Once-dominant video rental chain Blockbuster is trying its hardest to prove that it can compete in the 21st century. It is closing down stores, and has been bulking up its on-demand offering.

But it looks like it may be too little, too late. Last Thursday, the New York Stock Exchange announced that the company would be delisted from the exchange after the company failed to win shareholder approval for a measure that would boost the company's stock price above $1, the exchange's minimum. More often than not, a company's delisting is signal of impending demise.

The only good news for Blockbuster last week was that its bondholders decided to give the video rental chain a six week extension on an interest payment. But the company has a whopping $1bn in debt and the odds of it surviving seem slim. While it has become somewhat cliché to claim that the internet has killed [insert industry name here], the truth of the matter is that technological disruption, led by companies like Netflix and Redbox, is responsible for many of Blockbuster's woes.

Netflix, of course, used the internet to make renting videos as simple as clicking a button and checking your mail, and is now helping make internet-based on-demand viewing a mainstream phenomenon. And Redbox's model, which sports self-service kiosks and $1/day rentals, has obvious advantages over the bricks-and-mortar model Blockbuster dominated before the rise of the internet.

Blockbuster, of course, wasn't completely ignorant of the technological disruption that was taking place around it. In 2007, it bought online video service Movielink. And its on-demand offering takes advantage of set-top boxes, the Xbox 360 and even mobile devices. But execution has always been a problem. Blockbuster dropped Movielink's technology in 2009, and it arguably took too long to develop its on-demand offering.

In the face of technological change, Blockbuster's brand hasn't been a particularly potent weapon. Had Blockbuster moved fast enough, and brought to market compelling new offerings before upstarts like Netflix and Redbox completely disrupted it, the company may have been able to leverage its brand to keep consumers from flocking elsewhere. But today, no matter how hard Blockbuster tries, it will have a hard time winning back consumers. Blockbuster's brand simply represents the past.

As Blockbuster's end nears, there's a good lesson here for other companies facing technological change: your brand can only do so much. And when you don't move fast enough to adapt, it can even become a liability.

Photo credit: sunshinecity via Flickr.

Patricio Robles

Published 5 July, 2010 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2641 more posts from this author

You might be interested in

Comments (5)


Name Tags

Blockbuster really missed the boat in online service. They had the tiger by the tail, but like most things sticking with what used to work leaves you behind the curve.

about 8 years ago


Chuck Bergman, Marketing Manager at South Bend Orthopaedics

The article is dead-on in acknowledging that Blockbuster and other video stores, like Hollywood Video, have not adapted quickly enough to the changes of technology.

Although I enjoy the convenience of Netflix and Redbox, I'm sorry to see the loss of jobs in local communities due to store closings. Unfortunately there is often a local "price to pay" for technological advancement.

about 8 years ago

Fran Jeanes

Fran Jeanes, Internet Business Consultant at i-contact web design

The final paragraph sums it all up. So true. and I echo Chuck - the job losses are a big price to be paid and I feel for those employees who will lose their jobs.

about 8 years ago



they get what they deserve, independants were by far the best and most fondly remembered during the 80's and 90's - blockbuster bullied them and now they get what they deserve - closure - and I remember them making fun of game and gamestation - oh the irony

almost 8 years ago


Tina Bentick, BPO at Northway Infotech

The final paragraph sums it all up. So true. and I echo Chuck - the job losses are a big price to be paid and I feel for those employees who will lose their jobs...

<a href="http://www.debtreliefsecrets.com" rel="dofollow">Debt Management</a>

over 7 years ago

Save or Cancel

Enjoying this article?

Get more just like this, delivered to your inbox.

Keep up to date with the latest analysis, inspiration and learning from the Econsultancy blog with our free Digital Pulse newsletter. You will receive a hand-picked digest of the latest and greatest articles, as well as snippets of new market data, best practice guides and trends research.