Blockbuster is expected to announce a loss of subscribers during the third quarter of this year. The drop comes as their chief rival among brick and mortar video rental chains, Movie Gallery, has been faltering and may file for bankruptcy soon.
Over the last few years, online DVD rental pioneer Netflix has been steadily growing at the expense of traditional rental outlets. Last year Blockbuster unveiled a new online rental program of their own, dubbed Total Access, intended to be the first to actually give Netflix some real competition. One of the selling points for Total Access is an option to return movies to brick and mortar stores, allowing faster receipt and shipment of additional movies.
This strategy seemed to be paying off as the program gained momentum last year, and earlier this year even resulted in a net loss of customers for Netflix, the first time that's happened since that company's inception in the late 1990s. However, despite subscriber gains, corporate losses led Blockbuster's recently hired CEO to cut back on in-store returns from the program, only permitting a Limited number, depending on the plan you select. At the same time, Netflix has added Streaming movies and lowered prices.
Although Blockbuster executives assured stockholders that their cost cutting measures wouldn't have an impact on subscriber growth, that doesn't appear to be the case. Perhaps a better question is whether the window for competing with the online giant is closing. Blockbuster should carefully consider their next step unless they want to become just a footnote in the history of Netflix.
Source: Reuters
This strategy seemed to be paying off as the program gained momentum last year, and earlier this year even resulted in a net loss of customers for Netflix, the first time that's happened since that company's inception in the late 1990s. However, despite subscriber gains, corporate losses led Blockbuster's recently hired CEO to cut back on in-store returns from the program, only permitting a Limited number, depending on the plan you select. At the same time, Netflix has added Streaming movies and lowered prices.
Although Blockbuster executives assured stockholders that their cost cutting measures wouldn't have an impact on subscriber growth, that doesn't appear to be the case. Perhaps a better question is whether the window for competing with the online giant is closing. Blockbuster should carefully consider their next step unless they want to become just a footnote in the history of Netflix.
Source: Reuters
