- Music from The National. I was first introduced to them in 2008, but didn’t start to really digest their stuff until I saw them live this past summer.