It's Not Hard to Figure Out Why Blockbuster is in Trouble

Blockbuster is the largest video store chain in the United States, but it is having to make adjustments in order to compete with new rivals.  This was detailed in section B1 of the 9/16/09 Wall Street Journal: "Blockbuster to Shutter Up to 40% of Stores."  According to the article the giant chain will "close as many as 1,560 of its 3,750 retail outlets."  Cited as reasons were competition from Netflix and Coinstar.  Though not given as a reason in the article, I would have to think that the ability for people to now download rentable movies online from Itunes, for example, would also cut into their market share.  Add to all this competition the fact that people are not renting as many movies these days in general, and you can see why Blockbuster has a problem.  

I would have to guess that Blockbuster's leadership had known this day will come, though I wonder if they anticipated that things would get this bad for them.  I see them much like Kodak at this point, a giant company who once dominated an industry which is now struggling to adapt to dramatic changes brought on by technology.  

Blockbuster has tried to compete directly with Netflix in the mail order rental market.  According to the article however, they have not been very successful.  Netflix has 10.6 million subscribers while Blockbuster has only 1.6 million.  Blockbuster was up over three million mail order customers while they were aggressively marketing this new medium, but as soon as they stopped they lost nearly half of their members.  I must say that the reason this article intrigued me so much was the marketing of this service, which I found to be so over-the-top aggressive. From a customer's standpoint I can say that it was so bad whenever I went to rent a movie from my local Blockbuster (Carytown) that my wife and I started to avoid the place.  One associate there was so rude and obnoxious in his refusal to take no for an answer that I was forced to complain.  With tactics like these who needs competition to deteriorate business?  It does not surprise me that the enterprise is now falling on its face.  Coupled with this bad business tactic is the fact that they claimed to do away with "Late Fees", while really not, and when people complained about it they simply scrapped the whole thing.  Also, I have noticed that their price point for rentals changes quite frequently, to the extent that it seems like I am paying a different price every time I go in there.  

All of this leads me to believe that the leadership is not united in a common purpose, and is fragmented about how to proceed.  They had better get it right, or the days of having a "Blockbuster Night" might soon be over.