Home Blockbuster’s Bankruptcy Could Be the Beginning of the End for DVDs

Blockbuster’s Bankruptcy Could Be the Beginning of the End for DVDs

For as long as I can remember, Blockbuster Video has been the nation-wide go-to spot to rent movies. Some of my earliest movie experiences as a child involved movies my family rented from Blockbuster. When the popularity of online music downloads began shuttering music stores, the world realized that Blockbuster’s days were similarly numbered. Now it seems that number is quickly approaching zero as the Los Angeles Times reported yesterday that an impending bankruptcy could be as close as a few weeks away for the video and game rental giant.

According to “several people familiar with the situation,” Blockbuster executives met with the six major Hollywood studios to warn them of a “pre-planned” bankruptcy the company plans to enter sometime in September. The company intends to file Chapter 11 in order to escape leases on underperforming stores and hopes to soldier on in 2011 with some of it’s nearly $1 billion in debt recouped.

Blockbuster’s decline can be partly blamed on the rise of online rent-by-mail services like Netflix and Gamefly. Other services, like Redbox which lets users rent DVDs at $1 a night from conveniently placed kiosks, have equally eaten away at the retail giant. Blockbuster has tried to react to these competitors, launching both online and kiosk-based rental service, but it clearly hasn’t done enough to help plug the leaks in the sinking ship that is Blockbuster.

The major advantage Netflix has over Blockbuster is its online streaming capabilities. Netflix subscribers can stream a continuously expanding library of movies and TV shows directly to any of a number of devices, including the iOS devices, gaming consoles, and networked BluRay players. While Blockbuster users have the ability to swap discs in stores, the inability to stream any content has long been a thorn in the service’s side.

DVDs are going away. This already happened with music. One day that vast majority of us will no longer buy physical copies of movies and keep them on a shelf. Netflix realizes this – which is exactly why they want to get out of the expensive rent-by-mail business and completely focus their efforts online with streaming content. Blockbuster, by failing to make the move to online streaming, will inevitably go down with the ship as fewer and fewer people purchase physical media.

However, until broadband speeds improve to handle full streaming at BluRay quality, there will still be lingering business for physical disc renters and sellers. Blockbuster hopes it can eventually pull itself out of bankruptcy and continue to survive for a bit longer.

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