{Photo courtesy of Digital Trends}
With the Red Box coming about, & adding new machines to every other corner, movie stores started to see a major decline in business. According to Daily Finance, between 2008 & 2009 their revenue was down by 30% & later that year by 54%. That year it shut down 200 stores that weren't producing much revenue, & the years following closed close to 800 more stores.
Just out today, according to Channel Seven News, Blockbuster filed for bankruptcy in August & if you have any of their gift cards, they will only be good for seven more days, expiring on April 7, 2011. The LA Times states that Blockbuster was over $1 billion dollars in debt when they files in August for chapter 11 bankruptcy & growing competitors such as Red Box & Netflix were to blame. The bankruptcy crosses out the company's debt & equity of the once number one DVD rental store in America.
I hate this for companies that never really saw it coming, until Red Box & Netflix hit the shelf. But I guess that this is just part of the corporation world. Things comes & go...now is the time for Red Box & Netflix to take over & for actual movie stores to go. Our kids probably won't even know you could once rent movies at a STORE! All they will know is the "big machines outside McDonald's"! Ha!
Dear Kati,
ReplyDeleteI never really thought about Redbox and Netflix being responsible for big and small movie rental stores going out of business. It's kind of like when big book retailers move into a community and knock out all the local stores. Redbox and Netflix are so much cheaper than spending $6+ on one movie rental.
Also, it's putting a lot of people out of work. When they shut down all those stores they put a lot of people out of a job. I'm sure that's not something people think about when they choose Redbox and Netflix over going to an actual store.
Great post. It really made me think about how small things like a little red kiosk outside McDonald's or Kroger is affecting the economy and other corporations.
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ReplyDeleteDear Kati,
ReplyDeleteThis was a great piece. I've noticed a lot of movie rental stores in my hometown being shut down and at the time I had no idea that it was because of Red Box!
It's crazy to think that one company can cause another company to file for bankruptcy. In just one year they had to shut down over 1,000 stores?!
Even though it's sad that people are losing their jobs due to stores being closed, you can't argue with the fact that $6-9 is WAY too much to spend on a movie that you are only going to watch for one night.
Thanks for sharing this information! It's really interesting and let's me know what's going on around me!
Genet
Dear Kati,
ReplyDeleteRecently movie stores have been going out of business. The reason for this is because they were unable to keep up with changing business conditions. Like you said in your blog post Red Box only cost one dollar to rent a movie. The other movie companies charge much more than that which puts a drain on people’s wallets during a recession. Another thing you mentioned was that Red Box has many different locations. The other movie stores only have one or two locations around town while Red Box has several locations around town. This makes Red Box more convenient for customers and makes traditional movie stores obsolete. Thank you for writing Kati. Changing business conditions can greatly affect how businesses operate and could eliminate traditional businesses that everybody is used to. I am glad you wrote about bankruptcy because it is a crucial part on our economy today.
Junco
Dear Kati,
ReplyDeleteI enjoyed reading this post. It's weird to think of a world without video stores but I think this is a good example of how ruthless the corporate world really is. RedBox and Blockbuster offer the same products but RedBox is able to provide them cheaper. RedBox has the advantage in not having to pay for store locations or employees. That is what ultimately brought Blockbuster down.
Thanks for touching on this topic. It is a real eye opener to the corporate world.
-Elephant
Dear Kati,
ReplyDeleteI was very interested in this topic. Honestly the picture of the red-box caught my eye and i just had to see what it was about. After reading it i feel bad for Blockbuster. It is actually a really good store and I'm sad that they had to file Bankruptcy.
I really loved this statement "Our kids probably won't even know you could once rent movies at a STORE!" Sadly it will probably be the truth. In the future I'm pretty sure our kids won't even know about DVDs or that you could go to a store and rent them. It will be sad if my prediction actually comes true.
I very much agree with the fact that Red-box may be the reason these companies are filing for bankruptcy. When it first came out it was such a crazy amazing thing to do. Nobody had ever thought that you could rent a DVD for a dollar. On the other hand i was skeptical of the whole concept of swiping your debit card into a machine for just a dollar. I mean you can't even use cash.
This post was a very good read. I never even thought that red-box could be a problem for the movie renting stores. Although it does make sense considering their DVDs are only a dollar.
Sincerely,
Klipspringer