While most observers suspected that video rental Goliath Blockbuster was headed toward Chapter 11 bankruptcy, hometown paper The Dallas Morning News cited unnamed sources who say Blockbuster will file its petition by mid-September. Since the company is $1 billion in debt and has warned investors about a possible bankruptcy for nearly two years, no one should be surprised.
But a Blockbuster bankruptcy doesn't necessarily mean curtains for the once-dominant movie rental company. In fact, Atlanta bankruptcy lawyers would tell you that the process ideally is an opportunity for a fresh start.
Still, the question remains: What kind of a future should Blockbuster expect?
Any attempt at answering that question must begin with an analysis of what went wrong in the first place. The company was acquired in 1994 for $8.4 billion and now is valued at just $24 million, according to FastCompany.
Some say Blockbuster's brick-and-mortar model put it at a disadvantage to nimbler competitor Netflix, which maintains warehouses and ships DVDs to its customers. And then there's Redbox, which also was able to operate more cheaply by using self-serve kiosks. Digital streaming services and on-demand offerings also cut into the company's business.
In other words, there are many plausible reasons for Blockbuster's decline and imminent bankruptcy. And for the most part, they have to do with the bottom line; particularly, costs associated with keeping the lights on at its more than 5,000 U.S. locations and the employees who staff them.
A few of the suggestions made in the FastCompany article include shuttering its physical stores, becoming an all-digital service or focusing on its kiosk business. While bankruptcy offers an opportunity for Blockbuster to trim the fat and go lean, it seems as if any of these options would reinvent the company as a copycat of one or more of its competitors.
That means Blockbuster's days might be numbered after all. We'll see.
Related Resources:
- Help for Your Business During Financial Trouble (FindLaw)
- Contact a Bankruptcy Attorney in Atlanta (FindLaw)
- Blockbuster Employee Stabs Himself to Get out of Work (FindLaw's Legally Weird Blog)
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