Blockbuster, the $500 million video rental chain, has been in a long battle to remain relevant in the Internet-enabled age–lately by attempting to strike a deal for online content distribution. But the company’s Internet leap may be too late: An FCC filing has revealed that the company is in deep trouble.
The filing, made to the Securities and Exchange Commission late yesterday, shows that the company is unsure whether it can continue doing business. Specifically, Blockbuster may not survive the months between a planned $250 million loan deal arranged last week and when the agreement goes into effect on May 11. Blockbuster management say there’s “no assurance” the company can meet the requirements of the deal.
In effect, the company is saying it’s within days or weeks of having to close up shop–postal, online and brick-and-mortar.
The latter of those categories is mostly to blame, of course. In an age when music and movies are easily downloaded at a few moments notice, companies stream content over your phone lines to TV set-top boxes on demand, and even waiting for the postman to deliver a NetFlix envelope with your next DVD is beginning to seem slow, driving to a real store to rent a movie or game just isn’t convenient. Managing and funding the company’s physical assets must have become a real burden as its business eroded. Compare that to NetFlix, which doesn’t have to worry about storefronts with its warehouse-centric distribution model, and online streaming systems like Hulu, which have barely any overhead at all.
Blockbuster’s recent announcements that it would be partnering with TiVo, and get its content onto Apple devices, now just rings hollow. It was the right move, but taken far too late to have the needed impact on the company’s fortunes.