If ever there was an example of changing media markets Blockbuster and the market for home video represents a classic case study. Early Thursday morning, September 23, 2010, Blockbuster filed for bankruptcy protection or Chapter 11. Once-mighty Blockbuster, which had at its peak somewhere near 4,000 stores, had ruled the home rental market for years after driving out most of the family-owned rental houses and competitors like Hollywood Video and Movie Gallery.
But then the digital revolution hit, and everything came unglued. Rather than recognize the massive technology shifts and changes in consumer tastes, Blockbuster ignored what was happening across society and stayed the course. Only after upstart Netflix started seriously crimping their business model did the company start to make changes. By then it was too little too late.
The revamped Blockbuster that emerges from Chapter 11 will be a shell of its former self. In a world where broadband wireless distribution is becoming the way most people will access content, Blockbuster's brick and mortar stores are irrelevant. The company will try to compete with Netflix via online and mail distribution, but they won't catch the leader. Redbox is also growing across the US for those users who rent on the spur of the moment for $1 a pop.
There's a lot to learn in the media economy about Blockbuster and its demise. For some more information, see today's Wall Street Journal story:
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