Bonus Round Replay: Blockbuster – Hasn’t The Market Spoken?

Reposting through the inevitable.

Hey all. I’ll have something more this week; but for now, a reposting. Back on 23rd March 2013, I posted this article on this blog in response to the administration of Blockbuster and it finding a buyer. Now, a mere seven months later, Blockbuster are back in administration after the business failed to make any profit at all.

As a result, I thought I’d rewrite the whole post but it seemed a moot point in the end; everything that I wanted to say was already said in this piece. And as a result, I thought I’d simply repost it and recheck it for any loose typos and/or errors before putting it up again. I’m doing okay by the way; gotta go to the doctor again this morning but you know, such is my life these days!

You all take care of yourselves in this stormy weather and I’ll do something else very soon. — Kami.

blockbustersp

No Kami, that’s Blockbusters, not Blockbuster.

Eurogamer state that ailing administration-saddled Blockbuster has acquired a buyer: a restructuring company called Gordon Brothers. The acquisition will keep 264 stores open and 2000 staff employed. You’d think this was a good thing, right? Except, I can’t shake off the feeling that the soundbites being tossed out signal a decidedly out of touch new ownership.

“We acknowledge the industry is in transition; we know that we have a challenge ahead but there is still a market to be served…
Gordon Brothers CEO Frank Morton.

The industry isn’t in transition though; the evolution has happened already. The transition has already taken place. Between the modern rivals that offer physical and digital services like LoveFilm, Netflix, NowTV and others such as Freeview and Sky services, then combined with the smaller, more flexible and specialist independent stores still dotted about the place, Blockbuster have been in decline for some time. The market has already changed and the way people obtain and consume their entertainment has changed. Blockbuster cannot continue to trade in the same way, or it will find itself once more back in a dangerous position where it cannot pay its way. I already sincerely doubt that this is a company that will turn a profit someday, unless there is a radical mutation and money is pumped into it to make it competitive in a market dominated by now-bigger names; but it would be an incredibly risky investment for arguably no real certainty of a place at the table of modern rental or streaming services.

Blockbuster are another company who sat back and watched as the Internet age dawned upon them and thought they could weather the storm, or that it might have been a bit of a fad. Much like HMV, there have been comments from former staff who acknowledged that the Internet subscription package was introduced when they had no other choice, and even then they knew it paled into comparison when compared to its rivals. Unlike companies who grew and took advantage of the revolution that was the Internet as early as possible, Blockbuster simply arrived when everyone had already set up shop, when its presence and brand power had been diminished and where it could no longer negotiate better terms. It had the opportunity, like many companies have, to grasp the bull by the horns. Instead it thought it could wait for the young pretenders as it felt to soften the bull up. It should be no surprise that the new blood were able to best the bull and take control of the situation, and make the old hats of Blockbuster seem positively ancient in comparison. It has simply tried to use its brand name to leapfrog over those who did all the legwork, and it hasn’t worked.

The market spoke – the company went into administration, after all. I don’t like to say this, but sometimes death is an inevitable part of moving on. Far from a market to serve, the market has made its intent quite clear; the majority simply moved on and like the Spice Girls (minus Victoria, who has officially said she will never reform again. Sensible lady!) there is a certain amount of trading on past glories. Past glories, evidently, that the market cares very little about. We have new heroes to look to now, and we expect the old ones to retire with some shred of dignity left in them. Debasing themselves for money is hardly surviving, after all.

tetris

No Kami, that’s Tetris… busting blocks, not Blockbuster.

Some will say that this is good news as it “saves jobs”. It saved less than half the jobs that Blockbuster had last year, and even these jobs are likely to be at risk of being cut or, worse, see wages frozen or slashed in an effort to convince the banks and the market there is money to be made here. It’s a dishonest way to do things and staff deserve better – no really, this isn’t fair on anyone at any point at any time ever. Keeping people employed is a noble goal, it is true, but it is only a noble goal if the end result is that they can secure their jobs in the long-term. Any attempt to deviate or delude the staff, the company or the market from the realities of the financial side of things isn’t noble, it’s foolish and will never truly save the brand. These jobs are safe for now, but there is clearly a lack of stability that could see more cuts, more layoffs and more pain down the road. You can’t fudge the numbers forever – eventually, the math really will arrive and bite you on the backside. The ultimate victims are the staff who live in a constant state of Schrödinger’s Cat; with a job, but never knowing if and when it will be taken from them. That’s not a pleasant place for any human being to be in, no matter how good/bad/lobotomised they are at their job.

“This transaction provides Blockbuster a future in the UK,”
Deloitte, adminstrator.

But does it? As I see it, Blockbuster has been slowly dying out. I do foresee a future for Blockbuster as it is; but it’s not a pleasant one, and it isn’t a future many would wish upon others either.

For me, Blockbuster will eventually see the same fates as HMV (still seeking a buyer), Woolworths (Gone and half-forgotten), Comet and their ilk. The brand does quite likely have some residual value, but the business itself was not working. You don’t go into administration if things are all swell, after all. The markets have evolved, and the skittish oldies who were wary of grasping the nettle of the Internet have found themselves unable to compete and survive in this brave new frontier, this amazing new landscape. Blockbuster needs more than a buyer; it needs someone radical to come in, grab it, turn it upside down and rework it. But in doing that, more job losses would be inevitable anyway; more stores would need to be cut to direct the money into the reformation project. As well as lots of outside money. Continue on as is, and the scale of the problem will not improve; rents will not magically become cheaper without government intervention (which would be welcomed but is unlikely to happen in any reality you can name!), studios and distributors will not give you nicer deals because you’re having problems. All the while, independents and the big new names on the scene are swallowing your market up entirely; caught between a rock and a hard place, there’s not likely to be much – if any – market left for the traditionalist Blockbuster.

brickbuster

*facepalm*

Mark my words, it won’t be long before we’re back with Blockbuster wondering where it went wrong this time. What is going to go wrong is that there isn’t anyone with the balls necessary to save it; this needs to be an unethical Robocop-like procedure that strips away most of the human part and bolsters it with the digital and online options. It can’t survive in its old form; and even if someone does have the Kahunas needed to revitalise the brand, it’s still going to need to somehow carve a slice of the market away from current options taking the market by storm and eating up the market like a plague of locusts. To survive, Blockbuster can’t shrink – it needs to grow. It needs to be nurtured, from the roots to the tip, like a fancy swish L’Oreal advertisement. It needs to find ways of making more money without putting prices up. It’s here that I think the conservative people in power will struggle; they will simply lack the vision and imagination to make such a reality occur, and without it, there is no future. No hope. Just more pain and turmoil for people who frankly deserve a more solid, concrete future plan.

Saving a company always appears a noble endeavour. But the ultimate point of a new buyer in this case is to make money from it. Without a clear plan of action, without identifying and solving the problems it originally faced, then it’s a complete non-starter. It will always end the same way when the new buyer simply can’t pay its way; between digital services, postal services and bricks and morter rents to pay, when they can’t juggle them all at the same time it is back to the Administrators who will carve off another large financial slice for their services. It would be funny if that wasn’t so disturbingly brilliant…

I have no love for Blockbuster. I have always, personally, found it soulless. But that doesn’t mean I don’t wish those in its employ the very best of luck, and I hope – for their sake – that there are big changes afoot. I hope they have secure jobs. I hope this works out for them. I doubt it will, but I feel terrible for the human cost in this; those laid off, and those constantly in fear of losing theirs. Numbers are pushed about and compromises are made and the people who suffer are not the consumer, who has a ton of options available to them in the modern era, but to the staff; staff who probably live in areas where there are fewer and fewer jobs available for them. They are the real victims in all of this, and it’s for them that the company should survive. If they can keep it going, then I’d be thrilled for them and their dedication.

I just don’t think it will happen. As harsh as this sounds; sometimes, it’s best to konk something on the head when it’s dying to stop it prolonging its agony, or hurting others, as it thrashes about.

That point should be reached by now. But like always, we have a very human need to prolong the inevitable. I just hope we’re aware there are consequences to such actions – the doctors will still get paid, after all…

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2 Responses to “Bonus Round Replay: Blockbuster – Hasn’t The Market Spoken?”

  1. Sazanamistyle says:

    Hello, I got recommended here by a friend who couldn't believe he read articles about rental places on two different blogs in the space of a few weeks. I find it charming here, a bit white maybe, but it's a good, if traditional color for a wall.

    My rabbit had a question, I'm afraid. He asks about this: "the smaller, more flexible and specialist independent stores still dotted about the place… " Are these shops in real life? Are they thriving? Why are they not going out of business?

    My rabbit wants to know if the people who work at these stores have lovely feet. I take my rabbit to Tsutaya, the Japanese rental chain, which is very popular, because he likes to bite the people's feet there. We have Hulu and Netflix and all that rot (Tsutaya even operates services like that), and we've had exclusive video services, TV playback, and so on in cell phones well before Apple unveiled the iPod. It was so ubiquitous back then Hideo Kojima was afraid of its all-encompassing power back in the days when Metal Gear Solid 3 was a new game. It's only gotten more ubiquitous now and yet Tsutaya and rental chains still carry on in Japan.

    I wonder if, in smaller countries where travel to rental stores is infinitely more convenient, they are still viable? I wonder why they still thrive in some areas. I know I will always prefer them, even though I use both types of services.

    I do worry for my rabbit though. He hasn't been biting enough rental clerks' feet lately and I am concerned about his iron levels. Please advise.

    • KamiOnGames says:

      Smaller, more flexible stores don't have to just be about any one thing; my nearest store, which is very small, orders things in for people on request and does fun stuff like raffles and loyalty schemes. But they cover a wider range of things; they sell DVDs and games. They have vinyl, which some people still enjoy flipping through. They also sell merchandising, the often collectible stuff that can retail for quite large sums of money if you're patient and/or smart. They get in rare items for collectors to drool over, and convince them to part with their cash. They also recently opened a bookshop nearby; which, as it turns out, is quite profitable as well. Smaller retail stores that sell products like DVDs can differentiate by offering a wider range of services – and indeed, products – than the likes of Blockbuster. And of course, they can take more advantage of the digital age too; eBay is still an extremely viable and successful marketplace.

      And whilst they obviously will make losses in some areas – there are larger gains elsewhere. For every £5 they lose on a new game, they make it back on second-hand copies of older games that cost them barely anything. That's business. You don't make a loss, unless you can be sure you're making it up and more in another area. Otherwise you're just throwing money away. You buy in a stock of Doctor Who figurines in pristine condition because you think you can sell them for more than you paid for them.

      Part of this is that many independent stores did indeed close in the late 90's; there's no point denying it, because it happened. Blockbuster effectively throughout the decade drove smaller rental shops out of business – because it could make larger margins on cheaper deals, which smaller chains simply couldn't match at the time. What is happening now is simple diversification; or rather, the market has split into two very different new halves. Blockbuster may have offered cheaper convenience at the time, but now of course there's even cheaper convenience – digital rentals have all but swallowed that up, and they have even less overheads; no bricks and mortar to pay rent on, or property taxation, or maintenance. If you go to a physical store, for whatever reason, you want something more than a cold store and a grumpy clerk. And that's where some are beginning to make their mark. Because it offers… more. More than a rental. More than a purchase. There's something of value to the experience. And they are out there; thriving? Some probably are. I can't speak for all of them, because this is the UK and you're I'm guessing in Japan. But it's obviously much nicer, no?

      I'm sure they all have lovely feet though. Still, in terms of food, I'd say the administrators and CEOs of these companies would be much tastier. Sadly, the retail clerks don't tend to have much meat on them. They're often quite badly paid. So they end up very bony. The guys at the top, however, obviously make many many times more than any retail clerk will see probably in a decade. As a result, they're likely far better fed and therefore will have much fleshier feet and ankles.

      Still, rabbits need higher potassium intake than iron; a low potassium intake has been observed to have a pronounced effect on the structural integrity of their bones. So try a park on a busy day… health freaks have artificial supplemental intakes of things like potassium and iron. Arguably more than their bodies even need on a day-to-day basis.

      Might want to make sure the bunny avoids the feet though… feet can get a bit stinky after a half-hour jog…

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